Is it important that a bankrupt company hire a new management team?
It depends. If the company has met the perfect storm, keep the captain who has performed the management magic. There’s no sterner test than keeping the lid on disaster. If, on the other hand, his appetite for debt or his grandiose plans or failed vision are what got the company into its mess, then I think it’s time to go. Q: EMCOR maintains a very conservative cash-laden balance sheet. By playing it so safe, aren’t you also taking a risk, the risk of lost opportunity? A: Absolutely. It’s a matter of balance. We used some debt last February in our acquisition of 19 companies. But our cash flow allowed us to repay it very quickly. What I don’t believe is management has the obligation, or even the license, to borrow every possible dollar in order to make the company as large as possible. That’s a recipe for disaster. Q: How do you know how much to borrow? A: You have to be able to pay down debt in a hurry if you need to. Nothing would be more frustrating than to be tapped out at the bank
