To my regular readers– I'm experimenting with legitimizing the blog. I've been doing some research on blogging and I think I'm going to give it a go… I took down the private registration, so it is now open to the public. My intention is to start covering the sector fairly aggressively, but I'm still on a learning curve. Once I've got just-in-time news, I'll start an alert service that I'll let you know about ahead of time, just like the old days. For now, I'm writing in several venues: GITS which I still love, and a new column in a new magazine launched by my old friend and first publisher, Mike Perkowski. The magazine is called TechIQ. The online version launched today. So. There you have it. I'm mainstream once again. I hope to see some of you in NY at HRO World. I will be at the 21 club party hosted by Convergys and I just slid in under the wire at the Superstar HROA gala banquet. I'm wondering if my invite included serving the guests rather than being a guest…
I’ve been doing my tour of duty over the past month or so. I’ve had phone conversations, meetings, and various negotations with old friends and even some new contacts. For instance, I had an enjoyable meeting yesterday with Harry Feinberg, Andy Tang, and Mike Masters from the outsourcingtoday.com group. Feinberg is the publisher of a series of new titles in the BPO space (new to me anyway who has been AWOL for 5 years). He’s focused now on the F&A BPO market, but has made a nice niche for himself in the HRO market. It turns out Masters worked for years with Joe Levy who started CIO Magazine. We had a lot of stories to share about the people we knew in common, having had a lot of crossover experience with publishing friends and agency business. Sometimes people don’t remember (or don’t even know) I used to be a hotshot Madison Avenue rising star at O&M and LGF&E (a division of JWT). The publishers do, though. My accounts were IBM and AT&T.
I also caught up with Frank Casale who originally formed The Outsourcing Institute with Mike Corbitt (who now runs IAOP. Frank and I have tried to work together for years. I’ve always believed he’s a marketing genius. To even have had the foresight to reserve the outsourcing.com URL in the early 90s was way ahead of his time. Frank was also early to market with BPO. He was publishing on BPO and embracing BPO before any of the cognoscenti was giving any credence to its expanding market possibilities. Frank has some interesting things in the hopper for his business. Stay tuned.
Finally, I had a chat with John Halvey yesterday. Halvey, as you should know. was one of the founding members of the so-called cognoscenti. He’s at Milbank, a highly prestigious Wall Street law firm. He had left for a period, as I did, to pursue opportunities opening up on the Internet Economy frontier by going to work for his friends at Safeguard, but he came back and resumed his practice. He said he doesn’t do much in the way of promotion and speaking these days. I find a lot of my old sources and friends are in a completely different phase of their career these days (read: wildly successful).
Next week, I’ll be attending HRO World. Not sure what to expect. I’m coming at these BPO markets completely humble. I have a lot to learn. I’m like a cub reporter. I remember in college we learned about a management strategy popular in the 80s called “MBWA.” It stood for “Management by Walking Around.” The idea was that management should not be isolated to ivory towers, oak desks, and consultant’s reports– that a lot could be learned organizationally by just asking questions of your own employees. That’s the attitude I’m taking in this new era of post-ITO outsourcing. I’m just walking around, calling around, emailing around– asking questions.
There are a lot of rumors floating out there suggesting why the merger imploded. Interestingly, many are pointing the finger at EquaTerra– alleging that EquaTerra is unprofitable, has performance issues and debt problems on some major contracts. Now granted, I've been AWOL for a spell in this market, but I found it highly unusual that TPI, whose reputation has always been the epitome of inflexibility and well, ahem (nous parlons la vérité ici), arrogance– was looking innocent and victimized in some way. Huh? First of all. I have pretty solid information that EquaTerra is not unprofitable and there are no debt issues/repayments or credits being made to unsatisfied clients there. Whether or not there are performance problems on specific deals, who knows? Show me an advisor/vendor that doesn't have a dissatisfied client in the portfolio. That doesn't surprise me. What does surprise me is this spiraling negative spin in the market against EquaTerra. Where is it coming from? What is the motivation behind it?
As for as the intricacies behind the breakdown of the deal, our understanding (and we're pretty confident here) is that the deal finally broke down over distribution of equity on the part of the private equity class investors. For some of the terms and conditions to change the way some of the investors wanted it, TPI recognized it would create problems– they knew the combined company would ultimately fail if they moved forward under the PE investor's scenario. Remember, Monitor Clipper Partners (MCP) had the lion's share of the deal, as they are the owners of TPI (important fact). Oak Investment Partners could have equally been difficult, but certainly had a fraction of MCP's interest. Our calculated guess is it was MCP that was the final coagulant in the deal and forced the hemorrhaging.
So, in the end, as I was getting closer to what actually happened in that last week– leading up to what I believe to be an amateurish, unprofessional dis-engagement in the form of their hostile breakup release, I started feeling sorry for the principals of both firms. Even Denny. Who still hasn't returned my inquiries on this. On the one hand, it started getting very complicated to follow how these M&A transactions work with their preferred positions in the stock and their investor rights, etc. On the other hand, I started to feel like this was a private affair and I really shouldn't be meddling in their business. (Weird. I really felt that way.)
So what does it all mean? Not much. The question that remains is what will TPI (read: MCP) do now? Where will they go from here? TPI can't pull off an IPO on their own without more bench strength. EquaTerra is a young company. Their options are more varied. Their greatest challenge right now appears to be an image problem. That's fixable. The wild card is MCP. Interesting. What do you think?