David Johnson is founder and managing partner of Abraxas Group, a boutique advisory firm providing interim leadership to companies in transition. David has served as an interim executive or financial advisor to dozens of companies in transition and is a public speaker on the topics of change management, turnaround, restructuring, and value creation.

You have a very interesting business model. Could you tell us what inspired this business?

First, thank you.  I like to think that I am bringing some much-needed innovation to my niche.  I was inspired to focus my career on turnaround and business transformation after my experience of founding a behavioral healthcare startup in the late 90s.  In line with so many business owners, I allowed my passion for the business to blind me to my own strategic missteps, and once it was clear that I had taken a series of wrong turns, I was not able to see a way out.  After five years of blood, sweat, and tears, I shut down the business, but I left that experience with a strong belief that companies need the opportunity to reset.

Following my initial entrepreneurial endeavor, I knew that I wanted to go to business school.  At that point I did not yet have a sense of how I would align my career with my growing passion for business transformation, but I was convinced that an MBA would an important step.  I was lucky in that pursuit of an MBA took me to Chicago, where I quickly became introduced to the city’s thriving turnaround community.  From the day that I understood that there is a subset of advisors focused solely on turnaround and business transformation, I have not wanted to do anything else.  Post-MBA, I worked as a consultant at a mid-sized firm with a dedicated turnaround and restructuring practice, and then moved on to a boutique firm focused solely on turnaround and restructuring.  In 2010 I started my own firm, seeking to combine the lessons of being an entrepreneur with the skills I had learned from my former employers.

Today I have a very focused approach: I take on c-level interim executive engagements and manage business transformations from within.  I am generally with a client for 6-12 months, and in that time period my role is to develop the plan, lead plan execution, coordinate with key stakeholders (employees, suppliers, lenders, financial sponsors, etc.), hire my replacement and leave.  My approach eschews the traditional “leveraged model” of advisory engagements, in that I do not have a staff, and so I come into engagements as a single change agent.  This approach facilitates superior client upskilling and goes a long way towards minimizing any disruption when it is time for me to leave.  I am always humbled by the trust my clients put in me, and I can say that over the years that trust has been repaid with noteworthy success.

How many interim management engagements have you done, and what does a “typical” engagement look like?

Over my career I have served as an interim manager perhaps 12 times.  In the last few years I have recast my practice to focus solely on interim management engagements.

It is hard to outline a “typical” engagement, because every turnaround / business transformation is different.  Generally speaking, my clients are dealing with cash flow issues, toxic relationships with suppliers, low employee morale, and a loss of faith among lenders and investors.  The fix always begins with a rigorous, objective assessment of the current situation, followed by a comprehensive turnaround plan that is grounded in conservative assumptions and is designed in a way to foster execution (i.e. a working plan vs. a nice presentation).

What sorts of challenges do your middle market business clients face?

The single greatest challenge that my middle market clients face is the explosion of complexity in their business.  New competitors, product/service innovation, changing capital providers, new tools to drive efficiency, etc.  Business is changing faster, and oftentimes my clients find themselves struggling with poor financial performance that traces, directly or indirectly, back to a failure to master the complexity of the modern business environment.

What size are your ideal clients?

I do not have a strict cut-off, but generally my clients range between $10 million and $300 million in revenue. Below that it can be hard to justify my cost, and above that it can be difficult to drive change without a larger team.

Do smaller businesses experience similar challenges? 

Absolutely.  The time is long since past when small companies could ignore the challenges and opportunities of their larger brethren.  In fact, smaller companies have an opportunity to leapfrog their competition if they are willing to seize focus on organizational versatility as a key differentiator.

When you think back on all of your client engagements, is there any one that really stands out as being the most difficult?

They are all very difficult.  The ones that I go back to most often are those in which we made great progress, but the client was unwilling or unable to get out of their own way.  A focus on they way things had been, and “getting back to normal” is a killer for any business transformation process.

I seem to remember that you were a history major in college. Has your background in humanities helped you in your business career?

I think it has.  Humans are social animals, and we love stories.  History is a series of stories with (hopefully) a high level of objective truth.  I have found that building support and enthusiasm for a turnaround / business transformation is very much an exercise in telling a story: the historical element must be grounded in what happened and why, and the future must build up logically from the past and the present.  When the story makes sense, employees, suppliers, lenders, investors, and other key stakeholders get on board, and the transformation process becomes self-reinforcing.

If you could impart just one nugget of advice to middle market business owners, what would it be? 

Please don’t wait.  I have never, in advising over 60 clients, had a client for whom a better outcome would not have been possible if they had come to me three, six, nine, or even 12 months sooner.  Once something is wrong, acknowledge that it is wrong and seek expert help.

Most consultants focus on their successes, but I think I’ve learned more from my failures. Have you ever failed at anything, and if so, what did you learn from the experience?

Absolutely, and those failures have been my most valuable lessons.  When I was 19 I started my first company, and when I was 24 I had to shut it down. That early experience with failure taught me the importance of a sound strategy, has reinforced my passion for helping companies and has also kept me humble.

You travel a lot in your work. What is your favorite city and why? 

Vancouver, BC.  The city is just breathtakingly beautiful.  I am not sure that I could live there, though, I would probably just sit in Vanier Park every day and look out at the water.