CRN: One of your first moves was to close the Watford office, despite its opening only 10 months ago. To what extent are this and other cost-cutting decisions being driven by Hilco, given its background as a restructuring specialist?
AC: Financially it just didn't make sense to have a satellite office in Watford. It just wasn't making any money and it wasn't well thought out.
The decision was really nothing to do with Hilco - they are a financial backer of the business. Hilco has two sides to its business: Its traditional business, which is a restructuring company, and then its private equity side, which is the part of the business I have been working with for the last few months to arrange financing for this. They've pretty much seen the opportunity here as a stabilise-and-build.
Your background, and that of the MBI team, lies in services and solutions [they ran Selection Services until 2011]. Misco's attempts to build a services and solutions business, at least in the UK, haven't taken off to date, so are you planning to do anything differently?
I wouldn't necessarily say differently, but in the UK over the last 10 months a solutions team has been built consisting of about 60-plus people, and they haven't necessarily been given the opportunity to develop a revenue stream yet. So we are going to focus more on the sales side, rather than ‘build it and they will come'. We're going to start developing a revenue stream off the back of the skills set that has been developed here, very similar to the Dutch operation.
Misco has three components to its business. Misco core is what it has always done, and what it's good at. Misco services and solutions are the growth components of this story. If we can mirror the Dutch business - which has a turnover of about £200m and has the three components working together - in the UK, the UK will be very successful.
We will have a more dedicated focus on the services and solutions component. The Watford office was only core product - it had no solutions and services people.
Is there any truth to the rumour that the credit insurers withdrew cover in the wake of the ownership change?
One of the first actions of our CFO, Harvey, on day one was to contact all the suppliers, and Euler and Atradius, to bring them up to speed on the transaction and the new financial package that was in place. Neither insurance company has withdrawn cover and none of the suppliers have withdrawn credit limits.
We have spent a lot of time with all of them, making sure they have full visibility on the new financial models of the business moving forwards. As you say, the business was loss-making for 2015 and 2016 and would be predicted to lose money in 2017. Our job is to stop it losing money and turn it into a profit-making position, and Atradius and Euler are supportive of that. But there's no smoke without fire - everyone was caught unawares by this.
Your Budapest shared services centre has had mixed reviews since it was launched in 2013. Is it true that you are planning to close it, or at least return some of its functions to the countries?
No, I don't know where that has come from. When the Budapest facility was originally set up by [former European boss] Pim Dale three and a half years ago, his vision was for Misco to be a much larger business than it currently is. But a lot of the work that's done in Budapest works reallyy well and it's very cost effective to run a centralised shared service centre, so we are 100 per cent committed to retaining it. Naturally there are certain services that have come back to the local countries because they just make sense: the UK, for argument's sake, does its purchasing and customer services.
Part of the reason why the Budapest facility has been frustrated is it has been utilising some old ERP software, which was a legacy application from Systemax. As part of the transaction, we have a nine-month agreement to replace that with a tier-one, either Netsuite or Dynamics.
Misco France wasn't included in the deal. How large is Misco's geographic footprint, and are there any plans to expand or, equally, contract that footprint?
There are 1,100 staff in the group - about 300 in Hungary, 350 in the UK, 300 in Holland and the rest split between Spain, Italy and Sweden. The only thing we have planned is that Hungary is a shared services centre and we plan to start a sales focus in Hungary. Over £10m has been invested in the shared services centre over the last four years, and I'm amazed that it's not actually a profit centre, rather than a cost centre. They have inbound sales there, and customer services: all the components exist, apart from a website.
What will the change of ownership mean for staff, particularly in the UK where the business has been struggling financially?
The management team - the four of us - have put every spare penny we have into Misco, alongside Hilco. There's a huge amount at stake. We are very heavily committed to this financially. Being a public company made it difficult for Systemax to be flexible and experimental. Having four new members coming on board, who understand the industry, and who are local - and therefore can be in the office to make decisions and motivate the team - has hopefully had a positive effect in the last few weeks. It will breathe new life into an unloved asset.
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