Repo man Marty Pichinson swaggers down the deserted hallway of Zoho.com in Sunnyvale.
Zoho, a Web site that serves hotels, is barely alive. And Pichinson has arrived to grab and sell its assets on behalf of creditors. Coffee cup in hand, he marches from room to room with three haggard Zoho employees in tow, inspecting the debris–computers, golf clubs, electric dart boards–left after 240 layoffs.
“I’m the clean-up man in `Pulp Fiction,'” says Pichinson, referring to a movie character who mops up after a bloody shooting.
When an employee confides that the company hasn’t paid June’s $105,000 rent to the landlord, Repo Man grins.
“I’m not going to give him $105,000,” he says. “That’s just the way life is.”
Pichinson is a leader in the thriving “workout man” business. As the economy leaves wrecked companies in its wake, he clears up the messes and salvages what he can for creditors. He then dumps the garbage, like thousands of computers and servers, on the market, undercutting the prices of new goods from companies such as Sun Microsystems and Dell.
Pichinson operates as a so-called “ABC,” or Assignee for the Benefit of the Creditor. He is effectively licensed to kill. His mandate is from company boards, which usually includes venture capitalists and other investors eager to liquidate dying companies for cash.
In the last six months, his firm, Sherwood Partners, has picked up 45 ABC assignments, up from none a year ago. He has ramped up his staff to 20 people from six and will hire five more.
Boards in California can choose ABC men instead of court-appointed officials to liquidate firms. Without court regulations, Pichinson can close a firm in a few weeks and keep the liquidation out of government documents–and thus off board members’ resumes.
“This is the wild, wild West,” says Pichinson, 55.
Fast, furious pace
In the past he has fired about 50,000 people. Now he takes only high-tech deals. He does 60 percent of his business in the Bay Area but flies in from Los Angeles to avoid being “jerked around” by clients. “It’s a cold and ugly world,” he says.
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Like the characters in the 1984 cult movie “Repo Man,” Pichinson is always intense. When he drives, he cradles his cell phone with his neck, taps on a Palm hand-held computer on his right thigh and stares at a Blackberry e-mail pager between his legs. With one hand on the wheel, he balances a clipboard with driving directions.
He’s barraged with calls. The night before, an angry man woke him up to say, “See you on the courthouse steps on Monday.” Pichinson scoffs: “He hasn’t even served me yet.”
He peers at 150 Dell computers sitting in a room at Zoho, and shakes his head. The best he can do is auction them, maybe getting 35 cents on the dollar.
Downtrodden executives and employees say Pichinson’s quick, brash humor eases the pain. Richard Rubsamen, Zoho’s acting chief financial officer, says the board talked to six candidates for the ABC. Pichinson was an easy winner, despite his fee of 7.5 percent of the sales, or about three times the amount of his nearest competitor.
Every day is one big negotiation.
He says a slick TV monitor and videotape recorder is worth $800 new, but he lets Rubsamen have it for $200, haggling him up from $100.
Now that he has Rubsamen on his good side, he asks the three Zoho employees to help him sell off the company’s intellectual property for a 5 percent “success fee.” After a moment’s hesitation, they agree.
Finessing the deals
In the company’s “Zen Room,” they help him call potential buyers and feel out the market value of software.
He cuts off a call with an Ohio buyer offering $100,000 for software code. He’s playing hard to get.
A half-hour later, the gamble pays off.
He’s driving toward San Francisco, and his cell phone rings. It’s the buyer. Pichinson grins. The price goes up to $175,000. He says he’ll call back.
Pichinson predicts they’ll end up at about $225,000. “I can sell ice to an Eskimo,” he boasts.
At 11:30 a.m., he pitches the legal counsel of a company planning to lay off 700 employees.
At 1:30 p.m., Pichinson lunches with two competitors who want to partner with him. Pichinson calls the shots. As they bemoan their choppy business, his phone rings, and they must wait. The lunch finishes; he says he will get back to them.
Then, it’s down to the San Francisco business district. Walking toward his next meeting at Wells Fargo, he takes another call, placing his notebook on top of a trash can.
Another call. He stops again, this time setting up office at a newspaper vending box.
After his last meeting, Pichinson drives to the baseball stadium. He chairs a networking group that is watching the Giants from private box seats.
He leaves early and dashes toward his car. “I feel like I’ve just started my day,” he says. Actually, his day started at 3 a.m., and he will get home at 1 a.m.
What’s next for Repo Man?
It’s his turn now. He’s raising a $100 million “vulture” fund to buy some of the struggling companies himself, turn them around and sell them for a profit. He already has a commitment from outside investors for $50 million, and he’s pushing for an eye-popping 35 percent cut on returns.
He may relent and settle for 30 percent.
“Pigs get fat,” he says. “But hogs get slaughtered.”