Q: How did you gravitate into turnaround/restructuring work?
Montgomery: Honestly, I sort of fell into turnaround and restructuring 20-some-odd years ago coming out of undergrad. At the time, I wasn’t entirely sure that I really knew what restructuring was all about, but it was the idea of getting to learn how to help fix broken businesses, the promise of getting to travel—oh, to be young again—and working across different situations that initially drew me to
Right from the get-go I was working with some incredible clients, ranging from retail and consumer to auto and other advanced industries. I am a hands-on, roll-up-your-sleeves kind of guy. Having the opportunity to climb into the trenches and help solve some of the most challenging of problems when it mattered the most to my clients and their employees and stakeholders had me hooked. Looking back now to my first, very eye-opening, client engagement in 1999, and my subsequent career journey, I don’t think that there is anything that I would have changed.
Q: What have been some of your most gratifying, favorite, and/or important engagements?
Montgomery: I’ve been fortunate to have been able to work on matters ranging from deeply distressed turnarounds through healthier, “good-to-great” transformations. The two matters that typically come to mind as my all-time favorites are both grounded in distress but had significant operational opportunities that proved to be the difference between liquidation and successfully charting a path forward as a going concern.
The first matter involved a multichannel and vertically integrated food-gifting retailer, with a legacy reaching back nearly 100 years. As one of the largest employers in the region, the company supported 7,000+ jobs within the surrounding communities. Unfortunately, years of declining sales and margin and rapidly increasing lower-cost competition raised significant doubts as to the viability of the business.
We were originally hired to develop a road map back to profitability, but it quickly became clear that the situation was far more dire than initially believed when we realized the company had less than 10 weeks of available liquidity heading into its biggest season of the year. Priorities immediately shifted to stabilizing cash and maximizing the available runway to evaluate strategic options and engage in stakeholder negotiations.
During the ensuing process, our team was asked to step in and assume several interim executive management roles and was successful in reaching a consensual deal to convert the existing debt to equity and raise additional funding to support a back-to-basics operational turnaround plan.
Over the course of 11 months, significant value was unlocked throughout the business. Focusing on a simplified business model led to a dramatic reduction in SKU count and a massive consolidation of vendors, improved on-line customer experience, positive comparable store growth, and significantly reduced year-end inventory and accounts receivable. All of this contributed to significant reoccurring cost savings and the successful completion of a prenegotiated Chapter 11 in less than six months.
While I’m proud of the financial results and efforts of all involved, what has really stuck with me over the years has been the impact the turnaround had on the employees and the local community. Working in restructuring can mean having to deal with some emotionally taxing situations and unpleasant realities at times. This particular situation is one that I look back on when I need a reminder of why I do this.
Funny enough, for the other client that comes to mind, I had actually stepped away from restructuring. I was working in management consulting and was hired to lead an operational transformation program for a thermal coal producer. At the time, though, growing operational and balance sheet pressures forced the company to file for bankruptcy when lenders were unwilling to refinance its debt.
While it had only been a few years since my last restructuring, this particular matter was far more reminiscent of the cases I had worked on closer to 15 years earlier. Where restructurings have become much more transactional in nature over recent years, the collective effort in this engagement was focused on addressing the root causes of the operational issues facing the business and contributing to its overlevered position and fixing them. This wasn’t about providing a little window dressing to support a process but rather fundamentally changing the way the business was run.
The operational program embedded within this Chapter 11 proved to be the cornerstone of the consensual restructuring achieved. I give a lot of credit to the board, which had the foresight to put together a cross-functional team of professionals that brought the best of both the restructuring and operational toolkits to drive to an outstanding outcome.
There is so much more to turning around a company than simply running a process, which is something that people sometimes lose sight of these days. It wasn’t long after this assignment that I returned to turnaround and restructuring with a renewed focus on solving not just the balance sheet issues but also the operational ones.
Q: What role has your TMA membership played in your career?
Montgomery: Life, family, and career have taken me from Boston to Chicago and, most recently, to San Francisco. Being able to tap into an instant network of local professionals has provided a real boost for me each time that I began rebuilding my personal network in a new city. In almost every instance that I’ve reached out to a TMA member to find a few minutes to connect, introduce myself, and learn about them and their practices, people have been incredibly gracious with their time, as well as their relationships, following up with additional introductions and helpful suggestions for expanding my personal network.
Continuing to build on these relationships over the years has been a great benefit, whether in referrals, helping to introduce the right resources to my clients, or establishing credibility when working across the table from other stakeholders’ advisors. If you really think about it, being successful in restructuring a business really hinges on being able to drive consensus among parties with differing motivations. Engaging in those discussions with some basis for connection to the person on the other side of the table and being able to trust that they are a fair dealer can have a real impact on the outcome and the time it takes to get there.
Q: What advice do you have for someone who is new to the industry or is thinking about getting into the industry?
Montgomery: First, seek out as many different opportunities as you can. So much of what I have learned throughout my career stems from having been exposed to so many unique situations, teams, challenges, and approaches to solving problems. Diversifying your exposure provides great perspective on how companies get into trouble in the first place, what they may have tried that didn’t work, and ultimately what it takes to pull them through, all of which will contribute to your pattern recognition, which is invaluable when walking into a new situation.
