International Profit Associates, a two-time Inc. 500 winner, became a $100 million company by selling $20,000 consulting jobs to thousands of small businesses. So why is Inc. receiving calls from irate customers?
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International Profit Associates has become a $100-million company by selling $20,000 consulting jobs to thousands of small businesses like yours. But before you let IPA into your company, there are some things you might want to know
When John Burgess talks about his life, he favors a metaphor about climbing mountains and falling off them. Figuratively speaking, he's done more than his share of both. Last year, at his company's lavish Christmas party in a ballroom of the Hyatt Regency Chicago, he looked as triumphant as a climber atop the Matterhorn. Burgess is the head of International Profit Associates, known as IPA, a management-consulting company based in a Chicago suburb, and the black-tie affair -- billed in IPA's ornate invitations as its "Ninth Annual Celebration of Success" -- punctuated another year of impressive growth for the business. Indeed, as Burgess exulted that night to anyone who asked, IPA's revenues were on track to hit $105 million in 1999, up 44% from the year before.
What better evidence that IPA had reached another pinnacle of success than the eight-piece orchestra at the far end of the glittering ballroom, the hors d'oeuvres of shrimp, crab, and sushi, and the dinner of filet mignon and lobster tail?
The better evidence was at the head table in the jaunty figure flanking Burgess: former president George Bush. The two men presented a striking contrast. On one side was the stocky, saturnine Burgess; on the other the trim, patrician Bush, his lopsided grin radiating congeniality.
Bush hadn't come cheap. His fee, according to Burgess, was $82,000, or roughly $1,800 for each of the 45 minutes that he spoke. (Bush was on hand earlier to pose for photos.) For his money Burgess had the pleasure of hearing the 41st president of the United States crack a few self-deprecating jokes ("I'm delighted to speak before dinner, because if the broccoli comes out, I'm getting the hell out") and hail IPA. "When I was asked to come celebrate the success of this company," Bush told the crowd, "that was a gimme, as they say in golf."
Showcasing Bush as a speaker at IPA's Christmas gala meant "instant credibility" for the company, Burgess said -- although Bush was not the first former public official to lend luster to IPA's reputation. Gerald Ford spoke at the company's Christmas party in 1997, and Bob Dole was the keynoter in 1998. Lining up a speaker of that caliber wasn't easy, Burgess explained. "My God, we work on it a year ahead of time," he said.
In the midst of all the hoopla, Bush conceded offhandedly to his audience of about 500 people that he had done only "a little homework" on IPA. I, on the other hand, had by then done a lot. I'd begun in October, after Inc. received an irate phone call from an IPA client, Robert Goldstone .
Along with his brother, Goldstone owns Karnival Sports Center Inc., a Brooklyn clothing jobber specializing in the custom embroidery of athletic uniforms. The brothers had had a billing dispute with IPA. To pressure Karnival into paying the $19,700 balance owed for consulting services, someone whom Robert Goldstone believed to be an IPA employee had been speed-dialing Karnival's number, clogging the company's six phone lines and unleashing obscenities at anyone who answered, according to Goldstone. He says he howled to higher-ups at IPA, to the New York City police, and even to the FBI.
Other scalding complaints from IPA clients filtered into Inc. From the owner of an auto-body shop in West Babylon, N.Y., came a second allegation of an IPA telephone blitz in a dispute over a bill payment. The co-owner of a roofing business related that she had sent two IPA consultants packing after one day, concluding, in her words, that "nothing they gave us was of any value, period." The aggrieved clients were turning to Inc. because IPA had appeared on the magazine's list of the nation's 500 fastest-growing privately owned companies -- ranking eighth in 1996 and ninth the next year -- something IPA aggressively promotes in its sales and marketing. Even the business cards of IPA's consultants bear the Inc. 500 logo.
By the time of Bush's Christmas appearance, I had looked into accusations from several of the company's clients and former employees, and reviewed hundreds of pages of IPA-related court papers and other documents. I'd begun to see a dark side to IPA as I uncovered details about Burgess's checkered past as a disbarred lawyer, as well as the claims of some of the company's clients that it had behaved deceptively and abusively. But all of that couldn't have seemed more far-fetched, even surreal, on that celebratory night. As Bush flashed a thumbs-up and ducked out of the ballroom through a kitchen door, I asked myself which image was accurate. Was the fast-growth phenomenon that was IPA a compelling argument for caveat emptor or a success story worthy of the former president's benediction?
