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FTI Consulting, Inc. -
(410)
224-8770
900
Bestgate Road, Suite 100
Annapolis, Maryland 21401
www.fticonsulting.com
Sales
$376
million
Business Description
FTI
Consulting, Inc. is one of the largest providers of forensic
accounting and litigation, corporate finance/restructuring and economic
consulting services in the United States. We have a 20-year track record of
performance and overall expertise. We provide high caliber consulting
services through our staff of professionals who are able to quickly staff
even the largest and most complex assignments. Our goal is to anticipate our
clients’ needs and expand our expertise, professionals and the range of
consulting services we offer accordingly. Success in our marketplace depends
primarily on having a reputation for providing consistently high-quality
advice and services, on schedule and on budget. The following are key
elements of our business strategy:
• Maintain High Utilization Rates Among Our Professionals. We carefully
monitor our utilization rates on a weekly, monthly and annual basis. Our
goal is to manage growth to maintain consistent and high utilization rates
among all of our professionals rather than intermittently expanding our
staff in anticipation of short-term demand. We take a disciplined approach
when recruiting additional professionals. Although we maintain enough
professionals to staff large, complex assignments, we focus on hiring
qualified individuals who meet our selective criteria. High utilization
rates allow us to maintain our profitability and make us less vulnerable to
fluctuations in our workload.
• Retain a Critical Mass of Highly Qualified Professionals. Our
professionals are crucial to delivering our services to clients and
generating new business. Through our substantial staff of highly qualified
professionals, we can handle a number of large, complex assignments
simultaneously. We offer each of our professional’s significant compensation
opportunities, often based on his or her utilization rate, along with a
competitive benefits package and the chance to work on challenging
engagements. When we can, we enter into written employment contracts with
our senior professionals that include reasonable non-competition clauses.
• Leverage Our Relationships and Expertise. We work hard to maintain our
existing client relationships and develop new ones. We believe that our
existing client relationships and our reputation among other professionals,
coupled with our recognized expertise, track record and size, are the most
critical elements in a decision to retain us. We receive a significant
amount of repeat business and referrals from our financial institution
clients, from our clients in regulated industries, and law firm clients. We
have been successful in recent years in expanding the range of consulting
services we provide to our clients. Moreover, as a result of the Lexecon,
DAS, Ten Eyck and BRS acquisitions, we have greater capacity to handle
simultaneously a number of complex, high profile matters. We strive to build
client relationships on a company-wide basis, and to that end we enter into
corporate as opposed to personal engagements. In this way, our goal is to
develop client relationships that are not entirely dependent on the
expertise of any particular professionals, although it is often difficult to
decouple client and professional relationships. By successfully leveraging
our reputation, experience and expanded client base, we believe we should
obtain a greater number of engagements from both existing and new clients
have diversified our service offerings to include economic consulting by the
Lexecon professionals, who are among the leading providers of these services
in the U.S. The Ten Eyck professionals who joined us in 2003, provide
consulting services relating to SEC investigations, securities law
litigation, SEC accounting and enforcement, fraud investigations and
Sarbanes-Oxley. We increased our capacity to assist clients in the analysis
and resolution of all phases of complex claims and disputes through the
acquisition of the U.S. dispute advisory services business of KPMG LLP. In
2003, we began providing investment banking and merger and acquisition
services to middle market companies through our registered broker-dealer and
NASD member. We also began offering our corporate finance/restructuring
services in the United Kingdom. We believe diversification of our service
offerings will better insulate our overall business from changing or
fluctuating market conditions.
• Selectively Acquire Companies and Integrate Our New Professionals and
Capabilities into Our Business. We have always followed a disciplined
approach to acquisitions. Our selective approach has allowed us to acquire
businesses on attractive terms. Over the past five-to-six years, we have
made six significant acquisitions that have greatly enhanced our position in
the restructuring, forensic and trial practices and added expertise relating
to economic and securities consulting. We intend to selectively pursue
strategic acquisitions that are complementary to our existing practices or
that expand our range of services. This should enable us to expand the
services we offer our existing client base, expand our staff of expert
professionals and add new clients to which we can sell our services.
Forensic Accounting and Litigation Practice. Our forensic accounting
specialists work with companies faced with fraud, financial disclosure and
accounting investigations, misstatements and malpractice issues. Many of
these companies are undergoing restructuring or bankruptcy reorganizations.
