Presidential Services Ltd.

a nonprofit corporation

Serving boards and presidents worldwide

Presidential Services' History

A 25-year-old executive organized the firm in 1965 after being appointed vice president of development of Youth For Christ International. He decided to combine a full-time master's degree program with his full-time work assignment. Neither his organization's management nor the University's department chairman believed the two could be done concurrently. The student went ahead, thinking course work could be integrated with his organizational work.

Then, a third factor emerged to complicate matters. Several organizations offered assignments, of immediate importance to them, which could be used for graduate-work projects. These outside projects could serve two purposes. They would provide up-to-date material for class assignments and fee income to cover educational costs and research expenses. So, a graduate business school program and client projects became the hotbed for creating a distinctive type of professional service firm.

As the year's work progressed, thesis research of private liberal arts colleges yielded extensive data. Through analysis, the data conveyed insight into the needs of private liberal arts colleges and their presidents. The research findings aided a four-member planning team who sought to create a service program of high quality professional services for non-profit organizations.

The unpublished thesis presented an analysis of the development potential of private liberal arts colleges accredited by the North Central Association of Colleges and Secondary Schools. The findings proved significant because nearly 30 percent of the private colleges in the U.S. held membership in this regional accrediting body. Seventy-five percent of the college presidents and vice presidents for development returned completed surveys.

The analysis showed that most private liberal arts colleges needed streamlined organizations, lacked adequate resources for sound governance, neglected strategic planning, overlooked effective college management or ignored internal controls. In short, very few private liberal arts college officers managed their colleges as an owner or CEO would manage a viable business enterprise. The planners set out to discover why this was true.

In 1966, the firm began its first full year supported by $250,000 of newly raised capital and a well-qualified board of five experienced business executives. A staff of five began serving college trustees and presidents. They introduced out team concept under the name "Compro," a 60s "image name" that did not work well. So, the corporation was renamed Presidential Services Ltd (1972.)

The initial results from the marketplace astounded the firm's organizers! Presidents willingly sought more services than the planners had anticipated. During its first 18 months, the company grew from a staff of five to over 40. Gross billings increased from $75,000 to nearly $700,000 a year. Demand validated our ideas.

In the 60s, a professional services firm with ten senior professionals ranked as a large firm. Presidential Services employed fourteen seniors. Most competitive firms offered one of three or four senior professionals to its client prospects. The firm offered a superior, diversified staff and over 90 skilled Associates. Teams worked with clients, directed by a senior executive as manager. We complimented our teams with additional staff, Associates and contract professionals who could capably meet a client's pre-defined needs. The firm offered a novel approach because most firms did not apply the team concept to professional services delivery.

Our firm's methods, style, growth and quality of service attracted unexpected attention which created two external influences that would modify the firm's future strategy, course and structure. Marketplace pressures began to define our business.

The first influence . . . the trustees of private liberal arts colleges tend to be highly-paid professionals, senior executives, entrepreneurs and business owners. They watched the team serving their college apply well-planned and well-controlled adjustive measures. They saw swift, radical improvement. The results impressed them!

Several trustees asked our management to consider forming teams to serve their companies. An affirmative response would alter the future course of the firm. The Board decided to adjust the firm's client mix so that 40 percent would be business clients and 60 percent private liberal arts colleges or other non-profit clients.

The second influence . . . through field exposure, several national consulting and professional services firms observed the work of our two year old firm. As the growth of the firm accelerated by accepting business clients, it became a prime acquisition prospect. Professional service firms looking for market-niche opportunities or specialized services capabilities found us most interesting. One firm offered $1 Million in cash for the company.

The Board of Directors considered the acquisition offer and then examined other joint venture arrangements. In the end, they decided to remain independent. The decision split the board because some individuals cash-out out. The strategic plan changed. Management soon learned, first hand, how difficult managing a dynamic firm can be.

Our management compared operating results from 1970 to the firm's first full year in 1966. The comparison reflected unfavorably on the then most recent year. In 1970, revenues exceeded 1966 revenues by ten times, yet, 1970 yielded only a modest five percent increase in net-after-tax profits. Smaller seemed better.

