Timingis everything in business. Platinum Equity, a private equity firmwith an excellent track record of buying distressed companies,applying its operational expertise to the ailing businesses, andthen turning them around, finds the timing is again right to makedeals.

As Mary Ann Sigler, CFO of the Beverly Hills, Calif.-basedcompany, points out, few distressed businesses looked to sell theirunderperforming assets during the downturn. With the economy in anupswing, more of these businesses are now on the block. Not thatPlatinum Equity waited on the sidelines during the worst of therecession. It acquired 14 companies in 2009 while other PE firmstwiddled their thumbs. Still, that's nothing compared to itsappetite this past December, when it feasted on four companies in asingle month. T&R asked Sigler to elaborate on therecent uptick in deals.

T&R: What a difference a year makes,yes?
Sigler: We're seeing some of the sameopportunities we saw during the recession, just more of them. Thereare a lot of distressed companies in Chapter 7 and Chapter 11.During the recession, not many people were willing to let go oftheir businesses. You don't want to be the one who sold in thetrough–you don't want to become famous for that unless you'retotally up against the wall. Since a lot of what we buy arecarve-outs and parts of other businesses, a company that wants toget rid of underperforming assets wants to be sure they don't sellin the trough since buyers have the ability to second-guessyou.

T&R: So they hold on until prospectsbrighten?
Sigler: Seems to be the case. Given what we allwent through in 2008 and 2009, companies that held onto theirdistressed assets didn't have the capital to turn them around–theoperations just didn't get fixed. So there are a lot ofopportunities where, in just a short period of time, with ouroperational expertise, we can go in and turn these things around.To be able to make money in this business, you have to takesomething and appreciably change it–morph it into something else.This has resonated with sellers.

T&R: When you say 'operational expertise,'you're referring to putting new people into these companies,right?
Sigler: If you rely on the people who werethere–maybe they were good people stuck in a bad structure or theywere just not the right people for that situation–how are you goingto make a difference? How are you going to get a return on yourmoney? Investors are looking for how you can really distinguish theorganization–not just go in and buy it and operate it a littlebetter. That won't do. You have to have a plan on Day One for therestructuring–even before that.

T&R: How do you make sure you don'toverpay, particularly as deal-making heats up?
Sigler: We have models, methodologies andprocesses that tell us this is the right transaction at the rightprice, or we will walk away. There are plenty of deals out therenow looking for investors, but if we don't think we can turn thebusiness around, we will put down our pencil. We've done lots ofdeals, but only the ones that promise a yield.

To learn more about Sigler's work at Platinum Equity, readher profile in 2010CFOs to Watch: Ready for Opportunity.

Read about other CFOsto Watch in 2011.