I am like a surgeon. I am operating on wounded companies.

17. 12. 2017

Distress assets

NG Management

Taking these bigger risks allow us to make bigger returns on our invested capital,” Tomas Raska tells Lidove Noviny (Peoples’ News) magazine during an interview.

LIDOVE NEWS: At the heart of your investment interests are these so-called “Distressed Assets.” What attracts you to them?

RAŠKA: We are very attracted to a hands-on approach: having our team very closely involved in managing our investments. I think that this is necessary when dealing with distressed assets. Taking these bigger risks allow us to make bigger returns on our invested capital. Simply: investing into distressed assets is just what we’re good at. We can help companies that either need to make major changes internally, or who just need a short-term cash injection in order to make a quick recovery from a difficult situation. However, these types of cases typically have one unpleasant thing in common…

LN: Stress?

RAŠKA: Sure. There are always negative emotions that come along with distressed assets. Perhaps the shareholders are arguing with each other, or are either unable to pay their employees or are forced to let them go – things like that. So, when we solve this kind of situation, needless to say we aren’t always the most popular. But, I think of it like a surgeon who has a seriously injured patient brought into his operating room. His number one priority is to save the person’s life – and only after that will he concern himself with how to minimize the scars that are left behind. And, like the surgeon, we cannot save them all. But I am happy to say that in a good number of cases we have been able to get the companies back on their feet.

LN: And who refers these “patients” to you? Is there someone who often lets you know that a company might be having difficulties?

RAŠKA: Usually, it’s straight from the market. People know us, so they give us a call. Often, it’s from the lawyers representing these companies, letting us know that their client has some kind of problem. Unfortunately, this is often too late. From talking to many banks, it is my opinion that if the lending institutions came to us at the very beginning of the difficult situation, that we could significantly reduce the amount of money lost by both the company and those who are financing them.

LN: What factors go into deciding which projects you will invest in?

RAŠKA: Our investment strategy has, of course, evolved over time. One of the factors that we currently look for is whether the new acquisition would create any synergies with our existing projects. But, we won’t invest into a project if we know that we can’t offer any ways to fix it or to make it better. Also, the management team and/or the founders of the company must show to us that they are committed to the business. When we see that someone has gone as far as put up his house and all of their money into a company, we will approach the project differently. Lastly, however unsophisticated it may sound, I believe in the power of common sense. Of which, I use a lot when making decisions.

LN: And has common sense let you down?

RAŠKA: Of course. But, according to German psychologist Erik Erikson, people grow from conflicts, and they evolve due to crises. It’s very similar in business. People don’t move from the fire until they feel the heat. A person learns from his mistakes. Although, you have to make sure that your first one isn’t fatal.

Source: http://ceskapozice.lidovky.cz/sef-natlandu-jsem-jako-chirurg-operuji-tezce-ranene-firmy-pmt-/tema.aspx?c=A171215_111047_pozice-tema_houd

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