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AlixPartners

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AlixPartners LLP
Company typePartnership
IndustryManagement consulting
FounderJay Alix
HeadquartersNew York City, United States
Area served
Global
Key people
Simon Freakley (CEO)[1]
Number of employees
1400+
WebsiteAlixPartners.com

AlixPartners is a consulting firm best known for its work in the turnaround space.[2] The firm was founded by Jay Alix in 1981 in order to handle the turnaround of Electrical Specialties Co., and has since moved into a more traditional consulting space, grown to a staff of over 1,400, and added office locations throughout North America, South America, Europe, and Asia.[3] In 2012 AlixPartners was valued at $1 billion.[4]

Founding

AlixPartners was founded in 1981 in Southfield, Michigan by Jay Alix, a Detroit-area Certified Public Accountant (CPA)[clarification needed]. The company was founded as Jay Alix & Associates PC.[5] According to BusinessWeek, the “firm pioneered consulting to companies in or near bankruptcy … While most management consultants focus on long-term strategy, AlixPartners' mission is more immediate. It jumps into crisis-ridden companies and looks for ways to maximize value for investors and creditors. Often, that means shedding assets or restructuring operations. But sometimes, it means preparing the company for sale.” It first found public notoriety in 1984, when working with the bankrupt automotive company DeLorean Motor Co, finding an additional $100 million for the company’s creditors.[6]

Consulting and M&A work

The company has built a mergers and acquisitions practice, in addition to other forms of business consulting. Specifically, they work within large merger integration situations. In March 2014 AlixPartners was brought on board to advise on the merger between JoS. A. Bank Clothiers and Men's Warehouse, two male clothing retailers.[7] AlixPartners has consulted for companies including Airbus, Crocs,[8] and William Morris Endeavor. Once hired by William Morris, AlixPartners was responsible for finding $120 million in cost cutting measures for IMG before the two agencies merged.[9]

Industries in which AlixPartners consults includes, but is not exclusive to, maritime and port-based industries,[10] private equity,[11] automotive industry,[12] natural resources,[13] and aerospace. In September 2014, AlixPartners began the restructuring of the Puerto Rico Electric Power Authority (PREPA). The deal allowed PREPA to access a $280 million construction fund for infrastructure improvements for the country.[14]

In December 2014 the company purchased Evidence Exchange, a litigation support company.[15] In 2015 the company started its Leadership & Organizational Effectiveness department, which provides “leadership assessment and selection [and] propositions aimed at transforming cultures, implementing talent management strategies, organizational design, M&A culture integration and change management.”[16] In February 2015 AlixPartners purchased Zolfo Cooper's UK & European operations for $100 million.[17]

Restructuring work

In 1986, AlixPartners worked with Delaware-based Phoenix Steel Corporation, which was the oldest steel company in the United States. Jay Alix took the position of CFO at Phoenix, where he restructured Phoenix’s debt before leading it out of bankruptcy and selling the company to China in 1988. In 1987, AlixPartners restructured the Detroit chocolate company Fred Sanders Inc. In 1993, AlixPartners began restructurings National Car Rental, and in 1999 the company restructured Fruit of the Loom.[18][19][20] During the late 1980s and 1990s, the company also restructured HMO Oxford Health Plans, Wang Laboratories, Unisys, Zenith, and Maidenform Worldwide.[21] As exhibited by Alix’s work with Phoenix Steel, AlixPartners has developed a system where executives from the firm enter the company as a chief executive, CFO, or other c-level executive, in order to deal with the problem at hand. The AlixPartner executive then develops a team of people from the distressed company “to diagnose weaknesses and prescribe a strategy to preserve cash and restructure the business”.[6]

In 1990, Jay Alix was the court appointed bankruptcy trustee for Cardinal Industries, which at the time had $1.8 billion in real estate holdings.[22] In 1992, Alix became the court appointed examiner in the bankruptcy of and fraud case against Phar-Mor pharmacies. Alix unearthed a $1 billion fraud perpetrated by Phar-Mor executives, resulting in 129 counts of fraud against six of the company’s employees. At the time, the Phar-Mor scandal was called the “largest financial fraud in the modern era”.[23][24][25] In 1994, Alix was named as one of President Bill Clinton’s three appointees to the federal Bankruptcy Review Commission, which oversaw changes to the federal bankruptcy regime.[26]

