While the credit crunch has put a stranglehold on much of the investment banking industry, Gordon Tunstall and his Tampa-based firm have defiled the trend and scored big for Bay Area businesses.
Tribune photograph by BOB WESTENHOUSER
Gordon Tunstall stands next to his firm's "Hall of Fame," which shows many of the company's clients.
By ADAM S. LEVY
Tribune Staff Writer
For much of the past year, bankers and lenders have acted like misers from a Charles Dickens novel.
But a Tampa-based consulting firm has helped nearly 80 corporations raise more than $ 1.1 billion in the first nine months of 1991, an enviable track record for all but the nation's biggest investment banks.
Tunstall Consulting Inc., the corporate finance brainchild of 47-year-old Gordon Tunstall, has certainly grown up since it was formed in 1980 by Tunstall and his wife Nancy. This year, the 42-employee, three-office firm will earn about $5 million.
In the highly competitive world of corporate financing - a world in which profits are shrinking and deals are becoming scarcer - Tunstall has emerged as a formidable force with plans to spread its wings across the planet.
Hundreds of Tampa Bay area companies have sought out the services of the master of corporate finance. In fact, the list of Tunstall's clients reads like a Who's Who of Tampa business: Outback Steakhouse,
"I drive the car I want to drive; I wear the suit I want to wear. I don't need to take equity stakes in my clients and dilute the value of their company. I try to prevent dilution. I respect the entrepreneur."
Tunstall Consulting, Inc.
Checkers Drive-In Restaurants, Scotty's, Pharmacy Management Services, and so on.
Take the following testimonial of one of Tunstall's recent clients:
"What Gordon did for us could have taken us almost a year," said Denis Fontaine, co-founder and president of Lakeland based Discount Auto Parts. "He has excellent sources throughout the financial community, incredible financial savvy and a real feel for nurturing companies.
Fontaine turned to Tunstall earlier this year when he needed $25 million to fuel the company's growth through the rest of the decade. The money would finance the construction of 50 new stores, bringing the total number to about 200 by the year 2000.
At the time, Fontaine was in a quandary. To
begin with, the economy was in the throes of the so-called credit crunch, and many traditional lenders were clutching their purse strings very tightly.
Even if finding a lender wasn't a problem, Fontaine faced the task of soliciting and then sifting through proposals to find which financing option would best suit his company.
There were banks, each with different loan requirements and strict review boards. Then there were insurance companies, pension funds, venture capitalists and investment bankers to consider.
"The list of potential lenders was long indeed," said Fontaine. "There were so many options it seemed a bit daunting."
Tunstall and some of his staff huddled with Fontaine. Two weeks later, the consultants put the finishing touches on a thick, well-bound five-year business plan for Discount Auto Parts and promptly mailed copies to 65 financial institutions.
One month and a dozen financing proposals later, Fontaine had his millions and Tunstall had another notch on his belt.
Tunstall Consulting sets itself apart from the rest
Tunstall was born and raised in suburban Philadelphia, where he went to Widener College. After graduating with an accounting degree in 1966, he joined the Big 8 accounting firm Coopers & Lybrand.
"I remember getting calls from clients who had just made acquisitions or divestitures," Tunstall said. "And I was frustrated only to be involved in figuring out the accounting aspects of a deal I wanted to be involved in the decision-making process. I wanted to help companies grow."
T'hus, Gordon Tunstall at the ripe old age of 29, on the verge of being made a partner at Coopers & Lybrand, was bitten by the entrepreneurial bug and quit.
He joined forces with Provident National Bank (now PNC Corp.) as the bank's youngest vice president. Six months later, his career path would twist again.
"The bank had acquired John P. Maquire & Co., a commercial finance and factoring company in New York. I was sent to Canal Street in lower Manhattan with $200,000 worth of fabric that the firm was trying to unload."
Tunstall sits back, his eyes fixed on the far away, when he recounts the days of his pounding the pavement selling fabric.
"These old guys would call me "Sonny" and haggle and bargain with me like there was no tomorrow. It was the best training I could have ever received."
Months later, Tunstall was back at Provident, and started up the bank's asset-based lending department. As opposed to the stereotypical banker, who hits the golf course at 3 p.m. or the freeway at 5 p.m., Tunstall met with his clients after hours and often stayed up late into the night working on start-up plans or helping map out a turnaround for a struggling business.
"I guess I've always been a sucker for an entrepreneur."
Scores of clients, taken with his extra effort, tried to lure him away from his post at Provident and finally, in 1975, one
Tunstall joined Swann Oil Co., a Philadelphia-based fuel company with $25 million in sales, as chief financial officer. Four years and six acquisitions later, Swann was a $450 million company and Tunstall found himself bored and ready to move on.
