Why the Financial Picture Is Never the Whole Picture with Susan Moor

The financial picture is never the whole picture. In this episode, Oliver Colling sits down with Susan Moor, who leads the transitions practice at FRP Transitions and has spent 15 years placing turnaround professionals into distressed businesses. They talk about how the profession has changed, why the best interventions start with operations not finance, when a team beats a single operator, and what it really takes to do this work at the highest level.

Key Moments

00:00 — How FRP Transitions was built and why it works differently from traditional interim providers 

04:00 — How the turnaround profession has changed: from ego and command to empathy and gravitas 

11:00 — Situational expertise versus sector knowledge: why asking the basic questions unlocks the real answers 

17:00 — When to use a single operator and when to build a team: the CFO, the CRO and the five million pound stock problem 

24:00 — What makes a good turnaround professional and why you cannot teach it in a classroom

Connect with Susan Moor
FRP Transitions: frpadvisory.com
LinkedIn: Susan Moor


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Website: kingsgate.uk.com
Email: podcast@kingsgate.uk.com
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LinkedIn : Kingsgate
LinkedIn: Oliver Colling

The Value Agenda is Kingsgate's podcast on turnaround, restructuring and value creation.

Transcript

SPEAKER_00 0:00

Welcome back to the Value Agenda. Today I'm joined by Susan Moore of FRP Advisory. FRP is a leading national advisory firm supporting mid-market businesses across the full corporate life cycle, from growth and transactions through to complex turnaround and recovery. They are best known for restructuring and transformation, and they work across corporate finance, debt advisory, forensic services, and financial advisory. What makes FRP's transitions practice distinctive is their network of around 500 experienced interim leaders, both operational and financial, placed into businesses that need the right person at the right moment. Susan has been building that network since FRP's inception in 2010, and restructuring remains very much at the heart of what they do. This is the value agenda. Let's get into it. Susan, welcome. Great to have you with us. I'm interested in how did FRP move to that transition service? Because I think that's I think that's unique amongst amongst the marketplace.

SPEAKER_01 1:09

I think it started off actually when we were in the former company and we were just a small turnaround panel. And basically the partners that worked in it would either be so busy doing the work that they basically uh they would just get phone calls from people going, Can you help us? Have you got anybody who can do so-and-so? One of them had a light bulb moment and thought we should be doing this for ourselves. So that's how it all started. And I took that role up and then moved over with FRP. And we've just grown it ever since. I suppose the way that we work is slightly different from interim providers, as much as it's very much a relationship-led piece as far as FRP is concerned. But it's worked for us across our whole network of not just the partners but also the PE funds and the banks and the restructuring lawyers and so forth that work with FRP on a daily and weekly basis.

SPEAKER_00 2:02

Great.

SPEAKER_01 2:02

It's been a good journey. It's been a nice journey.

SPEAKER_00 2:05

Excellent. Excellent. So the fact that you've got 500 people that you've got you can call upon for every situation is really impressive.

SPEAKER_01 2:13

It's a movable feast, as some people join that network as FDs and CFOs and are now doing non-exec roles and even chair roles, and then we fill in again from the bottom. And obviously in that period, people have retired and gone on to do other things or just retire. And we fill and the other thing that's changed is sectors change. So we will come on to the sector specialism piece, but there are always new sectors coming in. We're one of the things we're concentrating on at the moment is the blockchain, because it's it's going to be in our world fairly quickly, and we're going to need expertise in that area. Yes, it's a it's very much a movable piece, the network.

SPEAKER_00 2:53

Yeah, that's great. And all differences have you noticed over the since 2010, the nature of the sort of expertise required, particularly in turnarounds. Has that changed?

SPEAKER_01 3:05

Oh, very much, very much, yes. Out with the old guard in with the new, but it's not been as black and white as that. It has actually it's morphed over the years into being perhaps not such a dark art. I used to explain the turnaround guys coming into the office as their ego turned up ten minutes before they did. And I think that gives you a good indication of the sort of the power that they felt that they wielded or possibly did. And it's that's just not there these days. Very much more looking at the empathy and the character of the person and how they're going to work with the business and with the stakeholders. You want somebody that's got real gravitas, not necessarily an imposing character, and therefore this is supposedly gravitas because it isn't, it's just perhaps an arrogance. I'm possibly using stronger words than might be right, but I it is as black and white as that.