As perpetrators of fraud become more ingenious, the expertise required to
unravel their schemes increases. We have a team of forensic accountants,
certified fraud examiners and computer technicians who are experts in
discovering and analyzing the most sophisticated ways to circumvent internal
financial controls. We routinely analyze complex transactions, reconstruct
events from incomplete and/or corrupt data, uncover vital evidence, identify
potential claims and assist in the pursuit of recoveries. We utilize
sophisticated software tools to analyze and uncover important information
from the computer systems used in the frauds. With our advanced search
techniques and innovative methods, we are able to uncover valuable
information that was considered lost, deleted or hidden.
We provide services relating to securities, regulatory and Sarbanes-Oxley
investigations, and dispute advisory services. The acquisitions of the U.S.
dispute advisory business of KPMG LLP and Ten Eyck have greatly expanded our
ability to provide those services.
Our experienced intellectual property professionals provide valuation,
damage analysis and expert testimony services. They provide those services
to a range of industries, including oil and gas, technology and consumer
products. They perform financial analyses of intellectual property in
licensing and royalty disputes, antitrust claims and other types of
disputes. Our professionals employ industry research, statistical analysis,
regression techniques, portfolio analysis and sophisticated financial
modeling to support defensible, credible valuation and damage conclusions.
Our dispute settlement practice helps our clients mitigate the cost of, or
avoid, litigation by evaluating claims and risks. These professionals
coordinate business expertise with legal and technical analysis to develop
cost-effective settlement strategies and implement mutually beneficial
business resolutions.
We also provide asset tracing investigative services. We analyze corporate
and personal records and electronic information, conduct interviews and
evaluate related financial information to trace the flow of funds and locate
assets that may have been misappropriated due to illegal or fraudulent
activity. We use sophisticated software tools, advanced data mining and
search techniques as well as databases to conduct asset searches for
companies, government agencies and individuals. We have provided
investigative services in diverse cases involving misdirected or stolen
assets, embezzlements and bank, healthcare, insurance, energy,
telecommunications and bankruptcy frauds.
We develop and deliver creative solutions to litigation problems. From the
first computer animations used in court to the latest in digital graphic
presentations, we have been one of the leaders in providing high-quality,
cost-effective methods to prepare for and try cases. Our trial technology
professionals have supported clients in the courtroom in some of the largest
and most complex civil trials. Through the use of information technology and
the Internet, we have demonstrated our ability to help control litigation
costs, speed-up the trial process and provide litigants with superior access
to data, a key competitive advantage.
We prepare and enhance presentations and expert testimony on complex
subjects, such as toxic torts, financial disputes and intellectual property
resolutions. We have responded to the increasing demand for document
management in cases involving thousands or even millions of pages of
depositions, testimony and exhibits by developing document management and
exhibit and trial preparation solutions that enable our clients to better
focus on preparing for and trying cases. Our range of services for complex
litigation matters include visual communication consulting services; graphic
exhibit design and production; customized database development and
distribution; video deposition capture and transcript linking; management of
designated trial exhibits; courtroom survey, design and configuration;
on-site technical trial support; trial-specific hardware procurement and
tracking; and secure extranet storage and distribution of data, documents,
transcripts, videos and exhibits.
We have developed a number of technology-based tools to assist our clients
in managing complex litigation. TrialMax®, our comprehensive trial
preparation software, enables a litigation team to easily store, annotate
and display documents, computer graphics, video clips and digitized
depositions in the courtroom. We employ an automated tool for handling trial
data regardless of information source or data type. Secure extranet and
web-hosting services are Internet applications for clients that are parties
to multi-district litigation. We also intend to expand our web-hosting
capabilities to teleconference and other Internet based applications. We
also provide electronic evidence and repository hosting services.
Corporate Finance/Restructuring Practice. Our corporate
finance/restructuring practice, regularly advises companies and creditors in
some of the largest, most complex bankruptcy proceedings and out-of-court
restructurings in the U.S. A number of factors affect demand for this
practice’s services. These include:
• the level of lending activity and over-leveraging of companies;
• over-expansion by various businesses;
• increases in merger and acquisition activity;
• management problems; and
• the general economy in the U.S. and abroad.
When we represent companies, we work with our client’s management. We assess
the client’s financial condition and viability, to structure and implement a
business rehabilitation plan to manage the client’s cash flow to at least a
break-even point. We help clients to identify any non-essential assets or
business units that could be sold to generate cash for the client. We assist
clients as they negotiate with their lenders to restructure their debt. If
an out-of-court workout appears unlikely, we assess the impact of a
bankruptcy filing on the client’s financial condition and operating
performance and seek debtor-in-possession financing on the client’s behalf.
