Masek Manages Turnarounds

August 15, 2005
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GRAND RAPIDS — Timothy Masek, managing director of Chicago-based TMB Industries and chairman of Grand Rapids truck component maker Fuel Systems LLC, knows that turnaround specialists sometimes get a bad rap.

"But a lot of the companies we've acquired, if they weren't acquired by people like us, they might not be in business anymore," he said. "We're preserving companies, preserving jobs for a segment of the market that has been really decimated."

In 13 years at TMB, Masek has been involved in more than 30 acquisitions of under-performing companies. He's managed three of those himself, most recently the three-year restructuring of a dead-weight Borg Warner Inc. division into the now-profitable Fuel Systems.

"There are really two components to turning a company around," Masek said. "They can be underperforming from a standpoint of profitability or a lack of revenue growth, and that's what we specialize in — buying underperforming companies in smokestack America and creating values for partners, shareholders and the company itself."

Named for founder Thomas M. Begel, TMB is a private equity group specializing in underperforming manufacturers, historically in the transportation and machining industries.

"Sometimes, you have 'turnaround experts' who can write the plan on how to turn around the company, and give lots of advice from the outside looking in," Masek said. "But once you're inside, running a company is a whole different story, especially a company that's in trouble.

"We roll up our sleeves and actually get in there and create the turnaround."

Masek was working in sales and marketing at Bombardier Inc.'s railcar group when he was introduced to Begel in 1992. Begel had purchased the freight-car division of Bethlehem Steel the year before, renaming it Johnstown America Corp. As it turned out, the two had shared a mentor, who facilitated Masek's addition to TMB as a market analyst.

At the time, the office consisted of Begel, Masek and a secretary. Before long, TMB had 5,000 employees through its various units.

Masek was given the opportunity to do due diligence on transactions and then to run the due diligence for an acquisition.

In 1996, he was named president of Bostrom Seating Inc., a manufacturer of suspension seating for the heavy truck market.

"I get goose bumps talking about it," he said. "I was 31 years old and way over my head. If you were to put me in a room with 10 other people and say, 'Pick the guy who is going to be the president of a $50 million company,' I would be at the bottom of the list.

"But I had someone who understood the importance of common sense and the importance of being a people person."

He later served as president and CEO of Heckethorn Manufacturing.

Fuel Systems was the third acquisition he managed, and one of the most successful. From a point of near bankruptcy, he led a turnaround for the five-city operation that brought it into profitability, increased market share and added jobs.

"This is the third company that I've run, and my fellow partners have run dozens and dozens of companies," he said. "We come at it with a whole different perspective. We can clearly look at the numbers, do our homework and understand the products and keys to running a successful company.

"We do it everyday and see certain things that other people don't to add value to companies."

He's noticed a common theme among TMB acquisitions: a lack of strategy, focus and, in many cases, an inability of the corner office to make a decision.

"I could throw in common sense, too," he said. "It absolutely amazes me — I could give you 10 hours worth of examples. It's comical in a way, but also very sad for an organization.

"It's unfortunate that those who are so much more dependent on a paycheck every week get hurt by the guys in the corner office."

Like all of TMB's acquisition, Fuel Systems had some ebb and flow of jobs. Headcount was reduced at first; then, as the company right-sided and started to grow, the jobs came back.

"The real key is, this company was in trouble," he said. "Look at those 450 jobs or the 500 we have today. That could be zero. We came in and bought the company with our own money, gave it a new financial structure, gave it strategy, and preserved 500 jobs in smokestack America that could have evaporated."

Masek is also responsible for managing deal flow to TMB. He receives 12 to 15 offerings a week from brokers and investment bankers, most in his firm's narrow niche of manufacturing. He analyzes the offerings and, if worthwhile, coordinates a bid package with accountants, attorneys and staff.

He expects to acquire another two companies before the New Year, in addition to the two acquisitions this summer: Tier 2 automotive supplier DynAmerica Manufacturing in Indiana and Holland's Grand Craft, which builds high-end mahogany replicas of the classic Chris-Craft boats.

"Grand Craft is the first fun company we've acquired," he said. "It's on the smaller scale and typically outside of what we normally acquire, but it's similar in a fashion in that it was an underperforming company."

Masek said TMB hopes to grow the boat maker to a new level of sophistication and profitability through an injection of capital for facility and product development, while keeping the character of its highly specialized product.

"This is one of the companies I think we'll hang on to," he said.

In his first two stints running companies, Masek commuted from Chicago to Alabama and then Tennessee. In 2003, he moved to East Grand Rapids with his family.

He credits much of his success to his wife, Dina, for her understanding through his years of extended travel.

TMB's new West Michigan roots have already altered the firm. Masek has been exposed to opportunities that he wouldn't have seen in Chicago, and financed the DynAmerica and Grand Craft deals with local banks. He also used a local firm for part of the due diligence.

"It's broadening our contacts and relationships," he said. "I think West Michigan is a great opportunity for TMB. We understand the business climate here, we're located here, and we understand the companies that reside here.

"We like West Michigan and we'll try to buy some companies here."    

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