Second, surround yourself with people that you genuinely like. This isn’t an easy gig. The hours can be long, the stress high, and the travel tough. When I think about my favorite engagements, so much of it had to do with the people I was working with. Focus on finding something you really enjoy doing and a group of people you enjoy doing it with, and you can’t go wrong. This goes not only for the people on your team but also the other professionals that you may be bringing into your situations.
Third, take advantage of the resources that organizations like TMA make available and get involved. Professional benefits aside, it is a great opportunity to meet some outstanding people, some of whom you may find will become not just colleagues and collaborators but also friends.
Q: What are you passionate about outside of the office?
Montgomery: Outside of work, when not spending time with my wife and two daughters, I look for any opportunity to be at a racetrack chasing my hopeless dreams of being a racing driver. Unfortunately, a lack of time, budget, and talent led me to follow the classic idiom, “Those who can, do; those who can’t, teach,” and I have been instructing at high-performance driving schools for the last 15+ years.
Work and family have limited the amount of time away that I can take these days, but any excuse I can find, I take it. I am naturally drawn to anything with four wheels and have always been fascinated with racing. For me, being on track, constantly pushing to improve my line through each corner and chasing that next best lap time, requires 100% focus and leaves no room to dwell on the stress of the week I left behind or the challenges of the one that awaits on Monday. It’s one of the few places I can truly clear my mind.
Q: What does the high-performance driving experience involve?
Montgomery: What I do is different than being a paid instructor for, say, Skip Barber or another program like that. Most enthusiast brands like Porsche and BMW support affiliated owners’ clubs that provide a variety of benefits, one of which normally is high-performance driving school.
These are great opportunities to learn the principles of advanced car control and race craft and will usually combine classroom instruction with in-car coaching. Students all begin with an experienced instructor strapped into the passenger seat, and both are fully miked so that they can easily communicate with one another.
Students drive their own vehicles, which may range from bone-stock family sedans to fully prepared racecars. Students who really take to it, and continue to enroll in subsequent schools, can progress from novice through intermediate and advanced run groups, with some continuing on to becoming instructors, which was the path I followed.
Q: Are there specific tracks where you do this?
Montgomery: One of the great things about this is that most clubs host several different schools at different tracks throughout the season, giving participants the opportunity to be on-track at some of the same racecourses that the pros compete on. Here in California, I’ve spent a lot of time at both Laguna Seca in Monterey as well as Sonoma Raceway. Back in the Chicago area, a couple of my favorites are Road America in Elkhart Lake, Wisconsin, and Mid-Ohio Sports Car Course in Lexington, Ohio.
Q: What speeds do you reach?
Montgomery: First and foremost, these programs are designed to be safe instructional events, and there is no trophy at the end of the weekend. With that said, depending on the track and the car, the more advanced students and instructors can get going pretty fast. I think the fastest I’ve gone was just a little shy of 170 mph at Mid-Ohio, although straight-line speed isn’t really what it’s about. Where the real skill and fun come is in what you do as you approach the end of that straight and need to get the car into that next turn and carry as much momentum as you can through the corner.
Q: You must like teaching, given that you’ve been doing it for 15 years. What do you like about it?
Montgomery:I do find the coaching to be rewarding. Most students show up with fantastic attitudes and, frankly, are rather nervous. There are a hundred different things to try and keep straight on every lap, and it’s all coming at them so fast, even if they aren’t exactly fast yet themselves. It’s exciting as an instructor when you establish that common language with the student in the driver’s seat, and they slowly come to trust the directions you are giving, even if every instinct they have is telling them to do the opposite, and they start connecting the dots from one corner to the next.
Q: What might people who know you only in your professional capacity be most surprised to learn about you?
Montgomery: I really am not a fan of the whole work-from-home thing, and 2020 was pretty a rough year around my house. To try and create some sort of an escape for the family, we became RVers. By no stretch are we anywhere close to being full-timers, but I did find myself working from a campsite and juggling multiple Wi-Fi hotspots at least once a month throughout most of the year.
I was a bit of a reluctant participant in the beginning, but it has turned out to be a great way to get the kids outside and off their devices and for the family to make some unique and lasting memories.
Q: You mentioned not liking working from home. Why is that?
Montgomery: Collaboration is a huge component of this job. When you take away the personal, and often informal, one-on-one interactions among the team, clients, and other stakeholders, developing trust-based and collaborative relationships is more difficult and takes significantly longer. And most things are just going take longer when, rather than quickly popping into someone’s office or talking across the conference room table, you need to send multiple emails or schedule yet another virtual meeting.
Q: Have you taken any longer trips with the RV or have any favorite campgrounds?
Montgomery: For the most part we haven’t ventured too far at this point. But with so many great spots within a handful of hours from San Francisco, we really haven’t been lacking for great destinations. Being able to load everyone up in the truck around lunchtime on a Thursday, get ourselves fully set up at the campground that night, and then work on Friday makes it pretty doable with my schedule. We are planning our first long-haul trip, though, in the spring. Once the kids are out of school for summer break, we’re heading off
to Yellowstone, which we’re very excited about.