If the client voluntarily files for bankruptcy or is involuntarily forced
into bankruptcy, we have the expertise to manage the entire bankruptcy
process, including structuring, negotiating with creditors and implementing
the plan of reorganization. We also provide expert testimony in bankruptcy
and restructuring proceedings on such issues as business unit valuation and
economic loss.
When we represent creditors, we seek to maximize amounts owed to them by the
debtor, whether in an out-of-court workout or bankruptcy. In a workout
engagement, we evaluate and monitor the quality and value of the collateral
and any other assets available to the creditor, analyze the debtor’s
business plan and underlying cash flow projections and assess the adequacy
of the debtor’s financial reporting systems. Based on our analysis, we
assess the debtor’s viability and develop and evaluate restructuring plans.
If we conclude that an out-of-court workout is not feasible, we assist the
creditors in deciding whether to provide debtor-in-possession financing, in
working through the bankruptcy process and in structuring and evaluating
various reorganization plan alternatives.
To better meet the needs of companies suffering a financial or operating
crisis, we also offer interim management services. Our interim management
practice professionals are able to assume interim senior management roles at
companies in crisis. We can deploy our professionals to function as a chief
executive officer, chief operating officer, chief financial officer or chief
restructuring officer. We reevaluate business strategy and financial
forecasts and implement plans to meet financial and operating challenges for
our clients. Our creative approaches and innovative solutions can create
short-term liquidity to stabilize the business and afford the distressed
company time to explore its options. We are keenly aware of the sensitive
nature of these arrangements and the need to build consensus around a
realistic restructuring plan.
We have extensive experience in crisis management, negotiations of complex
mergers, acquisitions and capital restructurings, as well as the liquidation
of surplus assets. We have regularly provided our corporate financing,
turnaround, restructuring, bankruptcy and related consulting services to the
largest banks in the U.S., including Bank of America, N.A., Wachovia Bank,
N.A and JP Morgan Chase Bank. We are involved in many of the largest
bankruptcy proceedings and out-of-court restructurings in the U.S. We
believe clients retain us because of our recognized expertise and
capabilities in highly specialized areas, as well as our reputation for
satisfying clients’ needs. In 2003, no single client accounted for more than
5% of our revenues from continuing operations. In January and February 2004,
we experienced the unanticipated departure of about 60 professionals in our
corporate finance/restructuring practice. We continue to employ
professionals who have expertise in providing the same type and level of
services. These departures are likely to have a significant negative impact
on our operating income for 2004. The negative impact could be long-term,
but we are not able to quantify a long-term impact, if any, at this time.
See “—Item 3. Legal Proceedings.”
Our mergers and acquisitions advisory specialists assist clients in
negotiating and structuring business combinations, acquisitions and
dispositions of assets, business units or entire businesses. Our lender and
transactional support practice assists lenders and other institutional
clients in performing financial due diligence for loans, acquisitions and
other transactions.
Economic Consulting. Our economic consulting practice provides sophisticated
economic and anti-trust issues arising in merger, acquisition and other
complex commercial and complex securities litigation, and modeling and
analysis of the potential competitive effects and other financial advisory
services. Our statistical and economic experts in our regulatory practice
use a range of tools to help companies evaluate issues such as the economic
impact of deregulation on a particular industry, the amount of commercial
damages suffered by a business as a result of a tort or a breach of contract
or the value of a business or professional practice. We also work with
clients to develop business strategy and tactics on an ongoing basis to
address these issues. We have deep industry experience in areas such as
telecommunications, energy and transportation. Our professionals regularly
provide expert testimony on damages, rates and prices, merger effects,
intellectual property disputes in antitrust cases, regulatory proceedings,
strategic planning, mergers, acquisitions and valuations. Our acquisition of
the Lexecon business has greatly enhanced our ability to provide complex
economic consulting services.
Related Expert Services. All our practices have experience providing
testimony in the following areas: fraud, damages, lost profits, valuation,
accountant’s liability and malpractice, contract disputes, patent
infringement, price fixing, purchase price disputes, solvency and
insolvency, fraudulent conveyance, preferences, disclosure statements,
trademark and copyright infringement and the financial impact of government
regulations.
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