Management simplified the firm's organizational design. Future teams would include more highly experienced, well-qualified Associates located across the United States and in other cities worldwide. On-going, labor-intense assignments would be eliminated to make room for more critical engagements, serving presidents only.  

Late in 1972, the firm established a joint development strategy with an acquisition and merger firm (Killian Associates, Inc.). The strategy also included an investment real estate firm (The Equity Realty Group Ltd.). Management believed that the clients and prospects of the combined firm would soon experience radical changes in their operating environments.

The marketplace was changing dramatically. The corporate seller's market had ended, inflation continued increasing at an unexpected rate and interest rates continued their dramatic rise. Owning, operating, attracting capital, obtaining debt, increasing productivity and selling profitability had all become intensely demanding management issues. For many, the fun had disappeared from managing and owning. The pressure increased for non-profits, governments and colleges because the businesses and owners, upon whom they depended, had less discretionary funds.

The business world unexpectedly experienced its first period of rapidly rising, double-digit interest rates. The weight of accelerating change stopped many executives and their businesses dead in their tracks. Managing became exceptional painful for many! The business environment demanded exceptional CEO performance.

For our firm, the period proved to be one of continuing growth and profitability. Staff and Associates learned to operate effectively on the bottom side of a business cycle. During the firm's first year, we had abandoned traditional "consulting" in favor of "management services"--with the authority to act with "hands on." "Advising only" had given way to "advising while providing direct service."

Our client-service format provided a team or task force with experience and capability. They could solve problems, launching programs, plan and implement plans, effect organizational change or aid growth and development. Team members acted in concert with the client/president. They synchronized their efforts by using an agenda and timetable. (We describe this as plan-driven service.) Client presidents discovered quality, results oriented services that they deemed affordable and highly useful.

As management had added the new business services of acquisitions, mergers, financings and investment real estate, the firm further refined its mode of operation. The additions changed our firm's economics, too. Ongoing President's Counsel^(sm) service plans lead to relationship that spans three to five years. Revenues flow consistently but margins remain modest.

The new "transactional" activities could be defined, evaluated, undertaken and often concluded within twelve months. The "transaction" activity, brought clear-cut, measurable results and larger gross fees. Transaction revenues doubled the fees earned serving President's Counsel^(sm) clients. Transactions provided an opportunity to leverage time and knowledge. In this position we could help clients in either the "boom or bust" portion of a business cycle. Our business lost its cyclical nature. Revenue and margins expanded. 

As our firm approached its tenth anniversary, management undertook an evaluation that combined a historic and a futuristic look at the firm. The analysis and planning team included a diverse cast. The president chaired the team assisted by three of the firm's human resource group, senior staff, Senior Associates and well-informed outside advisors. The planners addressed the normal range of comments and negative criticism, which arise as a business matures. But, one outside commentator fed-back an unusual comment. A senior executive of the investment banking firm of Dominick and Dominick, asked "Do you understand the nature of your service pattern?"

The question stopped the review and analysis process cold. The business context increased our confusion as we thought about the question. One of our acquisition and merger teams had secured the first-ever, exclusive right-to-sell contract from Whittaker Corporation. We thought Dominick and Dominick saw our firm as a competitor, since no other firm, including theirs, had merited such an arrangement. Instead, they saw our firm as an ally and resource for them and their client.

After deciding that the commentator would accept our answer, we replied "Perhaps we don't understand . . . .." Then we listened as Dominick's senior vice president described our role as that of a private investment banker. He told us why his definition and description fit our firm's scope, methods, culture and style.

The executive focused our attention and review on Europe in the Middle Ages. He described the evolution of national and international monetary systems. During this period, bankers helped with land acquisition, ownership and exchange. They encouraged political power-base building. They controlled all types of scarce resources and fostered domestic and international trade. He observed that these "bankers" operated "within" or "as part of" the transactions. They shared the wealth with the other participants, who were also their clients. These bankers were "players," not just "providers" of money, services or support staff for managers and owners.

