But that, of course, was only the beginning -- and Braendel was slowly realizing how little he knew. A natural salesman, he was comfortable winging it on the marketing front. But what if the orders began to come in as fast as he thought possible? He would need management help. More to the point, he would need money -- lots of it. Any investor other than Mom and Dad would surely want to see some credible projections. Trouble was, he had no business plan. He had no idea how to create a business plan. Nor did he have any idea what his company might be worth.
That was when Braendel discovered that his interests as an entrepreneur coincided with the interests of some very big players indeed.
KPMG Peat Marwick, better known in this country as Peat Marwick Main & Co., is a large accounting firm. In the United States alone it has 135 offices, 1,930 partners, and annual revenues of $1.64 billion, ranking it #2 among the Big Eight domestically. Like the other seven, it has traditionally provided tax and audit services to big corporations; in recent years it has expanded its consulting practice as well. All of the Eight, of course, always had some smaller clients. But the advantage to the client of having so large a partner wasn't always clear. "The same guy who handled Nabisco," confesses one accountant, "would also work with a small textile company. In that situation large accounts would often get more attention than the smaller accounts."
The sea change in the accounting profession began roughly a decade ago -- earlier for some firms, later for others. The pressures were hard to ignore. The Fortune 500 companies that were the Big Eight's traditional clients were suddenly retrenching. Newer, smaller companies were beginning to grow. And deregulation was in the air. Under pressure from the government, for example, the American Institute of Certified Public Accountants changed its ethics rules in the late 1970s; henceforth accountants could advertise and actively solicit business from nonclients, practices that until then had been considered unethical. "Rather than wait for the big companies to come calling," says Joel Koenig, national director of Touche Ross & Co.'s Enterprise Group, "the Big Eight began aggressively going after new business. A big chunk of the business they were courting was smaller-company owners."
For Peat Marwick, 1977 was the turning point. Prodded by a consulting study that pointed to small companies as future sources of growth, the firm decided to set up separate divisions to court -- and handle -- their business. Not surprisingly, the corporate culture changed slowly. "At first," says Robert A. Swan, "all we did was take our existing clients that fit the description and put them into this new 'middle market' category."
A newly minted M.B.A. who had previously worked for a plumbing supply business, Swan had joined one of Peat Marwick's Los Angeles offices in 1976, and was toiling in the vineyards of Fortune 500 clients. But he wasn't happy there, and when the opportunity arose to move into the young middle-market practice, he jumped at it. It was the right time. Stimulated by the hot new-issues markets of the 1980s, Peat's Los Angeles middle-market division grew from 3 partners in 1980 to 10 in 1988. (The firm as a whole was growing from 50 to 85 partners in the L.A. area.) Today, like his colleagues, Swan is entrusted not only with making money but with signing up small, growing companies as audit clients. When he heard about Greg Braendel, his ears perked up.
The referral came from Betty Nibler, Braendel's part-time accountant, who knew Swan from a previous project. Swan went out to see Braendel, saw some cubicles under construction, heard the story of the company. "I had never seen anything like it," he remembers. "And I thought, if [the cubicle] appealed to me it would appeal to others." Thrislington's niche-oriented strategy seemed like a smart approach; Braendel seemed like a man worth betting on. "Greg doesn't have the experience, but he has the capacity to make things happen. I figured we had a reasonable chance of a winner here."
Over the next several months, Peat Marwick Main effectively transformed Thrislington Cubicles from a pure seat-of-the-pants start-up to a young but well-thought-out business capable of attracting serious investment. First Swan conducted a Business 101 seminar for Braendel and his group, explaining the basics of company finance and valuation. Then he sent in a team to do compiled financial statements, which Braendel needed for his fledgling fund-raising efforts, and agreed to do annual audits and tax work at a discount.
Finally, Swan called his colleague Robert H. Van der Linde, a consultant and senior manager in Peat Marwick's downtown L.A. office. Would Van der Linde be interested in Thrislington? Van der Linde met with Braendel, then visited the factory; he too agreed to take the company on as a client. At Braendel's request he sent an associate in to tear apart the company's finances and projections, then prepare a full-fledged business plan.
Peat Marwick is not the only heavy hitter that has helped bring about this transformation; on the contrary, Braendel has found assistance from several unexpected sources. As with Peat Marwick, he benefited from being a persuasive guy with an appealing product. But he also benefited from decade-long changes in the American economy analogous to the change that had swept the accounting profession. Suddenly, what he had to offer was what a lot of powerful players in the marketplace were looking for.
* A prestigious downtown law firm named White & Case (no relation to this writer) took Thrislington on as a client early in 1988, vetting a private-placement memorandum and doing some trademark and logo work for a modest fee. Serendipity? Not exactly. Ten years ago White & Case wasn't even in Los Angeles; a New York City-based firm, its only outside offices were in Washington, D.C., and in Europe. Like other well-established corporate law firms it was content to service traditional clients such as Bankers Trust Co.