Two days after the party I drove from Chicago 30 miles northwest to IPA's headquarters, in sprawling Buffalo Grove, Ill. Seemingly thrown up the night before on somebody's cornfield, the company's red-brick-and-glass headquarters is but one of many low-slung, glossy new office buildings in the area. Burgess greeted me in his spacious office, which he calls Grand Central Station, and told me he had been at his desk since 5:30 a.m. He works long hours, and his schedule defines the company's work ethic -- employees arrive and leave in the dark "like vampires," in the words of Dan Drugan, IPA's sales chief.
By midmorning on this day Burgess was smoking Parliament filters and exhorting his managers like a coach before the big game. Down to his white shirtsleeves, he was wearing a paisley tie and black, chalk-striped trousers. Though short and portly, he carries himself with the authority of a physically imposing man. What's most distinctive is his voice, gravelly and rapid-fire. (Once, during a legal proceeding, a stenographer had to plead for him to slow down his testimony, saying, "Mr. Burgess, this court reporter is not superhuman.")
With two weeks to go before Christmas, Burgess was worried that his employees would slack off too soon in the run-up to the holiday. "Hi, Dan," he barked into the phone. "We get any sales?"
"Yeah, about 12," a voice answered over the speakerphone.
Burgess grimaced. "This isn't Christmas week," he said gruffly.
On a wall to Burgess's left were two large whiteboards that registered the rhythms of the firm's business. Burgess is the company's "driver," some of his top executives are fond of saying. He doesn't manage week by week or day by day but hour by hour. To see Burgess in action with the whiteboards is to understand what the executives mean and how IPA maintains its rapid sales growth. The boards show hourly quotas for each phase of IPA's sales and marketing operations, a highly evolved, uncompromisingly disciplined machine. That morning, people hurrying into Burgess's office every few minutes wrote numbers on the boards, monitoring actual results as the machine delivered them from all across the country.
The IPA operating model has four basic steps -- telemarketing, field sales, survey analysis, and consulting services -- and works like this: In two six-hour shifts a day telemarketers dial numbers in targeted areas, tout the consulting firm to business owners, and set appointments for 350 field salespeople. A field rep shows up at the prospective client's business soon afterward. During a two-hour presentation the rep solicits a signed agreement providing for a visit by a survey analyst, the cost of which varies, although it's commonly $750. Though the title implies something different, the survey analyst isn't so much a consultant as another salesperson. The analyst spends two or three days diagnosing the company's problems and produces an oral summary, but his or her mission is to sell IPA's consulting services. The analysts' compensation, beyond per diem expenses, consists entirely of commissions based on the number of eventually collectible consulting hours that the analysts sell.
Once an analyst secures a go-ahead, IPA draws on its corps of 325 consultants (who total less than a fifth of its 1,635 employees). Both the survey analysts and the consultants live throughout the United States and Canada and typically are on the road from late Sunday through Friday evening. The consultants, who must each have at least a college degree and 10 years of business experience, perform the actual consulting services. IPA aims to have its consultants at a client's door the day after the analyst leaves -- in keeping with IPA's policy of avoiding even a 24-hour lapse during which a client might have a change of heart. According to IPA, it served 6,114 consulting clients last year, almost twice the figure for 1997, with the average job requiring about 92 hours and costing $18,000 plus expenses.
As IPA has prospered, so has Burgess. Just how much was manifest in his testimony last October in an Illinois libel trial involving a claim against George S. May International Co., where Burgess had worked before he started IPA, in 1991. Burgess's annual salary at IPA was about $1 million, he told the court. He itemized his net worth: estimated value of IPA, $100 million; securities, $9 million; bank certificates of deposit, $6 million; a 20-room house in North Barrington, Ill., which he bought last year for $1.5 million (it has a swimming pool and a waterfall); and life insurance worth a "few million dollars." Seeming almost giddy, he continued, "And I have cash on a daily basis, probably a million and a half or two million. If you add all that together, even excluding things like my wife's jewelry -- I have a young wife and jewelry being expensive -- it's about $120 million."
Back in Burgess's office that day, the lucrative IPA machine was producing the latest numbers. A clean-cut young man with a clipboard wrote "201" on one of the whiteboards, noting how many appointments the telemarketers had made so far that morning. The number missed the quota by 198. Burgess looked agitated. If he was the ultimate driver, each stage of IPA's operations was driving the next one. That week IPA's survey analysts were expected to contract 12,500 hours of consulting work. To maintain the tempo, the telemarketers had to call 40,000 business owners, scheduling 8,500 appointments for the field representatives, who were supposed to provide 358 leads for the survey analysts, who were to book 148 go-aheads for the consultants.
