Debra Cafaro, CEO of Ventas Inc., which owns nursing homes and other health care facilities, has done both.
Here’s how she did it:
- To restructure, be a tough negotiator with a thick skin. Conflict abounds during a turnaround. When Cafaro came on board in 1999, Ventas’ only revenue source was insolvent with huge debt coming due. Plus, the government was pressing a $1.3 billion Medicare fraud claim, and distressed debt holders had a legal claim.
Cafaro sprang into action. She drew down the company’s credit lines. Liquidity bought her time. Then she met with her lenders and assured them she’d pay back 100 cents on the dollar, standing ready to pay them higher interest and fees.
To make a turnaround work, Cafaro says, you have to temporarily upset people because “there’s a lot of losing going on.”
“You have to call on every single skill you’ve got: strategic, tactical, theatrical, legal, social, intellectual. Not a lot of other situations require that,” she says.
- To grow, be a lover, not a fighter. It took two years for her company to emerge from bankruptcy. Now Cafaro had to keep promises, build her industry knowledge and change direction but not speed, moving fast on acquisitions.
- To make deals, Cafaro focused on her relationships with top players at health care, real estate and equity firms: “You have to show them—not just tell them—that you’ll be a good partner,” not a shark.
Coming out of a turnaround, you also must fight the instinct not to make mistakes, accepting that if you never fail, you won’t grow. If she could do it over, Cafaro says she’d be less cautious and move faster in acquisitions.
—Adapted from “Fix First, Then Grow,” Carol Hymowitz, The Wall Street Journal.