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September 22, 1996


Gordon Tunstall's Unusual Financial Approach Gets Results

Tampa Consultant Garners National Attention


Review Staff Writer

Here's the scenario: you're the owner of a fast-growing company with enormous potential but you lack the cash to fund

sizable growth. You've approached the capital markets for a cash infusion, but you can't get your foot in any doors to even discuss the possibility.

   Enter Gordon Tunstall seasoned financial consultant and self-professed "sucker for an entrepreneur."

   Sucker or not Tunstall, founder of Tunstall Consulting Inc. in Tampa, only accepts about one in 12 companies that approach him as a client. Tunstall, 51, has garnered a nationwide reputation as a consummate expert in creatively financing growth companies and accessing the capital markets for them. Tunstall has received both local

and national press (including Forbes and the Wall Street Journal) applauding his somewhat unique approach to finance.

   There are thousands of investment bankers and venture capitalists competing for business, but most require an equity stake in exchange for consulting or access to capital. Tunstall, however, has set himself apart by adhering to a strict policy of only charging hourly fees plus expenses.

    Tunstall Consulting, which averages about 80 public and private transactions a year, was founded 15 years ago by Gordon and his wife, Nancy Tunstall, 40, in the couple's Tampa home. At the time, Tunstall handled the clients, and partner Nancy handled the administrative duties. That first year, the firm grossed about $25,000.

   These days, Tunstall still deals with the clients, along with a staff of seasoned CPAs hand-picked from Big Six accounting firms. Overall the firm boasts more than 30 employees, all but two of whom are trained in accounting, including the word processing staff. Nancy Tunstall is still Gordon Tunstall's equal partner, but now she handles all of the administrative functions at a 32,000 square feet building one mile from home. Tunstall Consulting purchased the building and occupies 18,000 square feet. 


Not Like New York City

   Also these days, the company raises close to $1-billion a year for clients, billing itself as 'assisting companies in the development of comprehensive business plans primarily utilized to access the public markets'.

   At its inception, Tunstall said he never visualized the company growing as big as it has, raising capital for companies all over the country. "And in Tampa - it's not like I'm in New York City," he said. "Fifteen years ago, if I had told you I was going to open this type of business here, you would have told me it was stupid. A regional firm in New York, probably does 10-12 public offerings a year, and we do that just in public offerings, not to mention the 70 or more private transactions."

   Tunstall said he had little trouble penetrating the area's local power structure, because no one could argue that there was a need to address the capital requirements of local growth companies.

   "But I built my business on my service, not on who I knew," he said. As the business grew, he said, the referrals grew nationwide, and he never had to make one cold call.

   Not only do most of Tunstall's clients consider him brilliant, they say his approach to capital is an anomaly to the usually greedy business of high finance.

   "I think it goes without saying that Gordon is a very, very smart guy," said Sanford Miller, chairman and CEO of Dayton Beach-based Team Rental Group Inc., a company Tunstall assisted in doing an IPO last year. "But he also represents himself in a fashion that the underwriters perceive as total objectivity. And because he will get paid whether the deal gets done or not, he really is objective. If Gordon had taken a piece of our deal instead of an hourly fee, he would have earned significantly more money. You have to admire his unique approach."

   Peter Fontaine, president and CEO of Lakeland-based Discount Auto Parts Inc. and longtime client of Tunstall's, put it like this: "I've never seen Gordon as driven by money. His core attitude is that if he is a servant of a company, someday his reward will be forthcoming. It's sort of a value-oriented approach."

   Miller said that when Team Rental one of the world's largest Budget Car and Truck Rentals franchisees, began working with Tunstall a couple of years ago, sales were at about $22-million and none of the Wall Street firms would read his business plan.

   "We needed cash to continue growing, but the brokerage firms kept slamming the door in my face. After reading about him in a newspaper, I approached Gordon because he appeared to have the expertise to convince the underwriters to take us public. It worked," Miller said.


Team Rental's Story

   Miller believes Tunstall's success lies in his ability to create a compelling document that wasn't readily thrown in the trash. Tunstall predicted that with his plan Team Rental would get two or three offers, and sure enough, the firm received offers from three underwriters, ultimately hiring CS First Boston of New York.

   Team Rental traded on the Nasdaq under the ticker TBUD, went public in August 1994 at $9.50 per share. Although the stock has not been a barn burner, recently closing at $10-3/4, growth is expected to continue steadily, with Wall Street expecting the company to earn 95 cents in 1995 and $1.35 in 1996. Other recent positive developments: Several weeks ago, Team Rental received praise in the Florida Journal edition of the Wall Street Joumal, and insiders have been heavy buyers of the stock, a bullish indicator.