SPEAKER_00 4:05

Yeah. I think many people, when you say that you have a turnaround person, they imagine, even though I'm a white middle-aged man, they imagine a white middle-aged man, possibly with a red face, shouting at people and firing everybody. And whilst that may have been true in the past, I don't think that unless you're in an extremely distressed position where you actually do need that command and control. I just don't think it works with organisations anymore.

SPEAKER_01 4:28

No, it doesn't. No, it doesn't. And you certainly don't get the best out of the people that are there. And they are in a very stressed situation and probably have been in that situation for some time before you as a T D go in there. They've been living with this for day in, day out, and possibly at night as well, for a number of months before anybody goes in. And you have you have to take that and know that it's sitting in the background there.

SPEAKER_00 4:55

So it's interesting you say that businesses live with these problems for a long time, probably longer than they should do. Why do you think there's that reluctance to seek help?

SPEAKER_01 5:06

Oh, I I think in a lot of cases it's considered a weakness that management need to need to ask for help. I don't know how many you've gone in into a lot of businesses. I bet in the majority of cases it's been the stakeholder on the investor that's been saying to you, Oliver, this business needs somebody, that it hasn't actually come from the chair or the CEO saying we need help is usually a referral in. And I think that they'll they'll start off by thinking they can do it themselves. Well they they ought to do it themselves, and there probably are times when they can. But as it gets worse and as the situations evolve, they get out of their debt. Um and don't want to share that with some with somebody else. They want to hide it in some way. So yes, it's very much up to and and indeed I think over the years we've all tried to do this is to open up and say, get help quicker.

SPEAKER_03 6:03

Yeah.

SPEAKER_01 6:03

Just reach out and talk to someone. Whether it's your bank or your investor or whoever, say, I think we have a bit of an issue and I would like some help. And really, in truth speaking, that's a position of strengths, not weakness.

SPEAKER_00 6:16

Yeah, absolutely.

SPEAKER_01 6:18

To be able to say that.

SPEAKER_00 6:19

I absolutely agree. And I think what you said about our experience does play to what you said in terms of it's often an investor, whether that's private equity interest or could be family interest, whatever, who who generally says to the business, you need to sort this out, and if you don't sort it out, we'll sort it out for you.

SPEAKER_01 6:38

For you.

SPEAKER_00 6:39

By the way, it might be worth talking to somebody like Kingsgate who might be able to come in and do this with a a good view and get you the right result.

SPEAKER_03 6:46

Yeah.

SPEAKER_00 6:46

Just thinking about the investor side of things, how do you think the growing number of private equity investors in, particularly in the UK economy, has made a difference to that turnaround space?

SPEAKER_01 6:59

I think to a degree, um the world of of private attitude and equity and again, don't necessarily want want the outside world to see a failure within their portfolio. And so they they possibly keep it amongst themselves for a little bit too long sometimes. Saying, well, you know, we we've got somebody on the board as a non-exec, we can we can manage it from there. Well it's not always the right way of dealing with it. Uh I'm sure you've had the same conversation that everything is alright, but and actually when you've gone round the table twenty times, suddenly an issue comes up, and it's like, the only thing is, and then you get to the nub of it, why are you actually talking about a particular business in that portfolio? I suppose one of the ways they covered off on this is by having their own operational portfolio managers within their within their funds. But obviously, you've got to have a fair amount of investments for that to be a useful tool for. If you've only got half a dozen investments, then you can't bring up an operational partner because it's just not going to be viable. So therefore, they've got to come out to companies like yourself and Kingsgate and so forth, and the independents. But I do think sometimes they could do with asking for help a little bit quicker than they do sometimes.

SPEAKER_00 8:24

Yes, I think I'd agree with that. I think some of it's this sort of subtlety even just around the language. So in this podcast called the value agenda, because I think everything is talked about in terms of value today. So that's value creation, if you're looking positively, or value protection, I guess we'd call it otherwise.

SPEAKER_03 8:41

Yeah.

SPEAKER_00 8:41

And just we need to use that sort of language as some of the investors that we speak to, because talking about turnaround, talking about potential failure, that's not language that necessarily all private equity investors and venture capitalists, etc., want to hear. That's a different proposition.

