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February Guest Speaker Subject: Succeeding in the Turnaround Industry

January 28, 2021 12:40 PM | Ché Loessberg (Administrator)

  Tra Pippin, Accentra Home Health & Hospice

Succeeding in the Turnaround Industry

By Dennis Spielman

With the experience of having raised nearly $800 million for companies, and buying and selling approximately 40 companies, Tra Pippin considers himself qualified in the turnaround industry arena. He’s also turned around businesses that ranged from a low of 1 million in revenue to a high of about $150 million. Pippin got into the industry happenstance manner.

“I bought a company back in June of 1982 called Perfection Equipment Company,” said Pippin. “And at the time, I think our revenues were roughly $2 million a month. Well, there was a little shopping center bank here in Oklahoma City called Penn Square Bank that crashed on July 5, 1982. And I don’t think either myself or my partner recognized the fact that a little shopping center bank could have the impact that it did, but it caused probably the greatest crash in the oil industry, certainly in my lifetime.”

Their revenue went from two to two-and-a-half million dollars a month to approximately $300,000 a month. Based on that, at the time, Pippin purchased the company. They had about 130 employees. A year later, they were down to 30 employees and were making decisions on how to cut based on whether someone had been there 15 years or 20 years. The industry turned around, and Perfection Equipment Company today is a lively, growing company in Oklahoma City.

Pippin said he learned how to save a company before there were associations, conventions, and resources dedicated to the turnaround industry. When buying a company now, Pippin has several things he looks for to inform his decision.

“Probably the most important thing that I look for is, ‘Does the company have passionate people remaining?’” said Pippin. “Nine times out of 10, about 85% of the time, current management is the issue, current management is the problem. Normally, I replace current management, but if the line managers and the other key employees don’t have a passion for that company, I’m typically not interested in either buying it or turning it around for a bank or a financial institution.”

When turning around a company, Pippin advises that the first thing buyers do is get a handle on the cash flow. Pippin analyzes cash flow through a 13-week rolling forecast. Every Monday, they would review and update it, make sure every bill was accounted for, and communicate with employees and leaders what’s going on.

“We grew one company in sales revenue within 15 months, from $8 million to over a $100 million in revenue,” said Pippin. “But in the meantime, they went bankrupt. They outstripped their cash even though we warned them. All they wanted was top-line revenue. They wanted to be a $100 million a year company; basically, they succeeded but ran out of money on the way. So whoever it is, whatever company, they may be a phenomenal salesperson, they may be able to generate sales, incredible sales, but if they don’t have the profitability to grow, they’ve got to figure out a way to get their working capital.”

When it comes to selling a company, Pippin said it’s a marketing piece once you’ve got the company on solid ground. “You try and put the company in the best light and tell them, you tell the potential buyers why this company is such a great company, ‘It was on its butt nine months ago, and now look what we’ve done. The sky’s the limit now.’”

If you’re considering attending Pippin’s OVF talk, he said he could help give broad-brush solutions to their issue with their company.

Tra Pippin will be speaking at the Oklahoma Venture Forum Power Lunch on Wednesday, February 10, 2021. Be sure to register for the online ZOOM event to learn more about turning around a business, asking your questions, and networking with entrepreneurs in Oklahoma.

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