   Team Rental had a very positive experience with Tunstall, Miller said, but the service wasn't cheap: $80,000.

   "But for us it proved a very valuable service, as our 1996 revenues will approach $200-million. I would highly recommend

Gordon Tunstall and his consultants, all of whom are CPAs, to anyone that has a viable business plan and prepared to pay a substantial fee," he said.

   Tunstall will turn down a potential client if the story is not compelling enough, Miller said, and although he attempts to put clients in a position to do what they want, he never guarantees success, and he won't compromise his beliefs. "If you go in anticipating the fee will guarantee anything, you'll be severely disappointed," he said. "On the other side of the coin, Gordon doesn't take deals that he thinks won't succeed."

   Miller said if he needed help again he would return to Tunstall Consulting without hesitation, but a more likely scenario is that he would just copy Tunstall's style. "Gordon would be disappointed in me if I did anything else," Miller said, laughing. "The bottom line is, I think there is more than a 50-50 chance I couldn't have gotten my deal done without Mr. Gordon Tunstall."

   If Miller could complain about anything, he said, it is that Tunstall didn't seem to know the investment bankers as well as he could. "But I'm sure that has to do with relationships over time and turnover,' he said.

   Fontaine seems to disagree.

   "Gordon, besides being a friend, gentleman and fantastic financial adviser, is probably one of the most Street wise (market) and New York-wise individuals there is," Fontaine said, "He has the most remarkable array of contacts and close relationships, and he is a wizard at accessing them."

   Tunstall has worked with Discount Auto Parts for about seven years, assisting the company with financing over the years, including its 1992 IPO and its secondary offering which is currently undergoing its road show, He also sits on the firm's board, a position he has held since the auto parts retailer went public.

   "Gordon gets paid very little for his seat, and yet I can call him day or night and he will be right there," Fontaine said. 'He is invaluable as a financial adviser, but he is also a big help from an operational standpoint. He is a really clear thinker and says when he sees something that might not work."

Started as a CPA

   Although Tunstall's ability to create financial wizardry may appear innate to his clients, the Philadelphia native humbly credits his success with a varied career and some tough training,   Born in Philadelphia five decades ago, Tunstall attended Widener College and graduated in 1966. He went right to work as a CPA for Coopers &

Lybrand, a job he kept for five years until he decided it wasn't enough.

   He wanted to be a part of the action.

   "One of my customers, Provident National Bank was hiring people to be lending officers," he said. "I thought that would be great because I didn't want to be the guy sweeping up the crumbs. I wanted to be the guy to make the crumbs. So, I said to myself, lets become a broker and see where it takes me."

   At about the same time, Tunstall said, Provident bought an old company called John P. Maguire & Company, an old-line factoring company in New York. Tunstall who described the Maguire guys as having ice water in their veins, was sent to New York as the liaison between John P. Maguire, and the bank.

   "I went up there, and they gave me a six-month training course that money couldn't buy," he said,

   As an introduction, Tunstall started selling swatches of fabric, on Canal Street. He would walk up these long steps to big guys at big desks, smoking on big cigars, bargaining with them over pennies. After two weeks, he grew fed up and went back and asked the bank why they would send a CPA and vice president of a bank down to the slums.

   Tunstall's boss replied, "We want you to know firsthand what happens when a loan goes bad, and how much the inventory is worth when it does."

   Experiences of this venue, continued to pepper Tunstall's next six months at the bank, until he had seen all aspects of asset based lending.

   "Eventually, I became the guy at the bank who got all the transactions that no one else knew what to do with," Tunstall explained. "At one time, I would be looking at 20 or 30 companies: growth, startups and leveraged buyouts. I learned invaluable financing skills."

Creating Complex Plans

   As time went on, Tunstall learned to create complex business plans that made sense to the lenders, sometimes spending all night with clients setting up the plan, essentially acting as the CFO.

   "Many of my customers offered me jobs, and I'd go tell my boss. He told me they were going to promote me here or there and to be patient," Tunstall said. Finally, one customer, Swann, a Philadelphia-based residual fuel company doing $25-million a year, offered him $75,000 a year and a percentage of the profits and a company car. Tunstall went to the bank president who said, "I'll tell you what Gordon, if you don't take that job, I will."

   Tunstall joined Swann, seeing a company with marvelous growth potential.