Burgess was on the phone to Rich Lubicz, the telemarketing director. "What the hell are you doing?" he shouted. "You want to take the day off, take the day off. Then you won't have the money to buy a Jaguar." Burgess turned to me. "If you weren't here," he said with a mischievous smile, "I'd be yelling louder."
John Burgess manages not week by week or day by day but hour by hour. The whiteboards in his office tell all.
When IPA sales representatives first solicited their business, Doug Hassell and Kim Hudlow knew nothing about John Burgess or his company. If they had checked out IPA's Web site, which they didn't do, they would have seen a code of ethics and scores of complimentary letters from unnamed IPA clients -- but only an obscure mention of Burgess as the owner. Hassell and Hudlow acted prudently; they asked for references. IPA's salespeople, however, replied that it's IPA's policy -- as is traditional in the management-consulting industry -- to keep clients' names confidential. Hassell and Hudlow signed on with IPA anyway.
Hassell, 60, a former New York City fireman, owns a growing auto-body shop in West Babylon, on Long Island's south shore. A 28-year-old registered nurse, Kim Hudlow runs a commercial roofing business in Panama City Beach, Fla., with her husband. They were two of the IPA clients who had complained to Inc., clients whose views of the company's methods differ sharply from what Burgess describes.
Neither Hassell nor Hudlow remembers being called by an IPA telemarketer. Their first contact had been instead with a field rep who had apparently stopped by to see them at random. A prospective client who says no to a field rep (Hassell and Hudlow said yes) may receive a follow-up call anyway from a salesperson at IPA headquarters. Those making the calls have instructions to offer a reduced fee, as low as $300, for the survey analysis, says Marion G. Townson, who worked at IPA for two years and left the company unhappily in March 1998. "I would say, 'We just happen to have an analyst in the area. A project fell through; we can reduce your price," explains Townson. "There was rarely anyone in the area."
Both Hassell and Hudlow say they were pleased with their survey analysts. Hassell says that his analyst, Bruce Davis, impressed him as "excellent" and "down-to-earth." Davis's counterpart on Hudlow's job, Vinay Bharadwa, quickly crunched the financial data of her 11-employee Centennial Roofing Corp., Hudlow says, and cranked out a detailed breakdown of overhead costs. "He just totally knocked us off our feet. He was very knowledgeable," she recalls.
Hassell says that in Davis he found a particularly sympathetic ear. Hassell's 37-year-old daughter, Kimberly, had died unexpectedly in June. Davis's own daughter had died at the age of 18, he told the grieving Hassell. (IPA may sometimes take a client's peculiar personal circumstances into account in deploying its analysts, I've learned, although Burgess denies that it did so in Hassell's case.) Having an analyst whose bereavement matched his own was important to Hassell. "We kind of bonded," he recalls.
The analysts recommended 108 hours of work for Hassell Auto Body and 117 for Centennial Roofing, at $195 an hour.
IPA states that it will accept a client only if it identifies a problem that the consulting company can fix. ("No recommendation will be made for consulting services unless I am able to substantiate a three-to-one return for every dollar invested," reads a talking point in the analyst's standard sales pitch.) Still, three former IPA analysts have told me that their supervisors at IPA headquarters exerted intense pressure on them to sign clients. James R. "Randy" Long of Douglasville, Ga., who worked as an IPA analyst in 1995, put it this way: "They thought you should make a sale on every call, and they'd really ride you if you didn't."
Not every job runs the full course prescribed in a client's contract; a clause allows a client to terminate a project at the end of any day. Hudlow, for example, hired IPA for 117 hours, seeking better management tools for herself and her husband, David, and an improved incentive plan for the workers at their company, which the couple had taken over from David's father in March 1999. She halted the project after 10 hours because she soured on two consultants who were simply "regurgitating" back to her a lot of the information she had given to them, she says. She refused to pay IPA's bill of almost $5,700, including expenses.
After she complained to the Chicago office of the Better Business Bureau, IPA quickly agreed to write off its charge. "Our business analyst, Mr. Bharadwa," IPA's in-house lawyer, Georgia Shields, wrote in a follow-up letter to the Better Business Bureau, "has been reprimanded and put on notice that this sort of misunderstanding will never be tolerated."