AlixPartners worked with Enron and WorldCom during their bankruptcies, fixing the problems developed during their public scandals and collapses, and recouping money for the company’s investors. During this period they also worked with Kmart during its early 2000s restructuring. At both Kmart and WorldCom, AlixPartners employees served as temporary executives during the restructuring periods. Enron, WorldCom, and Kmart were three of the five largest bankruptcies in United States history during this time period.[27] Jay Alix remained owner and vice-chairman until December 2001 when he was no longer directly involved in actual company restructurings and was replaced as chairman by Al Koch.[6][21]

During the 2008 crash of the automobile industry, AlixPartners was involved in the restructuring and return to financial health of General Motors. Al Koch, a partner with AlixPartners, was named one of the chief restructuring officers of the various company sections during the bankruptcy process. Jay Alix (having had previous experience turning around automotive companies) returned from an eight year hiatus from leading the company to lead the overall restructuring operations, and according Forbes Magazine, “hatched a radical plan that ultimately set the foundation for the salvation of the company.”[28]

Other work

Starting in 2003, AlixPartners began working heavily in the automotive industry. Jay Alix himself worked with the Government of Japan in order to establish a business turnaround industry in Japan and business turnaround association.[21] Companies have also brought on AlixPartners during healthy financial periods in an attempt to boost company performance as well.[6] The company has also produced studies on international economic and trade trends,[29] in addition to other social issues.[30] Many of the company’s studies focus on the automotive industry, which have been reported on by news outlets including the Wall Street Journal,[31] Time Magazine,[32] USA Today,[33] Forbes Magazine,[34] and the Financial Times.[35]

Business structure

AlixPartners' work includes enterprise improvement consulting, financial advisory services, information management services, leadership and organizational effectiveness consulting, and executing turnarounds of distressed and healthy companies. AlixPartners has been involved in several high-profile turnaround and bankruptcy assignments including GM's Saab division,[36] Kodak,[37] Barney's New York,[38] and JC Penney.[39] The firm's managing directors are frequently cited as topic experts in business publications such as Bloomberg, the Financial Times, CNBC, and Fox Business. In 2006, private equity firm Hellman & Friedman invested in AlixPartners.[40] In 2012, CVC Capital Partners acquired AlixPartners from Hellman & Friedman.[41] In 2015, Simon Freakley joined AlixPartners after its acquisition of Zolfo Cooper Europe and was named as AlixPartners’ next CEO in August 2015, taking the job on January 1, 2016.[42]

Law suits

In 2014, AlixPartners accused several executives exiting the firm to join the Restructuring and Transformation Service (RTS) at McKinsey & Company of stealing trade secrets.[43]

Awards

The company has received awards from organizations including the Career Education Corporation.[44]