SPEAKER_01 8:59

Yeah. But doesn't that tend to lead on from our original conversation, which started with the old and the new and the turnaround? Yes, everything's becoming a lot softer, a lot more inclusive, not quite out with the sword and let's fight this battle type thing. It's all becoming a lot more about engagement, and as you say, the protection of value, the protection of roles, jobs, people's livelihoods is a lot more has come to the forefront.

SPEAKER_00 9:28

Yes.

SPEAKER_01 9:29

In recent years, I think.

SPEAKER_00 9:30

That's right, that's right. I'm just thinking, going back to you saying that sectors change and sectors come in and out of in and out of fashion, really, depending on what happened with the broader economy. And it'd be really interesting to understand your thoughts on what balance should we have between the sector specialism and more situational skills having been in difficult situations previously.

SPEAKER_01 9:56

My view, and always has been, to be perfectly honest, is that it's the situational um expertise that is in this instance internar, transformation, whatever you want to call it, is the most important. Um and if you can get somebody that's a really good turnaround director, CRO, whatever you want, and they happen to have some knowledge about the sector, even better, but that can be actually quite uh an in intangible piece that you know they might just loosely have some connection to the sector. But I don't actually think that in a lot of cases, not all, but in a lot of cases, that the sector actually is that relevant. There are one or two like heavily regulated industries, or if you do the FCA, or maybe construction, there's those sort of roles, where you yes, you do have to have a knowledge. But actually being able to ask the really basic questions because you don't know the sector, and then going, but why? And but why again? And I'm sorry, but why would you do that? And you suddenly find out it's BS, isn't it, really? And and then you suddenly find out that's what you know what you're dealing with. Equally you've got the situation that if somebody comes in from uh with a good knowledge of the sector, certain things just get missed because it's a given. So you don't ask that question because it's a given, we know what the answer is. And actually, if you don't know anything about the sector, you ask that basic question, and suddenly there's this light bulb moment of, oh, that's what that's where our issues are. And it can be that simplistic, it's very strange. But yeah, I think to be able to go in and just go, I don't know a lot about your sector, however, I want to understand, and I want to understand your job, whoever you are in that organisation, from the CEO down to the shop floor, I can ask that question. And I'm not being st I'm not silly, I'm not stupid, I don't know the answer because I don't know your sector.

SPEAKER_00 12:01

That resonates very clearly with me. I spend a lot I seem to spend a lot of my life asking what might be really stupid questions, but quite often that's a good way and into that insight, particularly as you say, from those who are down on the shop floor who actually know what's really going on. Because I always think whenever I go into a business, all the people within the business know far more about that particular business than I will ever do. Getting some of that information from them and being able to turn that quickly into action is what is what you get from having experience of having to work in difficult situations. Just thinking about our clients across telecoms, retail, professional sports, healthcare, um none of which we are absolutely experts in, but we do bring some sector expertise in to help with that. But it's more, as you say, that situational experience of how do you keep everybody called in a difficult situation and get the right result for the company and for um investors.

SPEAKER_01 12:58

Yeah, it I think that is really important. Um I think it also you can align yourself, as you said, with the shop floor with those who you can align yourself with those people much easier. I mean, you do get pushback from particularly from management. I don't I I don't think you get the pushback from the investors as much these days without the sector specialism. But with management you will, uh, and you can. And my answer has always been to them, well, surely you are the experts. Because if you don't know your own sector I wouldn't say that, but the assumption is, you know, you are the sector experts. You just happen to find yourself in a situation at the moment that you're not an expert in. Your team aren't an expert in, so therefore let us help you.

SPEAKER_00 13:44

You mentioned construction as being one of those areas where there's quantum having that sector knowledge. Are there any others that spring to mind which are more difficult, I guess, without the sector input?

SPEAKER_01 13:55

I think financial services in particular is probably because it's because it is so regulated. And also if you've got a financial services business that is in a little bit of trouble and the FCA are are taking an interest, then they will want somebody in there that that is basically the FCA have comfort in it.

SPEAKER_03 14:12

Yes. Yeah.