The consultant who reported to Hassell Auto Body, Richard Arnold, set up his laptop in a glass-enclosed front office. For two weeks he churned out almost 300 pages of paper, which he compiled into a blue loose-leaf notebook and tabbed with multicolored dividers. The bulk of it consisted of a personnel-policy manual -- much of it copied from the shop's preexisting version, according to Hassell -- and a series of operating-procedure primers on such subjects as meeting agendas, job descriptions, employee-performance evaluations, and a drug policy. Although the words Hassell Auto Body did show up here and there in the pages ("Hassell Auto Body may require employees in safety-sensitive positions to undergo drug and alcohol testing on a random basis" is one drug-policy provision), most of the material appeared to be boilerplate language, presumably parroted from files in Arnold's laptop.
Arnold did spend time on other tasks, such as interviewing Hassell's employees. Hassell paid IPA more than $17,000 and, at Arnold's request, reluctantly initialed his approval on a series of forms, he explained. "I'd say, 'A lot of this is just waste," Hassell recalls telling Arnold, "and he'd say, 'It'll all tie in. We're going to make sense out of all this." Eventually fed up, Hassell halted the project after two weeks and stopped payment on his last check, which was for $10,264. As Hassell told the police, that triggered a three-day barrage of calls from IPA's bill collector.
Both Hassell and Hudlow were surprised that no one at IPA headquarters had called to inquire why they were dissatisfied. Bharadwa did call Hudlow on December 20, more than two months after the survey analyst had visited Centennial, for an update on the IPA project, she says. Hudlow was stunned. She asked about his being put on notice and reprimanded. He told her that he knew nothing about it, that "he didn't have a clue," she recalls. When I called Bharadwa the same day, he declined to discuss his dealings with Centennial, saying they were confidential and adding, "I try to do a good job, and I don't want to jeopardize anything or anybody."
Eventually fed up, Doug Hassell halted the project after two weeks and stopped payment on his check. "A lot of this is just waste," he said.
If IPA is today a subject of controversy, it's nothing new. It has been embattled virtually from the moment, in the late summer of 1991, when Burgess and two other executives at George S. May International Co., based in Park Ridge, Ill., bolted from the company and created a competing business. A suit May brought in October of that year charged that Burgess and his cofounders, Bruce A. Tulio and Charles W. "Bill" Morton, and eight other former employees had appropriated trade secrets, including the alleged use of its forms and programs. May eventually lost that round of litigation, but there have been many others. At least a dozen suits filed by May or IPA (or individuals with those companies) since 1991 have set off legal fireworks in the Illinois courts of Cook and Lake counties, among other jurisdictions.
One early obstacle that had confronted Burgess and his fellow defectors was a noncompete clause in the employment contracts they had signed while working at May. It barred them for six months from enlisting with a May competitor after they parted ways with the company. When Burgess called a meeting with his colleagues from May at his apartment to discuss the possibility of starting a rival business, he didn't know how many of them would defy the covenant. He expected three May employees to show up. Twenty-two did.
A few weeks later IPA opened a small office in Wheeling, Ill. The whole of IPA's empire then encompassed "two desks and three employees. So you had to make sure you got there early enough to have a desk," Burgess recalls. Ian McLeod, one of the early May defectors, jumped ship to work as an analyst at IPA because, as he put it recently, he admired Burgess as a "very astute businessman" who brought "a lot of very talented people together." McLeod no longer works for IPA.
IPA's early years were a struggle for survival. So severe was the early cash crunch that the company had to rely for financing partly on the credit cards of two employees. One of them, Karen Marchesseault, sued IPA and Burgess, Tulio, and Morton to recover $40,000 in travel expenses charged to her American Express cards. An employee temp agency, a snowplowing service, a bank, and even IPA's former law firm were among creditors who sued to collect on IPA's allegedly unpaid bills.
Those suits were settled, unlike the rancorous one pertaining to May's alleged trade secrets. For a fledgling IPA to defend itself against the relatively deep-pocketed May proved to be a heavy burden. In the third month of IPA's existence, according to Burgess, the company's legal bill was $45,000; its revenues were $25,000. By the time a judge ruled in IPA's favor, that one legal entanglement had lasted more than two years.
IPA prevailed in spite of May's legal onslaught and, just as remarkably, overcame another albatross: the impaired reputations and creditworthiness of its cofounders. All three of them -- Burgess, Tulio, and Morton -- had criminal records. In 1989 Tulio had pleaded guilty in a Philadelphia federal court to having conspired with a drug dealer in the manufacture of phenyl-2-propanone (a key ingredient in methamphetamine, commonly known as speed) -- a felony. Morton had been convicted in 1988 in the Allegheny County Court of Common Pleas in connection with the theft of Hummel figurines from three Pittsburgh stores -- a misdemeanor. (Morton retired from IPA three years ago, selling out his stake for $2.9 million, according to Burgess. Morton could not be reached for comment. Tulio left IPA after a dispute with Burgess in early 1992.) And Burgess's own career had been marred by trouble with the law.
