Another boutique arrives in Asia

What is A&M?

It was started in 1983 by Tony Alvarez and Brian Marsal. Alvarez had been with Coopers & Lybrand and had run the restructuring practice. Marsal had been with Citibank on the restructuring side too.

A&M was set up as a restucturing or workout boutique. The first job was Timex.

The practice grew from the two of them to a group of 25 professionals within a decade. Then they realized they had to grow or perish, due to the way the industry was changing. So A&M decided to grow.

The first decision was to grow geographically and open in Europe. The idea was to serve A&M's existing multinational clients in Europe and then get local business. A&M now has offices in Paris and London.

In fact, one of the pieces of business I am currently working on is the Asian leg of a European-sourced deal.

You have just opened in Asia?

Yes, a few weeks ago. Although I was hired by A&M in 2001.

What is your background?

I was at San Miguel for 23 years, working in the Philippines, Hong Kong and China. In the 1970s I was involved in the strategy and transformation of San Miguel in the period of its greatest growth. Then I was involved in restructuring the packaging business. Then I ran the beer business in Hong Kong and led the push into China. I later worked with the Kuok group of companies, running their Philippine operations.

So my career has been one in which I have gained a lot of operational business experience as well as gaining restucturing expertise.

Given A&M's business is built around corporate-cum-debt restructuring, would it not have been more logical to open in Asia in 1997-8?

1997 was the beginning of the opportunity, because before that Asia had been growing so fast. 1997 brought the realization that there are rules in economics that apply to everyone.

Most of the banks decided to reschedule debt, and not all of the companies that went through that process went through a restructuring as we would define it. You can move your debt and say you will pay it some time in the future, but if you haven't addressed the fundamental business model issues then you are only postponing the inevitable.

A number of Korean companies did proper restructurings and did what they needed to do with the businesses. But in general the ‘restructurings' were just postponements of the payment of debt.

So, yes, 1997 would have been a good time to open in Asia, but 2003 is just as good.

Do you have any mandates at the moment?

When I came out here I said we need to realize that the practice in Asia will be at a different stage to that in the US. Both Mr Alvaro and Marsal were receptive to this. They had seen how long it had taken for Europe to work. The MD in Europe spent about a year trying to generate business.

The big break came for the European business when we did Bridge Information Systems - a global restructuring mandate sourced from the US. When the European MD had done this it gave him a platform to get his name out to people who had been wondering what A&M did. Since then the practice has grown to 20 people in a year and a half.

So Asia will be similar. It will take time before the local conglomerates, and banks see our service is something they want. In the meantime we will service clients who come out of the US or Europe. That gives us a chance to get work done and establish ourselves.

Do you charge like a law firm - by billable hours - or is a flat fee like an investment bank?

We're flexible. We do billable hours, but within that we can have caps. Indeed, we like to have a combination of billable hours and success fees.

You have based A&M in Hong Kong, is that because you see the greatest opportunity in China?

I see opportunity for us in China and Southeast Asia. As to location, we get a lot of referrals from financial institutions and law firms, and it is best for us to be close to them. Hong Kong has the bankers, law firms, and accounting firms.

SARS aside, Hong Kong is also convenient for moving around the region.

The debtor job I am working on right now takes me to Shanghai, to Singapore, and Melbourne.

Why do you see most opportunities in China and Southeast Asia?

If we are looking at the business I see coming our way first - which is dealflow from our other offices - then it follows that you have a lot of manufacturing in China and Southeast Asia on behalf of US or European companies. Beyond that many of the family-owned firms in Southeast Asia and Chinese SOEs will open opportunities for asset workouts.

There are going to be many opportunities.