As the idea of a "banker" advanced through the centuries and entered the western hemisphere, many "participation" features dropped off. Legislation, industry controls, new divisions of labor and product emphasis within the American banking system modified the banker's role. No longer could one find an integrated, single-source banker. Americans developed investment banks, mortgage banks, commercial banks, savings banks, saving and loan associations, credit unions, investment funds and a new brand of merchant banker. Our friend at Dominick and Dominick matched our style with classical, European merchant banking. He called our style private investment banking. 

Equipped with this new definition of "private investment banking," management could evaluate activities and services in a new context. This review led to defining three divisions. One offered continuous management services (the President's Counsel^(sm).) A second engaged in transactions (these first two divisions comprise the core of Presidential Services ^(sm).) A third combined the firm's human and capital resources with investors to exploit "niche" opportunities. This created an owned and operated business portfolio.

Management began to create a portfolio of "house" investments--"owned and operated businesses." The first portfolio project came in fast foods. Presidential Services^(sm) Teams had helped owners of Kentucky Fried Chicken (KFC) franchised restaurants by valuing and selling their restaurants. KFC stores were generating abundant cash flow and commanded high prices.

Selling a KFC store became exceptionally difficult. Buyers, with available cash to meet high prices, didn't want to be operators. On the other hand, experienced operators lacked the necessary capital. Financing store sales without seller participation, became nearly impossible. The small asset values in the stores did not support the high selling prices or the acquisition financing. Sellers faced a very limited aftermarket, into which they could sell their businesses.

Motivated owners had become locked-in. One owner described his need. "The profits are good but the long hours, the commitment to constantly renew a young staff and the inability to get all the chicken fat off the quarry tiles makes ownership more bothersome than worthwhile. I should get a high price, but I can't find a suitable buyer."

Our firm's management had spotted a market-niche opportunity. Motivated KFC owners approached the end of their initial franchise period. Their stores generated profits and strong cash flow. Some owners wished to sell their Kentucky Fried Chicken stores without unnecessary complications. Their problem . . . no secondary market existed. To sell their KFC units they would have to provide most of the financing or drastically reduce their selling price. Neither option pleased prospective sellers.

Our firm solved the problem by raising equity capital, arranging debt financing and assembling a management team. The new management company bought and then expanded a group of stores. Thus, we created a KFC store aftermarket and initiated our first own owned and operated business.

It was an ideal investment/management project for a private investment banking group experienced in KFC stores and the fast food marketplace. The management structure, control mechanisms and measurement tools that we used to serve clients now applied to our business. Experience and knowledge could easily be applied to this business. Franchised, fast food units required only modest day-to-day attention, from our management company. So, strategic planning, marketing, human resource development and management systems occupied management's full attention. The idea worked well.

Over time, a second planning team developed a new condominium association management program based on a municipal management model. A third team created a "Craftsmen's Clearing House" (an alliance of high quality tradesmen). Then they added a risk-free home remodeling and construction project management system to it.

Our new division of portfolio businesses brought with it increased leverage for our firm. Management and planners had identified a method of converting our collective knowledge, people and implementation know-how into a dynamic program for expanding the results from our firm's available time and capital base.

Within five years, the firm concluded the development of two KFC management companies, a condominium association management group and one Craftsmen's Clearing House. We sold these companies and reinvested the recovered capital. This led to development of additional business ideas including; (a) a management program for independent film and television producers, (b) more effective system for independent television station operations, (c) a management program for minor league sports teams, (d) an integrated travel services company, (e) a small market radio network and (f) an export/import services for smaller American companies approaching the international marketplace.

At 25 Years

The planning review cycle repeated as the 25^th anniversary of the firm approached in 1991. The current configuration of firms and projects came into being. Presidential Serviced Ltd. became a nonprofit firm. Management of the firm determine who will be served and how.

You can benefit . . . 

It doesn't matter what type of organization or business you head. We can provide continuing, adjustable service through The President's Counsel^(sm) our basis for continuing client relationships. We can manage a project, raise funds, solve a problem capture an opportunity, buy or sell, arrange financing or redevelop your organization. We continually look for human and capital resources with which to develop portfolio companies. Which of the firm's services interests you most? Which one can help you most? We invite you to find out by exploring the ways in which you and your organization can benefit. Read through the cases, then e-mail, call or fax for an exploratory conference.

Contact: Larry Fuhrer

President

630.355.6625