Kim Hudlow called it quits just 10 hours into a 117-hour project. The consultants were just "regurgitating" what she'd already told them, she said.
Born on August 21, 1949, in Cranston, R.I., Burgess was selling eggs door to door by the age of 12. He ran a fruit and vegetable stand, among other jobs, to pay his way through school at Roger Williams College, in Providence, R.I., and the New England School of Law, in Boston. He didn't immediately work as a lawyer. A job he took as a soybean-meal trader for the Pillsbury Co., first in New York and later in Illinois, lasted three years, and he left under a cloud. Pillsbury sued to recoup almost $74,000 in commissions that Burgess had claimed, payments based on allegedly inflated trading profits, according to court records. The parties settled, with Burgess paying $10,000 to Pillsbury.
By then Burgess was practicing law in the quiet, middle-class Buffalo suburb of Cheektowaga, having moved back to New York in late 1979. He soon had a busy practice, says his former law partner Gary J. Wojtan. Burgess became known for his energetic, hard-hitting representation of women in divorce cases. "They'd meet him, and he had this impish smile, but he had this deep voice and knew where the bodies were buried," Wojtan says. An incident much publicized in Buffalo, however, tarnished his image. In August 1984 he pleaded guilty in Erie County Supreme Court to having patronized a 16-year-old prostitute at his law-office building, and paid a $500 fine. At the time Burgess and his first wife, Norma, had two small children.
That incident didn't cost him his lawyer's license, only a suspension, but the Grievance Committee of the Eighth Judicial District of New York was soon investigating at least 20 complaints his clients had lodged against him. The most serious charge: $40,000 inexplicably missing from an escrow account of a deceased 38-year-old nurse's estate that Burgess had represented. Burgess was disbarred and convicted of attempted grand larceny. He paid a $1,000 fine.
The roller-coaster ride of his life reached a nadir on May 2, 1989, when he and Norma filed for personal bankruptcy under Chapter 7. The following year he and Norma were divorced. (He met his second wife, Dana, who is 30, in the early 1990s after she came to work at IPA.)
But Burgess was a scrambler, and as usual he relied on a fierce work ethic to recover from adversity. He landed a job with George S. May as an executive survey analyst. His rise there was remarkable. By 1991, when he abruptly resigned, he was chief of the survey department, one of the company's top executives. It hadn't taken him long to put his troubles behind him. Within half a year of starting as a survey analyst, according to his bankruptcy papers, he was earning $12,900 a month.
Back in Burgess's office after the Christmas party, as the day wore on, Burgess, as promised, did indeed yell louder at his employees, and his language turned coarser. Being "incredibly aggressive" is an important element of his success, he volunteered, a point he qualified by adding that he was "compassionate" with his long-term employees. "If someone has a problem and I can help them, I get long-term loyalty out of them because they realize I was there when they needed me," he said. Drugan, the IPA sales director, cited examples of Burgess's generosity: "He's liberal with advances for employees in a bind. He has an internal legal staff to help with speeding tickets and even divorces."
Some of Burgess's former survey analysts, on whose behalf the Illinois attorney general sued two years ago, would likely paint a different picture of Burgess's management style. Accused in the suit of failing to pay commissions and reimburse expenses, IPA didn't admit any wrongdoing but agreed in a settlement to submit the employees' claims to arbitration and promised to abide by the law in the future. There have been no further complaints of that kind since the settlement, Burgess said.
That week's quotas for the telemarketers: call 40,000 business owners and set up 8,500 appointments.
At the office my conversation with Burgess turned to the question of how he would document the high level of satisfaction with IPA's work that he said prevailed among its clients. He pulled out a loose-leaf notebook full of positive letters. One letter in particular captivated him -- so much so that he'd read it aloud to IPA employees at a Christmas brunch the day before. The letter, written by Edward Page, CEO of Megawood Industries, in Maplewood, N.J., lauded IPA as "the real thing" and a source of "topflight" consultants. Page, whose company manufactures and sells customized windows, later confirmed the tone of his letter in an interview with Inc. and said that he would recommend IPA to other companies.
IPA regularly receives evaluations of its services from its customers; the consulting firm's contracts with its clients require the clients to write letters assessing IPA's work at the conclusion of a project. Burgess told me that he read all those letters, about 120 a week. "Therefore, we ask for complaints," he said. "We get very, very few."