SPEAKER_01 14:13

Possibly when you get into uh the realms of uh some people calls it things where we've met the other day, deep tech, which is the really the let's put it this way, if I had a brief, I wouldn't really understand the word story written there. Uh then definitely you possibly need somebody that's coming out of that. This blockchain thing is probably another one, in as much as it's it's as much about understanding the processes and the systems, but once you've got um, well, this is a conversation I have actually had with Anna T D a couple of weeks ago, who has with FRP, they have done uh uh a turnaround on a blockchain business. Um, which is a first. And speaking to him, he has the knowledge in the systems and the processes and what's going on in the back office and behind the systems in the deep tech to be able to take that forward. Now, the FRP partner didn't, who was involved, but he took he took the engagement alongside this TD who had that background knowledge. And between them, they pushed through the result that the client needed. So, yes, that was an in really interesting, and probably the first we've done it in that sector.

SPEAKER_00 15:34

That's really interesting. And that will be an ongoing thing, as you say, with all these advances in technology. And I don't pretend to understand much of this either, but there are people there who who you would need to involve. Which sort of leads me on to another thought. How do you see the balance between having an individual in in place, so the traditional sort of turnaround director model, and then bringing in, and that's a really good example you give them, the sort of more of a team approach, because we tend to work in small teams because I think we feel bringing the power of the team to certain situations can be good for the client because it's often very hard to get all of that knowledge within one person.

SPEAKER_01 16:12

Yes, I agree. You I think you have to look at every case individually. Um, in some cases you will start with one and then know that you need to bring maybe a couple more people in. Sometimes you might need to start with say a classic would be you're putting in um a CFO. It's usually the conversations all stem from a financial point of view. Uh it's quite often that the the messenger gets shot, so that's all the CFO is replaced first, and then you suddenly realize that actually there's no point having a CFO in there at the rate of day rates that the the cost when actually you need a bean counter. Because the information that's been given to you you can't believe in, therefore you can't make assumptions, therefore you can't do a cash flow model, and therefore get somebody in at the value that you need. Equally, uh the financial position of the business is only actually telling you what the operational side of the business is actually doing, which is it's so we failing might be a bit too strong a word, but it's there are issues. So therefore, you can't expect your CFO or your CRO, who have got their sector specialism in turnaround, to be able to go into the operational side and go, this is wrong, that's wrong. Why is that happening? Why are you only running one shift when you could run two? Whatever. Um, and therefore you need the eyes and ears of somebody who actually understands that side of things. And we will definitely, when we're looking at rather, we'll look at, I mean it will start with something like a CFO and then it will gain traction and we will then start looking and saying, we need somebody to look at the supply chain or the procurement, or we need a an assessment on what actually is the value of the assets in this business, the fixed assets. What are we actually looking at here? I mean, a classic we've worked on with the Kmart was working with a business where it turned out that the actual stock that the business had was completely valueless, but it was on the balance channel at about five million. But they didn't make the product anymore, that stock was for, so therefore the value is nothing. So you couldn't and they were looking to borrow against it.

SPEAKER_03 18:39

Right.

SPEAKER_01 18:40

But you could now the CFO wouldn't know wouldn't have a clue what that widget was for or whatever, but bringing somebody else in into the business to actually value that was so important. So there's lots of scenarios where I think a team is good. I think there's the there's two ways. I know with with yourselves, you can bring in across the board and that's great, and you can also bring in a CFO and then somebody underneath. And again, I think that is so much better value for money for the client.

SPEAKER_03 19:11

Yes.

SPEAKER_01 19:11

Because if you spent you spent your day doing bin counter, with all due respect, that would be a very expensive bean counter.

SPEAKER_00 19:17

And there are probably people who are much better at that than I am.

SPEAKER_01 19:20

Absolutely, yes. Keep the person doing the strategy, keep that senior person, you know, talking to the stakeholders, talking to the management, keeping everybody on board and on side, and let the um and let the other guys just get on with the day-to-day and get absolutely involved in the business and and and know everything about it.

SPEAKER_00 19:41

That really resonates again, because quite often we get involved with four four to six weeks to understand what's happening with the financials that we don't believe them. It looks like we're going to run out of cash in however long. But often, as you say, the actual underlying issue is an operational one.

unknown 19:58

Yeah.