"I wanted diversity and I wanted to run my own business."
As he cast around for direction, Tunstall thought about his strengths and what he enjoyed most about his work. He decided he wanted to be involved in helping small to midsize businesses find capital.
He and his wife moved to Tampa, ruling out Fort Lauderdale ("too much like a warm New York") and San Diego ("a navy town and not the best place to raise my four kids"). It's a move Tunstall hasn't regretted.
"I love it here in Tampa. I don't miss those freezing Philadelphia winter days one bit," Tunstall said.
In setting up the firm, Tunstall made a key decision that to this day differentiates his firm from any other: While most investment banks charge as much as 5 percent of the money they raise and bill millions of dollars for "financial advisory services," Tunstall Consulting charges between $90 and $315 per hour, plus expenses.
In the early days of his business, Tunstall and his wife worked out of their home. Tunstall said he would simply approach businesses and ask what they would do if they had all the money they needed.
"Once businesses saw that I wasn't looking for an equity stake in their business and I'd simply be paid by the hour to help them raise money, business began to pick up quickly."
Word of mouth spread and Tunstall soon was doing 20 transactions a week, a frantic pace. "By charging per hour, I lack any incentive to hype a deal in order to collect a bigger commission. I like to make sure my clients get a straight deal" he said.
If he had taken equity stakes in some of his clients, Tunstall would be millions of dollars richer.
"I drive the car I want to drive; I wear the suit I want to wear. I don't need to take equity stakes in my clients and dilute the value of their company. I try to prevent dilution. I respect the entrepreneurs.
As his business picked up, Tunstall began to expand and today his firm has two offices outside of Tampa, in Atlanta and Fort Lauderdale. Nancy Tunstall continues to work at Tunstall Consulting, running the firm's administration. Most of the other staff consultants are accountants who have a few years experience at big firms under their belts.
With the economy in a slump, Tunstall's business mix is skewed toward refinancings. "We're about 50 percent refinancing, 30 percent growth company financing, 10 percent turnaround and 10 percent merger and acquisition work. When the economy improves we do about 40 percent M&A; and less refinancing," he said.
Among several hundreds of deals, Tunstall has found start-up financing for Tampa-based White Mop Inc. and has helped American Buildings Co. of Eufaula, Ala., refinance about $90 million in debt it was saddled with following a leveraged buyout.
He helped Reeves Southeastern, a Tampa wire products company, raise $16 million within a week to stave off a hostile takeover attempt from Janus Corp. in December 1986.
Along the way, Tunstall has stumbled on occasion. A former top Tampa bank executive said he has been burned on more than one Tunstall deal.
"Remember," he said, "if these companies could have found financing themselves with no trouble, they wouldn't have gone to Gordon in the first place."
Tunstall agrees and says that four or five business deals a year don't work out.
"On a basis of one to 10, we tend to take the fives or the sixes," he said. "Then we try to turn them into 10s." Like Outback or Checkers, two Bay area restaurant chains that rank among the hottest new stocks of the year.
In September, Forbes magazine ran a glowing two-column piece on Tunstall and, as a result, Tunstall Consulting has been swamped with requests by potential clients.
"We'll only work with one out of 10 companies we screen," Tunstall said. "Our reputation is critical. We'll not risk it on any old company."
Following the Forbes-generated publicity, Tunstall received one call from a line operator at a General Motors plant who tried to elicit Tunstall's help in raising the
billions needed to take over the world's biggest automaker.
"That's one of the nine that didn't make our cut," he said with a laugh.
Despite having a record year and raising more than $1.1 billion, the credit crunch has made Tunstall's job a bit more difficult.
"It is tough out there. Luckily we have the contacts and sources to get in through the cracks and find those who are lending."
Looking ahead, Tunstall is focused on expansion. "Within two years we'll have about 100 people working for us," Tunstall said, and possibly a few more offices across the nation. Most of the expansion, though, will be in the Tampa base, because Tunstall
is intent on keeping his business centralized.
Currently, Tunstall's Tampa operations fill
a 5,000-square-foot floor of a three-story, nondescript building he owns behind a sports
bar in Carrollwood. Tunstall's home is less than a mile away.
"I'm well known in the Tampa Bay area and across the state. My biggest challenge is getting the world to know me."
Tunstall recently completed an acquisition for a domestic company of a Manchester, England based manufacturing company and would like to have enough overseas business to open up a London office.
"It's the wave of the future. Local mid-sized companies should not miss the opportunity to cement ties with a European company or they might be locked out."