   In just a short time, Tunstall was proved right. During the four years he was with the company, it grew to $450-million in sales, doing five to 10 acquisitions a year. It was exciting but it wasn't enough, Tunstall said, and he began to formulate a plan to take all of his experience and turn it into his own consulting business.

   Right around the same time, Tunstall met his future wife, Nancy while visiting a Tampa-based company.

   Nancy, who studied psychology at USF, admits she pursued Tunstall, and said it took about a year to win him over. "He did not pursue me," she admitted, "Fortunately, he had always considered moving here because of the enormous growth potential and it wasn't tough to convince him. He was ready."

   Tunstall credits his wife with the drive to make the company succeed to the level it has. He said he wanted to do it small, but Nancy convinced him to go into it big. 

   "She is my best friend, business partner and golf partner, the mother of my (four) children," Tunstall said. When working together, he added, most people don't have as good a relationship as he and Nancy do. "Even people that don't work together don't seem to have a relationship like ours. We know to stay off each other's turf and our employees know which one of us deals with what.

   For her part, Nancy said Gordon is not egotistical and always gives her credit. "I never feel like his sidekick. We are partners, through and through," she said. "It is very exciting to be a part of his life. When we go out, everyone knows him, everyone wants to talk to him and pick his brain. You know how it is with doctors: when they go out socially, people ask questions about certain ailments. Well, the same thing happens with Gordon."

   Her one major complaint about her husband: He falls in love with his clients, becoming so enthused that he works on something until he gets a problem solved. "He will work all night if that's what it takes," she said. "He is very intense."

Risk of Technology

   David Dunkel, chairman and CEO of Tampa-based Romac Intemational, a professional and technical placement firm, agrees with Nancy. Dunkel said he has known Tunstall for 10 or more years, most of which Gordon was his client. But recently, Romac was the client, as Tunstall helped the Tampa company on its recent IPO.

   "Gordon's advice was right on target. His


Gordon Tunstall and his wife, Nancy, form the nucleus of their Tampa financial consulting company.

   network is large, and he knows how to pin down a valuation. In sum, he really knows how to put the whole thing together," Dunkel said. Romac went public last month at 15, and the stock has traded as high as 17 1/2.

   But some deals just don't work out.

   Tunstall said things have sometimes fallen through when companies failed to give all of the details, and it only came out later.

   And of course, he said, there's the technology risk.

   "Technology risk can't be helped, "he said. "'You've done all your homework on a promising tech company, and suddenly a superior technology surfaces on the market. It is crushing, but it happens."

   Although they are not as high profile as public offerings, private transactions are Tunstall's bread and butter.

   "We have a proprietary database of over 1,000 private institutions that we use, and we are able to screen according to both the institutions and clients criteria," Tunstall said. The firm spent close to $1-million and four years building the database, and when Tunstall has a client in a specific industry, he relies on the database.

   For every IPO Tunstall takes to underwriters, he gets offered a finder's fee. "I always turn it down," he said. "Besides it being the right thing to do, the underwriters send me business in return, often companies not big enough to warrant a public offering but the right size for my business."

   Tunstall's latest project: helping Cleveland-based Advanced Lighting Technology Inc. with its IPO. In the past, Tunstall said he helped the company raise about $20-million

in private transactions. The IPO, underwritten by Prudential Securities and Dean Witter, is expected within the next three weeks, raising approximately $40-million in cash.

   Dunkel of Romac Intemational, said his only complaint about his recent work with Tunstall Consulting is the loss of consultants to other Tunstall clients. "These consultants were offered jobs at companies where they had worked on transactions, and a couple left mid-stream in my deal" he said. "But if that is the worst problem, I'd say it is a good one."

   Tunstall agreed.

   "Our biggest, and only problem with turnover is losing people to our clients as they build up their companies," he said. "But I don't discourage it, and typically we end up keeping the relationship, going on to the next phase with the company."

   Despite a competent staff, Tunstall has no thought of taking it easy.

   At 48, he decided to work only in the mornings, leaving the afternoons free for golf.

   "Nancy said I played something like 280 games in one year. I was doing it for two reasons: I wanted to know what it felt like to be partially retired, and I wanted to let some

of my people start making some decisions," he said. "What I found out about myself (is) part of what I do is how I feel about me. Helping businesses raise capital, I feel very good about myself. As a golfer who hits the ball in the water, I don't feel so good about myself."

   Despite his aversion to retirement, Tunstall said he is grooming his consultants to become shareholders in the business.

   "I want to see this business perpetuate itself. Unless I'm Peter Pan, I'm going to need some help in that department."

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