Baker A. Smith, CTP, is a managing director in the Atlanta office of BDO Consulting LLC. He has more than 25 years of experience in crisis management, turnaround planning, corporate renewal, and strategic advisory services, and has advised company owners, management, lenders, creditors, and investors on significant corporate restructuring matters in a broad range of industries. Smith has led more than 300 crisis management and turnaround teams for distressed companies, ranging from $25 million to several billion dollars in revenues, including serving as interim CEO and CRO.
A member of TMA since 1988, Smith has received TMA Global’s Outstanding Individual Contribution Award and the TMA Atlanta Chapter’s Distinguished Service Award. He is a past president of the TMA Atlanta Chapter; a past president of the Association of Certified Turnaround Professionals, a sister organization that has since merged with TMA; and a past TMA Executive Board member. He has served on a number of TMA Global and Atlanta Chapter committees and subcommittees, including the Editorial Advisory Board for JCR.
Smith holds a bachelor’s degree from the U.S. Naval Academy, an MBA from Northeastern University, a law degree from Suffolk University, and a master of law degree from Georgetown University. In addition to being a CTP, he is certified in Family Business Advising with Fellow Status.
Q: You have quite a background. How did you gravitate into turnaround and restructuring work?
Smith: The Turnaround Management Association introduced me to it. Through TMA, I met one of the pioneers of the turnaround industry, Daniel Morris. He asked me to kick off the Southeast region with a Florida-based nuclear power industry assignment in 1988. That turnaround was successful. The company is still in business. Turnaround work in the Southeast took off as lenders, lawyers, and private equity players realized that restructuring professionals could make significant improvements on their recovery.
My background had been startups and turnarounds. In turnaround consulting, as opposed to being a startup or turnaround executive, people only do what needs to be done if you’re persuasive, if you have good analytical skills and good communications skills.
Q: From this vantage point in your career, if you were just starting out, would you do anything differently?
Smith: I look at this as a calling, and it’s an opportunity to be of service to others. I think when you’re looking at it that way, you always orient yourself to what needs to be done to save the company, save jobs, and get the best return you can for the company that’s involved. So in the distressed and underperforming businesses world, there are multiple opportunities to be of service.
Q: What have been some of your most gratifying or favorite engagements along the way?
Smith: Pin ‘n Pay stores, which had 453 stores in 23 states, was interesting and challenging in that everyone thought there was going to be a big hit all the way around, but we managed to do well by both the lenders and the trade creditors in that assignment.
The Athlete’s Foot (shoe stores) was an interesting one. That’s still around after our work. It has 400 stores worldwide at this point. The company was losing around $20 million a year when we were called in. This engagement took a major transition in multiple steps to get to the point where the company is now making a lot of money.
Most recently, I was called into a textile manufacturer that everybody, including the owners, the employees, the lenders, and the lawyers, thought would be history in less than a month. But with cooperation from customers and suppliers, we returned the company to break-even and operated it for several months until it could be sold. That’s gratifying when the expectations and the ultimate results are so far apart.
However, in some situations it’s really too late. There’s not enough time or money left to save the business. Yet, one of the most gratifying situations involved another manufacturer where a portion of the business did not continue as a going concern. One of the employees who was going to lose her job came in to see me unsolicited and said, “Even though we didn’t survive, I know you did everything you could and I just wanted to stop in and say thank you.” That was very touching. You sometimes get feedback in ways you don’t expect.
Q: I imagine that doesn’t happen very often. You guys are too often seen as the bad guys.
Smith: When we’re walking in the door, they occasionally see images they’ve picked up elsewhere that our toolbox consists of slash and burn. The fact of the matter is, it’s normally more complicated than that, because if it were that simple, we probably wouldn’t have gotten the call.
Our toolkit has many implements, and there are many procedures we follow. It’s not a simple one-step process. Cash is always the driver in this industry. Cash is what we’re monitoring, it’s what we’re trying to impact, because if the company runs out of cash, it’s like a person who bleeds to death—they’re just gone.
People aren’t always skeptical about the tools, but they are sometimes skeptical about whether this is this going to work. They generally have some experience in that they’ve attempted to fix the company before and it never happened. That’s the origin of their misgivings. But I think the tools we bring for that need are implementation tools, not only ourselves as third parties, but also a meaningful plan—not just a general plan, but a detailed plan with specific milestones where certain operations have been assigned to particular individuals with a set timetable to accomplish them.
Certainly as consultants we have lots of advice to offer based on our experience, but I’ve learned that one of the most important tools is to be a good listener. Otherwise, you’re not going to catch everything you need to know to figure out what to do.
Q: Who inspires you professionally and personally? Who have you admired along the way, and who do you admire now?