SPEAKER_00 19:59

But but again, it going back to something we were talking about earlier, Susan, the there is sometimes a reluctance to tackle operational issues and saying the burden falls on finance or is it all down to them. How do you think you get over that reluctance to actually go down and look at the operational side? Because as I said, often that's where the biggest gains are, and some of the things that you've been giving as examples. And the people who are operational on the shop floor doing the day-to-day work actually know where the answers are to make a potentially failing business into a great business.

SPEAKER_01 20:32

It really depends on who you're putting into the business in the first place. If you're able to put a CRO in, a chief restructuring officer in, then you've got the advantage of having somebody who can go right across the organization and talk to anybody and should, basically. If you're bringing somebody in purely on the say the financial side of things, then it's a lot more difficult because you've you've got a CEO in the business, you've got a COO in the business, and they're not going to thank you for the CF and butting in and go to the shop floor and asking questions. The chances are they're not going to like that too much. You might get one or two that are okay, but it's unusual. Um so it really depends on who you've got in the business as the starting point to know whether you can you can actually shift between finance and operation. It's sometimes easier doing the other way around because if you've got somebody in on the operational side and then you suddenly start looking at margins and you suddenly realize the reason this business is failing is because the margins on the products or the product lines that are being produced that shouldn't be produced. And you've got sales going, oh, but he's a really important customer. And then you find out that this is the classic of 20% of your customers produce 80% of your goods. If you start from an operational point of view or commercial point of view and you and then you move it into the financial point of view, that's a much easier shift than taking it the other way around from finance. Because really what you're saying with finance is right, okay, fine. Our margins are good. We're selling to the right customer base, we've got our KPIs in place, therefore, over to you guys. It's just you can't do that. So it's a lot more difficult to do it that way then.

SPEAKER_00 22:29

True, in my opinion. Yeah. Can I something you said earlier about the source of sorts of people you place with transition? So if there's anybody watching or listening to the podcast who's potentially there thinking about doing something different from an executive career or whatever, what sort of experience do you think will make a good turnaround professional or somebody who's good in difficult situations?

SPEAKER_01 22:55

I suppose having seen failure or seen near failure and being able to dig themselves out of it. And with the the TDs that we see, that usually comes purely by accident that they're in a business, this is what their job is. Either they didn't do their DD properly when they went in and they suddenly find themselves in a basket case, or there's been some sort of um black swan event and the business has found themselves in in this situation, but they've fought their way out of it. So they, if you like, uh and it might even be as much as that they've actually been in something that's had to go into administration. So you know, but having seen having seen the underside of of what a profitable business looks like and having to deal with the issues that have been there. So in the first place, it's rather a case of by accident rather than you know, you could say being in the wrong place at the wrong time, but equally from the point of view if you want to do turnaround, then you were in the right place at the right time and and you got on and you dealt with it. So I think from that point of view that that's a really good starting point. Equally, if you've been able to work with and there are roles in industry, I know that people are too the basically the the sort of portfolio roles, but within an industry whereby you're actually working with a leader that you're doing this all the time or as project work. So therefore you've got that knowledge of this is really intense for a short period of time, but we're going to get you out of it, and then you know, we're going to leave and leave you to get on with it. And I think that piece about being able to leave is really important and have that experience of when you're no longer needed, because some people hang on too long, um, because it becomes their baby and they get too involved in it all and therefore don't want to leave. But actually, I think a good T D wants to, the adrenaline starts to dissipate a bit and they and then they're itchy to get on with the next one. So I think, you know, and and also a really wide-ranging career. So that if somebody has just been in glass manufacturing man and boy, although we said sector specific wasn't important, you I think you do need to have a good grounding in several sectors. So you have a knowledge of how other people work, how an industry sector looks and works, and possibly how its institutional side of things looks. So that if you're working at some point within that, then you've got an idea of what good looks like, or what good practice should look like, and where are you at the moment, and do we have good practice or no we haven't, therefore we need to make it that way. We need to get ourselves up to that scratch. So yeah, I think a well-rounded career, possibly with a couple of hiccups that you've resolved, is probably a good way of looking at it. There are MBA courses in Turnaround. My don't laugh, there are. There really are. I don't think you can teach you cannot teach Tungaround. And I have had people that come to me and gone, I have got my MBA and I did a semester in turnaround. Can you give me a job? And the answer is no.

