2012 Kellogg Turnaround Management Conference

5/16/2012 - As Samsonite spiraled toward bankruptcy in 2003, Ares Management purchased the luggage maker and developed plans to revive the iconic travel brand.

Led by Ares co-founder Antony Ressler, Ares gained control of Samsonite’s board, and injected millions in capital to restore the company’s balance sheet. Four years later, Samsonite regained its position as a premier luggage manufacturer and was sold for $1.7 billion.

Revival stories such as Samsonite’s blanketed the Kellogg Turnaround Management Conference on May 2 at the University Club of Chicago. More than 150 business professionals joined Kellogg alumni, students and faculty to explore the core ingredients of turnaround success as well as the challenges and opportunities created by today’s economic environment.

Turnaround essentials

Though Ares has developed a strong track record of reviving struggling firm, conference keynote speaker Ressler said his Los Angeles-based company does not consider itself a “turnaround artist.”

“Above all, we want to buy good companies. We focus on troubled balance sheets, not troubled businesses,” Ressler said.

Ressler cited three elements essential to a successful turnaroud:

• An understanding of capital markets

• Thorough knowledge of restructuring and the bankruptcy process

• A business plan to enliven the franchise

Ressler added that two of the pivotal questions all private-equity investors must ask themselves are whether they are comfortable owning a particular business and if they believe the business can grow.

Ressler explained that successful investments are based on the underlying business opportunity, and not the financial engineering that goes into it. The real issue, he said, is determining how much the business can grow.

Talking turnarounds

In its sixth year, the Kellogg Turnaround Management Conference continues to deliver a range of enlightening programs.
In addition to Ressler, the conference included:

• A morning keynote from Heidrick & Struggles Vice Chairman Theodore Dysart

• A case study of Del Monte Canada presented by Sun Capital Partners

• Four panel discussions examining issues such as valuation of distressed companies, regulations, union negotiations and the distressed investing outlook

“The idea was to gather major industry players in one forum to look at the current status and outlook for distressed investing as well as the need for corporate renewal across all sectors,” said Clinical Professor James Shein, the conference’s faculty adviser.

In October, Shein will oversee a new Kellogg Executive Education program, “Successful Corporate Renewal: Transforming Companies and Subsidiaries,” that focuses on this important sector of investing. The three-day program will discuss the practical skills and know-how to produce short-term results as well as sustainable success as a distressed investor.

Between the conference and the executive education program, Shein said, “Kellogg has established itself at the forefront of all teaching in the turnaround and corporate renewal space.”

Further reading

Reversing the slide: Clinical Professor James B. Shein offers a three-pronged approach to saving a distressed company

Back from the brink: These Kellogg School graduates are experts at finding value in floundering companies

Sam Zell: ‘Exert control’ for winning turnaround battle