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Australian Financial Review

25th September 2007 - extract from page 52

But for a growing band of managers, being a business doctor is a full time position. Colin Resnick got his first taste while working with the largest men’s and ladies hosiery manufacturer in South Africa.

“I knew from the time I walked in there that they could produce what was being produced with a third less people,” Resnick says. “You have to take courage from the fact that you are not retrenching a third of the staff, you are securing employment for the other two thirds. And that’s an enormously important part of this thing.

“Very often as businesses expand, they become lazy. and they don’t move to reduce the employee numbers or to win back their market share. And you have to rectify that. But no employee is safe in a business that is not profitable. So once you return a business to profit, at least you know that the core of employees that are left are secure.”

Now based in Sydney, Resnick has been involved in turnarounds at IMAX Cinemas, Hoyts, Video Ezy, and the local distributor of the watchmaker Raymond Weil.

At Hoyts, what had been a successful cinema exhibition business had foundered when it became de facto property developer in the mid 1980s. Resnick says at the time banks were throwing money at the company, but when the financial markets crashed, lending tightened, leaving Hoyts high and dry.

“It was a matter of selling the property for what they could make, and there were some big losses there,” Resnick says. “But the decision was absolutely correct, because what came out of it was a massively successful cinema business, which was listed at an enterprise value of $650 million in 1996, and sold to the Packers for $1.25 billion in 1999.

At Raymond Weil, Resnick describes a case of a superb watch brand whose business owner had expanded into other brands, but had hugely over-bought stock.

“It was a matter of convincing the agent and other suppliers that this as a profitable business that could be returned to profit - what was required was patience,” Resnick says. “The supplier extended credit assistance, and Raymond Weil himself got involved. We worked through that plan, and within eight months the business was stabilised and today is a profitable agency.”

Resnick says he derives a huge amount of satisfaction from returning value to a once healthy business.

“It has been very rewarding to see how you can assist people to rectify their lives,” Resnick says. “Because in a number of these situations, they have involved either families or a small number of shareholders, who have seen that investment obliterated. And by applying logic, your mind and your energy, you can return that value.”