As a result of the increase in turnaround plays, another player that has come on the scene is the ConJoin Group. The firm, which has been under-the-radar for more than a year, officially launched and hung up its shingle this week as a turnaround advisory for investment firms with struggling portfolio companies.
It is being initially backed with $9.5 million in funding from Toronto-based PE firm Jefferson Partners, whose co-founder, David Folk, is one of ConJoin’s managing directors. The other managing director is Richard Garnick, who also serves as chairman and CEO of Avotus Corp., a Toronto-based developer of expense management and procurement software, and which is backed by Jefferson Partners.
I spoke to Garnick earlier in the week about ConJoin and Avotus, which the advisory firm has been working with to restructure. Garnick says the firm is in the hunt for more companies like Avotus, with sales of between $25 million and $200 million that are doing “high labor-intensive stuff, such as back-office processing.”
The back-office work is key to ConJoin’s advisory services. The firm has contracted with a couple hundred offshore employees in India, and hopes to scale that up to 5,000 within the next few years as it builds out its portfolio of clients.
Garnick says offshoring is what saved Avotus. The company had about 350 employees in North America more than a year ago, “and was struggling,” Garnick says. He admits there were quite a bit of layoffs, more than 250, as the back-office operations were moved to India.
“But if we didn’t do what we had done, there would be no company today,” he says.
ConJoin intends to build a portfolio of five to 10 “transformational projects” per year with additional funding of $10 million to $20 million per project.
Garnick adds that Jefferson Partners has given ConJoin the startup funding to launch the operation and the firm has pledged to make more capital available, through its LPs, should ConJoin need it.