THE PROBLEM SOLVER: Turnaround Management and How to Expand a Business
GlassRatner had a well-established, successful 17-year run as an independent turnaround management firm before merging with B. Riley in 2018. Ian Ratner reflects back on how the company built its own particular reputation and what eventually led to the decision to become part of a larger organization.
BY AMANDA KOPROWSKI
Say the word “creativity,” and the average person is more likely to think about artists or novelists. But for Ian Ratner, co-founder of GlassRatner, a creative approach is just as necessary for accounting and turnaround work as it is for artistic endeavors.
“There’s a lot of different things that you can do when you’re trying to restructure a company,” says Ratner. “I think it’s one of the most creative areas in business.”
Ratner often describes restructuring as a puzzle to be solved, which is not all that surprising given his background in forensic accounting, a professional area that often requires drawing together disparate information to create a full picture.
“Some people come [into the business] from an operational perspective, but I came much more from a financial perspective,” he explains. “I started working on various cases for trustees and started providing forensic accounting services in the bankruptcy restructure space. From that, I continued to go on to more of the advisory work, such as creditor committees, debtor cases and the turnaround business.”
Co-founding his own firm followed a somewhat less straightforward path. After working for large advisory companies such as Kroll and Ernst & Young, Ratner took a year to serve as the interim chief operating officer and chief financial officer of a distressed telecom firm, helping it through a difficult sales process. The close of his work there left him at loose ends. He interviewed at some of his old workplaces but was unsure if returning to one of them was the right move.
And then some former clients started contacting him for consults.
“It was like, ‘Ian, we know you’re on the bench, but can you do X, Y or Z?’ Or ‘We’re trying to sell this company, can you come up and take a look at it, and maybe put a book together?’” Ratner says. “My wife joked ‘You’re the busiest unemployed guy I’ve ever met.’”
While Ratner was figuring out his next move, his friend, Ron Glass, was working as a Chapter 11 trustee after spending 20 years as a senior executive in the Zell organization out of Chicago. The two started talking, and the idea of going into business for themselves began to take shape. By October 2001, they had their business plan in place and had formed an LLC.
The newly formed GlassRatner Advisory & Capital Group LLC hit the ground running and almost immediately out of the gate, landed two substantial creditor committee assignments. That first year would set the company’s blueprint for the next decade and a half, as the mid-market firm would handle large or complicated cases even when its staff remained tiny.
“I had a leadership role in a large home builder in Atlanta,” Ratner recalls. “We were selected to be the debtor’s advisor in a complex restructure, where we restructured something like $400 million in bank debt in a very complicated case with many stakeholders and banks. The company survived, it did very well and ultimately was sold to Pulte Homes. This is one example of many where we played above our weight class.”
And it wasn’t always the big deals that stuck out to Ratner. He pointed out how even smaller restructuring assignments can sometimes operate under more pressurized constraints, encouraging him and his team to find inventive workarounds. In the case of Progressive Lighting, a retail chain of lighting stores, pressure came in the form of a tight time frame and an unhappy bank.
“They owed Wells Fargo a lot of money, and Wells was getting ready to liquidate the company,” says Ratner. “Based on our firm’s reputation and collaborative approach, Wells agreed to give us 60 days to see if we could make any headwind.”
A positive reputation ultimately proved to be the tipping point. GlassRatner was able to sell off some of the company’s assets and start working down the debt, buying enough time for Progressive to restructure and ultimately pay back what it owed to Wells Fargo in full.
Ratner even still keeps abreast of the company years after the fact, explaining that the restructure not only allowed it to rebuild, but to re-shift its focus in a changing retail landscape.
“They started focusing on online distribution, and now they have a significant online presence to complement their retail business,” he says.
And in both the short and long runs, the firm’s emphasis on those complex cases paid off.
“The thing that I’m most proud of is from 2001 until today, our revenues have grown every single year,” says Ratner. “That to me shows that we have a real business and market acceptance.”
The consistent growth also meant the firm could expand its offerings, letting Ratner return to some of his roots as a litigation support expert. Ultimately, however, the company needed to start looking at the bigger picture.
“Everybody has to know their personal limitations and opportunities,” says Ratner. “We’d taken the firm very far independently, [but] to continue to grow and find opportunities for our people drove us to look at different possibilities.”
GlassRatner had received buyout proposals previously, but it was only when B. Riley Financial offered them the chance to maintain a distinctive identity within a larger support structure that Ratner and Glass started to seriously consider the potential this could open up for the firm. Less tangible factors also came into play.
“We felt like we had a defined culture,” says Ratner. “We hire people that are collaborative, and the approach of our firm is very collegial. We are not the advisors that bang on the table and yell at people. We’ve always operated in a consultative way.”
That element of creative collaboration helped drive the decision to merge and in 2018, they closed on the merger, becoming part of the greater B. Riley organization. So far, the cultural mesh has worked well, just on a larger scale than when they were an independent company. Other subsidiaries and divisions within B. Riley, including asset disposition and appraisal firm Great American Group and investment bank B. Riley FBR, have also offered in-house synergies and capabilities that complement GlassRatner’s services.
“We’re benefiting from additional energy in the brand, even on areas that are non-financial,” Ratner says. “We’re sharing office space with people from the investment bank, from the wealth management company, from Great American, so you have a terrific integrated business.”
The merger with B. Riley may have brought a lot of new elements with it, but that doesn’t mean Ratner has any intention of slowing down. While GlassRatner has done yeoman’s work in the real estate sector in the wake of the 2008 crash and in retail as the online marketplace has become the driving force in consumer sales, Ratner is already looking at the next sectors that may need his firm’s help in the future.
“Things like UBER and changing customer preferences in the auto industry, where customers come to dealers less often, have created a good bit of restructuring in the dealer space. We are working on cases in that area all over the country,” he says as an example. And other industries? “Healthcare is 20% of the economy. There was a ton of over-building in healthcare, and now there’s going to be a contraction.”
Working in restructuring and turnaround means a firm gets to see up front and personal how quickly circumstances can turn for a company, even for large or well-established organizations. And it’s that lesson of uncertainty, of possible bad luck, that Ratner seems to take most to heart when looking at his own professional life.
“We don’t take anything for granted,” Ratner says. “We don’t take our cases for granted, we don’t take our clients for granted or our position in the industry. We are absolutely blessed every day that we walk into work.” •