From 1971 to 2001, Tom Epley was the General Manager, President, CEO, and/or Chairman of more than a dozen independent companies, divisions, or subsidiaries. During his tenure at each organization, Tom made a series of bold moves and decisions which put every one of them on the fast track to recovery and profitability. In 2009, he became a partner in Vance Street Capital and has been instrumental in acquiring and creating new strategies and operational tactics for several acquisitions. See www.vancestreetcapital.com.
The following is a list of Tom's major turnaround positions and bottom-line accomplishments, prior to the companies acquired at Vance Street Capital:
CEO, AMI Semiconductors, $400M revenues, digital and mixed-signal ASICs.
Going in: Acquired for $535M ($280M equity), the company was in disarray and revenues suddenly declined by 40 percent.
Results: A new base of performance was created that led to a highly successful IPO in a weak IPO market with a $2.5B equity market cap (10x original equity) two years later.
Chairman and CEO Paradyne Corporation, $150M revenues, telecommunications systems.
Going in: Acquired for $150M ($70M equity and $80M take-back debt), and losing $5 million a month, the company had not created a single new product in five years. Immediately after closing, it faced an unexpected 50 percent reduction in bookings.
Results: In eighteen months all investment equity and acquisition debt was repaid. One year later, Paradyne underwent a successful IPO and was valued, at its peak, at $1.5 billion.
Chairman, CEO, and Director, Globespan, $0-400M revenues, start-up in DSL semiconductors.
Going in: A department spun out of Paradyne, its allocated cost base was $5M. It was losing $500K per month and its technology was in conflict with industry standards.
Results: Within several years, a highly successful IPO was enabled and Globespan achieved a peak market value of over $8 billion (1600 times its original valuation).
Chairman and CEO, and subsequently majority equity holder, Bekins Corporation, plus Chairman of its many subsidiaries:
Going in: Irwin Jacobs acquired the Bekins Corporation for $93M ($6M equity and $87M debt), a safe asset-based bet due to $120M in appraised real estate owned by the company. One year later, Bekins management had sold over one-third of the real estate with zero cash retention.
Results: In Epley's first year, $106M post-tax cash was generated; in the second year another $35M; and in the third year another $60M. The entire purchase debt had been retired and there was a post-tax 15 times return on equity.
Chairman of Cuno Filtration and Potter Brumfield Relays, AMF Corporation.
Going in: AMF was one of the last hostile acquisitions in the heyday of high-yield bond financed, highly leveraged buy-outs. Prospects for getting a return were "shaky." This type of deal relied on a thin slice of equity --- great when it works but devastating when it doesn't. The appraised value of the AMF companies was barely over the acquisition cost.
Results: Cuno, $100M revenues, industrial filters.
Made major and rapid changes in its operations, cost structure, strategy, and business philosophy, and sold single-handedly for $120M against appraisal of $80M.
Results: Potter and Brumfield, $75M revenues, relays.
Made major and rapid changes in its operations, cost structure, strategy, and business philosophy, and sold single-handedly for $77M against appraisal of $55M.
President, Northern Ordnance subsidiary of FMC, $450M revenues, mechanical/electronic defense systems.
Going in: Forty years out of date, the company had a history characterized by spoon-fed, cost-plus government contracts. Despite its exceptional current financial performance ($400M revenues and $75M operating profit), the company had never won a competitive contract, its manufacturing and overhead costs were approximately twice that which was considered competitive, and ninety percent of its revenues were derived from systems in their last production cycle. World class competition had already seized the development contracts for the next generation systems. All of the company's existing major contracts were scheduled to expire within two years, at which point the company had a 100 percent chance of financial collapse.
Results: Two years later, after a complete overhaul and a radical change in its culture and performance capabilities, Northern Ordnance captured major positions in new defense systems and enjoyed a decade of excellent financial performance.
Chairman and CEO of Technicolor Inc. and Chairman and/or General Manager of its four principal subsidiaries.
Going in: Technicolor Corp., Video, and Film was acquired by Carlton Communications for $750M (10 times operating profit of $75M), a price viewed as ridiculously high for a company with no long term strategy or prospects, and heading rapidly and precipitously toward a $25M operating profit level when major priced-over-market contracts expired.
Macro results: In a little over three years, the company had an operating profit of $225M and a sound strategy for both major businesses. In several more years, Technicolor sold for $2.25 billion. This was achieved by the following:
Results: Technicolor Video, $600M revenues, video cassette manufacturing: Converted from a low-value added commodity to a highly integrated logistics-based partner with the major studios.
Results: Technicolor Entertainment Systems, $0-25M start-up in film and theatre logistics: Developed from scratch a $25M, $5M OPBT annuity-type business that gave Technicolor virtual control of the movie theatre distribution pipeline, both in film and future digital formats, and also produced a seamless entry into digital cinema.
Results: Technicolor CD/DVD, $0-40M revenues, CD/DVD production: Established from scratch the business, technology, and a solid base for later DVD acquisitions and resulting high market share, which guaranteed an ongoing life for video cassette capabilities and the dominance of theatrical DVD.
General Manager, Specialty Chemicals Group of FMC, and General Manager of each of its divisions:
Going in: Active Oxygens Subsidiary, $125M revenues, oxygen providing specialty chemicals. Faced major market share loss when legal barriers preventing intrusion from much larger and more efficient European producers expired; was well behind in technology.
Results: Recaptured U.S. market leadership through a radical technology/market strategy despite high obstacles --- a strategy that thwarted the European producersâ U.S. market intentions, and thereby created a long-term, high growth and profitability business.
Going in: CDB's, $75M revenues, swimming pool chemicals.
This business was a money-losing commodity chemical business with no way out. Even after cost reductions and volume enhancements, it had remained locked in a permanent and significant loss position. Environmental interactions with the remainder of the chemical complex prohibited what seemed like the only viable strategy: an extremely costly (perhaps $15M) shut down.
Results: Two years after Tom's arrival, it was a high value-added, consumer-branded business characterized by growth and profitability. Several years later it sold for over $100M reflecting its then strategic and financial value.
General Manager, Phosphorous Chemicals Group of FMC, $400M revenues, commodity chemicals.
Going in: Tangled up in its underwear, this company was blocked on all fronts â from environmental and technological to its lack of capacity and limited penetration of the marketplace. Due to these factors, its principal product was about to be engineered out by its primary customer.
Results: By implementing a breakthrough strategy and execution that scrapped years of institutional malaise, Tom put the company on a highly profitable ongoing course.
General Manager, Snowmobile Division of FMC Corporation, $25M revenues, recreational vehicles.
Going in: First, Tom created an amazing growth plan for a tired, unprofitable business and convinced the board to back his investment and acquisition strategy.
Results: Upon further in-depth industry and competitive analysis, Tom went back to the board and recommended selling the business with the accompanying strategy. The sale was successful based principally on that strategy. The sale also averted a major bloodbath when the industry collapsed two years later.