Smith: There are a couple of folks who come to my mind. Daniel Morris saw my potential and gave me the specific tactics, experience, and advice to transition into turnaround work. As one of the pioneers of the turnaround industry, he taught me everything he had learned. He trained me in the basics about communication and cash management, those essential skills for the turnaround consulting business. He also inspired me in another way—he was very generous with his time and his consulting practice. I eventually partnered with him because he was willing to share to make the practice grow and flourish. His open-handed attitude impressed me as a key to the success of any turnaround practice.
Another person who inspires me is Carl Pergola at BDO Consulting. He saw a need as part of a bigger picture, where he took the BDO restructuring group to the next level by creating a more robust platform to help owners turn around their businesses. He’s very astute about how to deploy turnaround talent where it’s most needed. His vision and the way he’s worked with each of us in that consulting group dovetails very nicely with an overall BDO corporate goal of being the business world’s go-to middle market consulting and accounting firm. I’ve learned a lot from him about how to bring out the best in people.
Q: What advice would you have for someone who was new to the industry or was thinking about getting into the industry?
Smith: I do get calls from a lot of people who want to get into the industry. They’re attracted to it for a variety of reasons, and I always share that involvement in TMA is critical, based on my experience in chapter, regional, and national programs. I think participation in TMA activities helps you, as a person new to the industry, figure out how the profession works. You learn to speak the language. You become familiar with the key tools and metrics. You learn how business is generated. TMA members typically go the extra mile to help newcomers.
People always say, “Exactly how do you get involved?” If somebody wants to get involved, rather than just asking to be put on a committee, they need to specifically offer to help with a particular program or project. When that happens and they’ve exhibited their interest and capabilities, then additional opportunities will follow.
Q: What role has TMA played in your own career?
Smith: I would not have been able to start my turnaround consulting career if it weren’t for Turnaround Management Association. Just as importantly, I constantly learn new things from my TMA colleagues.
Q: When you’re off the clock, what are you passionate about outside the office?
Smith: I think we’re each given certain skills, experiences, and abilities, and we all tend to use them in a different way. What seems to come my way is mentoring those who are at the beginning of their careers or peers who are in transition.
Every assignment that I’ve gotten is, in essence, a job interview, because someone has to make the decision to engage me and my firm. A lot of people starting out on their careers don’t have those skills. I try to work them through the process and practice with them.
This also applies to peers who have been in the same job for many years and, with all of the consolidations going on, find themselves outside of a new organization with a task they didn’t really want, which is to find a new job. One of the difficulties with interviewing is that we’re really not that used to talking about ourselves from an employer’s perspective. They may even have been in sales and marketing, but the one product they haven’t sold is themselves. While they may have many abilities that would make them great employees, they may not have developed the skill to clearly demonstrate their value to a prospective employer, so I work with them on that.
Q: I assume you’re pretty passionate about your family, too? You and your wife have what, four children?
Smith: Yes, I can always see the surprise in my clients’ eyes when I’m sharing some example with them about my wife, my four kids, or my two grandkids.
My children are pursuing careers totally different from mine and totally different from each other. But when they were younger, they would occasionally meet a client and visit their business, and as a result, each of them developed some unique business assessment skills. One day, I overheard my son telling a friend of his about an automotive aftermarket client of mine that he had visited. He was explaining to his young friend that the business was in trouble because “it was losing more money than it was making.” And I just thought he had the essence of the problem that so many of our clients have difficulty seeing.
Q: What might people who only know you professionally be most surprised to learn about you?
Smith: That I served on the transition team for the president-elect of the United States. However, it was really very similar to a turnaround assignment, because your job is to identify all the levers that the new executive can push to effectuate change.
Q: What items are at the top of your bucket list?
Smith: The bucket list recognizes that we are only passing through this world. We didn’t bring anything into the world when we were born, and we’re not going to take anything out, except for those things that advance God’s kingdom.
Probably the most famous person who has impacted me on the concept of a bucket list is the author of Anne of Green Gables. A lot of people don’t realize it, but in addition to that book, Lucy Montgomery authored over 100 poems. One of them is “The Words I Did Not Say.” It says in part:
The word of cheer that I might have whispered
To a heart that was breaking with weight of woe,
The word of hope that I might have given
To one whose courage was ebbing low,
The word of warning I should have spoken
In the ear of one who walked astray.
Oh, how they come with a sad rebuking
Those helpful words that I did not say.
I’m almost in a nonstop consulting mode, but there are a lot of things we don’t say. That poem makes me mindful that as we deal with distress situations in our work or the trials of life that all kinds of people outside of work bring to our attention, I’m trying to think of what can I say or do that would build someone up, would encourage them, would help them never give up. That is really my focus on my bucket list.