References

  1. ^ http://www.consultancy.uk/news/2431/simon-freakley-new-chief-executive-of-alixpartners
  2. ^ Merx, Katie. "Thinking Big Thoughts." Crain's Detroit Business 19.36 (2003): 18. Regional Business News. Web. 29 May 2013.
  3. ^ Henderson, Tom. "AlixPartners Deal Gives Equity To Firm's Managers." Crain's Detroit Business 22.32 (2006): 1. Regional Business News. Web. 29 May 2013.
  4. ^ "Turnaround Advisor AlixPartners For Sale At $1B-Plus". International Business Times. 12 April 2012.
  5. ^ "Turnabout for a turnaround artist". Automotive News.
  6. ^ a b c d "When the Going Gets Tough, Turnaround Specialist Jay Alix Gets Busy". Businessweek.com.
  7. ^ "Men's Wearhouse engages AlixPartners to support Jos. A. Bank merger". chainstoreage.com.
  8. ^ Edgell Communications. "Crocs CEO: Showrooming Affects E-Commerce Sales". edgl.com.
  9. ^ Shasha Dai (17 March 2014). "William Morris Endeavor Hires Adviser to Cut Costs at IMG". WSJ.
  10. ^ "Bigger landside investment, to support bigger ships, needed in US". joc.com.
  11. ^ "Italy's government under pressure to soften reform of cooperative banks". GlobalPost.
  12. ^ "U.S. Auto Sales Lose Steam in February -- 4th Update". NASDAQ.com. 3 March 2015.
  13. ^ Bradley Olson. "Why $100 Oil Won't Be Coming Back for a Long Time". Bloomberg.com.
  14. ^ Aaron Kuriloff (4 September 2014). "AlixPartners Will Lead Puerto Rico Power Authority's Restructuring". WSJ.
  15. ^ "AlixPartners buys New York-based Evidence Exchange". consultancy.uk.
  16. ^ "AlixPartners expands human capital advisory offering". consultancy.uk.
  17. ^ http://www.accountancyage.com/aa/news/2395437/alix-partners-to-acquire-zolfo-coopers-uk-european-operatons
  18. ^ "FRUIT OF THE LOOM, BURDENED BY DEBT, FILES FOR BANKRUPTCY". highbeam.com.
  19. ^ "GM to Sell National Car Rental System; Investor Group Led by Former Chrysler Executive to Buy Subsidiary". highbeam.com.
  20. ^ "CHINA BANKROLLS REBIRTH OF OLD PHOENIX STEEL PLANT". highbeam.com.
  21. ^ a b c "Crain's Detroit Business : Subscription Center". crainsdetroit.com.
  22. ^ "CARDINAL TRIES TO COMBINE DEBT". highbeam.com.
  23. ^ "PHAR-MOR FRAUD IS $1 BILLION LOSS IS DOUBLE PREVIOUS ESTIMATE, BANKRUPTCY EXAMINER FINDS". highbeam.com.
  24. ^ "Phar-Mor's Glowing Reputation Hid Web of Deceit, Investigator Says. (Originated from Akron Beacon Journal, Ohio)". highbeam.com.
  25. ^ "Phar-Mor awarded financing". highbeam.com.
  26. ^ "Clinton names three to Review Commission. (Bankruptcy Review Commission) (Brief Article)". highbeam.com.
  27. ^ "Waterbury, Conn.-Area Native Heads National Business 'Turnaround' Firm". highbeam.com.
  28. ^ Dan Bigman (30 October 2013). "How General Motors Was Really Saved: The Untold True Story Of The Most Important Bankruptcy In U.S. History". Forbes.
  29. ^ "Protean Supply Chains". google.ca.
  30. ^ "Shapes of Things - Global Gaming Business Magazine". ggbmagazine.com.
  31. ^ Joseph B. White (1 July 2014). "Forecasters Say U.S. Auto Sales Rebound Ripe for Swoon - WSJ". WSJ.
  32. ^ "The Military Aerospace Market: Sky's No Longer the Limit". TIME.com.
  33. ^ Bruce Horovitz, USA TODAY (5 March 2014). "Consumers plan to spend less eating out". USA TODAY.
  34. ^ Neil Winton (21 October 2013). "If Chinese Automaker Saves Peugeot-Citroen, Who's Next In Line To Falter In Europe?". Forbes.
  35. ^ "Shipping companies risk financial distress, says report". Financial Times.
  36. ^ New York Times, "G.M. Hires AlixPartners to Wind Down Saab", Jan. 8, 2009, http://dealbook.nytimes.com/2010/01/08/gm-hires-alixpartners-to-wind-down-saab/
  37. ^ New York Times, "Kodak Replaces Its Restructuring Chief", Jan 23, 2012, http://dealbook.nytimes.com/2012/01/23/kodak-replaces-its-restructuring-chief/
  38. ^ New York Times, "Barneys, Debt-Laden, Is Weighing Restructuring", Feb 8, 2012, http://dealbook.nytimes.com/2012/02/08/barneys-debt-laden-is-weighing-restructuring/
  39. ^ Penney Works With AlixPartners on Cost Savings, Wall Street Journal, April 23, 2013
  40. ^ Turnaround Firm AlixPartners Is Sold
  41. ^ "Private equity deals". Fortune.
  42. ^ http://www.wsj.com/articles/alixpartners-names-simon-freakley-as-next-ceo-1438584074
  43. ^ AshJones. "AlixPartners Accuses Directors Heading to McKinsey of Trade-Secret Theft". WSJ.
  44. ^ "AlixPartners, Career Education Honored by M&A Network". abfjournal.com.
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