SPEAKER_00 26:38

I think I might sign up for one of those. That sounds quite interesting.

SPEAKER_01 26:43

I would be quite surprised. One of the big business goals in London do it.

SPEAKER_00 26:47

Right. I always think the saying that's slightly off the topic, but when uh they have these MBAs that deal with entrepreneurship, is that something that can be taught? Is that something that exists? I yeah. I'm not quite sure how you teach that.

SPEAKER_01 27:00

It's the moxymoron, isn't it, going on a course for entrepreneurship?

SPEAKER_00 27:04

Plenty of things on offer. Yeah, that's very interesting. Actually, it just puts me in mind of going back to something we were talking about earlier in terms of the role of the operating partner in private equity. We had a crystal ball. How do you see that developing? Because I think there is a real tension between how much of this can private equity investors do themselves and how much of this do you need to be flexible to bring in the right skills and experience. And I think that's a sort of on-gate tension because there seems to be more investment in operating partners in that kind of capacity. Here's what it looks like.

SPEAKER_01 27:37

I think, as with always, if you've got a good operating partner who understands the turnaround sector and what he's looking at, you and you can build a really good relationship. There's no doubt about it. Because you're both coming from it from the same side, you're both being pragmatic about what good should look like and what you actually have at the moment. He can hold his hand up and go, look, I've got 24 other businesses I need to look after. I can't spend five days a week in this one. Uh, therefore, I need to bring somebody in. And actually at that point, you've then got somebody who understands the situation, can definitely look at say, right, that is the right person to go in there. Those are the skills that we need. Let's get him in there and let it go. You've got a very, very clear decision maker, which is really useful. You're just dealing one-to-one with them, and then you put forward people that you think are going to suit, and hopefully you're getting a really good decision making. So you've got a good relationship. I think if you've got somebody, and hopefully there aren't too many around that, it's perhaps not that good at that job, or is maybe a little weaker and therefore probably not as confident in their own assessments, then it can it can be a blockage to getting something done quickly. So I think it's as a lot of things in our industry are, it's about the relationships that you're able to develop and the trust that you can develop with people.

SPEAKER_00 29:05

That's really great. No, thank you, Susan. That's been really interesting. We've covered an awful lot. But I guess to round things up, and this may be an unfair question if you could offer key advice or learning to somebody who's in a difficult situation on their corporate side, what would it be?

SPEAKER_01 29:26

Reach out and get help as soon as you can. And don't consider that as a sign of weakness because it really isn't. From the corporate point of view, yes, that's got to be the most important thing that they can do. The second thing I would say is if you're going to bring somebody into your business, or whether you've asked to have somebody in your business or it's been forced on you to have somebody in your business, don't just interview one person. Don't have a conversation with one person, have a conversation with at least two or three because you don't know what good looks like. Equally, you're in a highly charged situation with a lot of pressure, and you've got to be able to work with the person that's coming in. It's going to get very personal, it's going to get very challenging, and you need to know that you can work with this person for probably the next six months very closely, and therefore, you know, you need the right character and personality with you on that journey. You know, hopefully people like myself, we do a good job, and you're probably going to say, we do a good job in putting forward the selection that we put forward, which is always very limited. So therefore, yes, you know, you've got you've got three people maybe that have got all the right skills to do the job, and now it's down to the culprit saying, I think I can work with Joe Bloggs better than I can work with the other two people.

SPEAKER_03 31:00

Yes.

SPEAKER_01 31:00

And it's just it's the the completion of the circle then.

SPEAKER_00 31:05

No, that makes perfect sense. Thank you, Susan. Thank you for sharing your insights with this. That's been absolutely fascinating. It's okay. Thanks again to Susan. That was a brilliant conversation. The things we kept coming back to, the financial picture is never the whole picture, the importance of asking the questions nobody inside the business thinks to ask anymore, and the fact that the best operators are drawn to the intensity of this work rather than deterred by it, were really, really interesting. Those lessons apply, whether you're in manufacturing, retail, sports, or anywhere else facing pressures. At Kingsgate, we've been doing this for over 20 years. So if a business you are close to is showing signs of distress, come and talk to us. The earlier the conversation, the more options you have. You'll find details at kingsgate.uk.com. See you next time for more from the Value Agenda.