KIT Capital Press Release
March 25, 2001For Immediate Release
Recognition Group Forms Advisory and Venture Capital Businesses to Serve Struggling and Out-of-Favor Emerging Technology Companies
- Former govWorks, Inc. Founder and CEO Kaleil Isaza Tuzman to Spearhead Management Services Business
- Former BSCH - Banco Santander Central Hispano Executive Juan-Carlos Garcia to Lead Second Frontier Capital Fund with Focus on Turnaround Financing
(New York, NY, March 26, 2001) - Recognition Group, which specializes in restructurings, reorganizations and turnarounds of venture-funded companies, today announced the formation of two new complementary businesses: Recognition Management, an interim and crisis management services business, and the Second Frontier Capital Fund, a venture capital fund focused on out-of-favor and distressed technology investing.
Recognition Management is led by Kaleil Isaza Tuzman, former co-founder and CEO of govWorks, Inc. and Jonathan Agus, a seasoned turnaround and workout specialist with experience in the high tech sector, as well as the retail and manufacturing industries. Recognition Management will provide independent advisory and interim management services --such as technical and operational audits, cost reduction, wind-down analyses, asset sales, distressed M&A and out-of-court restructurings-- to help venture investors, boards of directors and management teams address issues that are critical to companies in crisis or transition.
Recognition Group offers an exceptional value proposition to our clients --venture investors and venture-backed companies-- by bringing together the varied perspectives and experiences of professionals from the venture capital community, start-up companies and the turnaround and workout industry," said Kaleil Isaza Tuzman, managing director of Recognition Group and head of Recognition Management. "We offer direct institutional and personal knowledge of a "bust cycle" in the venture capital industry, and the appropriate coping strategies for a troubled marketplace. Our combined experience in crisis management and distressed investing underpins Recognition Group"s "high involvement" approach in supporting venture capital clients address troubled portfolio company situations."
Prior to the creation of Recognition Management, Recognition Group worked with management and boards at a number of companies providing consulting services and advising fiduciary parties on the appropriate execution of wind-downs and sales of the companies or their assets.
Recognition Management will use its own management resources and an affiliate network of professional turnaround consultants, including:
Wayne R. Walker, former chief restructuring professional at the DuPont Company, interim CEO for wind-down of Boo.com North America and other "dot-com" companies and founding principal of restructuring advisory firm W.R. Walker & Associates;
Nicolas W. Platt, executive vice president of Ogilvy Public Relations Worldwide, and one of the public relations industry"s leading authorities on crisis management;
Richard Tilton, widely known authority on in-court restructurings, former lead bankruptcy partner at law firm Greenberg Traurig and author of Asset Sales and Bankruptcy;
Jacob Billig, former general counsel of Frontier Insurance with a strong background in litigation, workouts and financial services;
Michael Eagan, crisis management and sales development specialist at David Kurlan and Associates with over 35 years of executive management experience in manufacturing and services businesses.
Under the direction and management of Juan-Carlos Garcia, a former investment banking executive with Banco Santander Central Hispano (now called BSCH) and managing partner at Suala Capital Fund, Recognition Group will raise at least $30 million for its distressed technology turnaround fund, Second Frontier Capital Fund. The Fund will complement Recognition Group"s advisory business by leveraging exposure to the distressed company marketplace and enabling the Group to take an active investment management approach and target control positions in companies. In an effort to maximize the experiences of the executives at Recognition Group, the initial focus of the Fund will be on e-government, e-finance and payment-related technology companies. The Second Frontier Capital Fund initially has been capitalized by a $15 million investment line from a leading European financial group and will begin additional fund-raising immediately.
"Industry analysts project that between 60 and 80 percent of venture-backed companies will need professional turnaround or wind-down assistance in the next twelve months. The Second Frontier Capital Fund will take an opportunistic approach to investing in out-of-favor or struggling companies that need an infusion of capital," said Juan-Carlos Garcia, co-founder and managing director of Recognition Group and head of the Second Frontier Capital Fund. "The Fund, will leverage Recognition Group"s capabilities to provide the guidance, expertise and continuation capital necessary to navigate through uncharted, critical situations."
"As venture capitalists and private equity funds evaluate companies within their portfolios, there is a growing recognition of the need for outside assistance to determine the long-term viability for challenged companies," said Bill Sahlman, Co-Chair of the Entrepreneurship and Service Management Unit at the Harvard Business School. "In today"s technology marketplace, neither the day-to-day management nor boards-of-directors of many portfolio companies have experience in dealing with a broad economic downturn. In crisis situations, companies need counselors with a mix of direct experience, emotional distance and a specific set of skills that can help move a company down the path to profitability or to an honorable discharge of assets to protect investors."
Since the mid-1990"s, many promising companies with innovative technologies, products or services have been able to tap into the venture capital community for financing. Unfortunately during the booming private and public equity capital markets, these companies" business models were often undisciplined with unrealistic expectations. With the current deteriorating capital markets, these companies are in dire need of realistic operational assessment, management capital and on-going support. Recognition Group was founded to provide the services and financing to address these needs.
"Our positioning as both a crisis management service that can work with the venture capitalists, boards of-directors or management, in addition to our ability to provide new capitalization, positions Recognition Group uniquely in the marketplace," said Jonathan Agus, co-founder and managing director of Recognition Group.