What about the records of the Better Business Bureau of Chicago & Illinois, which show that 47 complaints were filed by IPA's clients over the three years ending December 14, 1999? Burgess at first challenged the figure as too high, although it represented less than 0.4% of the firm's 13,378 clients during that period. After reviewing a list of the cases, he said that "the heavy majority of them are people who didn't pay us." All the cases were resolved, according to Steve Bernas, operations director of the bureau's Chicago chapter, which serves as a nationwide clearinghouse for complaints against companies based in the area. Of course, not all dissatisfied clients file complaints with the bureau; Hudlow did, for example, but the Goldstones and Hassell did not.
A bureau member from 1996 till 1998, IPA resigned in a dispute stemming not from the clients' complaints but from two other issues the organization was investigating, according to Bernas. One related to the agreement between IPA and the Illinois attorney general's office, the other to a complaint alleging that IPA's promotional materials wrongly claimed that Burgess was serving on President Clinton's "Advisory Committee on Small and Medium Sized Businesses." (No such group exists, according to the White House.) Burgess said IPA quit the bureau because it wouldn't postpone a hearing, but he conceded that he had never belonged to a White House committee, only to what he calls "the Pricewaterhouse Advisory Committee for Small and Medium Sized Businesses," which, he says, met with President Clinton two years ago in a Chicago hotel. While a PricewaterhouseCoopers spokesperson says that Burgess is one of more than 400 CEOs who make up its Trendsetter Barometer survey panel, the president has never spoken to the group.
When I asked Burgess if IPA blitzes clients with phone calls to pressure them into paying the balance on their bills -- as Hassell and Goldstone claim -- Burgess said he knew of IPA's tying up a client's telephone lines only twice, once years ago in Texas and again last year. "I would certainly not condone that," he said, although he said he favored "aggressive" tactics against delinquent clients who bounced checks and repeatedly refused to pay what they owed. In response to another question, Burgess denied that IPA survey analysts were expected to sell the company's consulting services to every prospect they visited, whether or not they identified a problem that IPA could solve. IPA declines 28% of potential business, according to Burgess, because a prospective client either cannot afford to pay or is "not rational" in what he or she expects the company to accomplish. As for complaints from Kim Hudlow and Doug Hassell about the quality of IPA's work, Burgess said that Hudlow didn't allow the IPA consultants enough time to prove themselves and that "what's wrong with Hassell is he didn't listen."
I had another ticklish question for Burgess. Why in 1991 did he leave his position as the survey-analysis chief at George S. May International Co.? On the telephone Burgess had told me earlier that his departure had to do with what he called May's "perpetual turnover, and they expected me to yell and scream all day long. I was too young to have a heart attack and die."
However, his explanation contradicted the court testimony of May's president, Donald Fletcher. In Fletcher's account, Burgess, in August 1991, had brought a prostitute into May's first-floor boardroom. A few days later Fletcher confronted Burgess with the allegation.
After investigations into at least 20 complaints against him by his law clients, Burgess was disbarred and convicted of attempted grand larceny.
When I asked Burgess if he did bring a prostitute into the boardroom, he said no. But in a sworn legal deposition on November 12, 1991, when a lawyer had asked him, "First of all, you agree that you had a prostitute in the boardroom of George S. May, correct?" Burgess replied, "Yes. But that had very little to do with my resigning." When I mentioned the testimony, Burgess said, "I'd like to see that, because it never happened." In sharp contrast, Fletcher said under oath: "When Mr. Burgess acknowledged to me the incident in the boardroom, I gave him the choice of either being fired by me or resigning."
So what really happened? Even here, as with so much about Burgess and IPA, it's hard to say with 100% certainty what's true. In the boardroom matter, Burgess contradicted even his own sworn testimony. It's also tough to judge the validity of IPA's tactics and the general worth of its consulting services, despite the seemingly credible complaints from a few of the company's clients. After all, IPA belongs to the nation's unregulated $21-billion management-consulting industry, which is generally considered to be a nebulous realm. "Measuring the success or failure of consulting projects is often murky. There are so many variables and intangibles that it's hard to make a fair assessment," says Tim Bourgeois, vice-president of research at Consultants News, a leading industry newsletter based in Fitzwilliam, N.H.
This much I know, definitively: The mere fact that a company books a former White House resident as its Christmas toastmaster is no guarantee of its integrity. Neither is a record of fast growth.
Before I left IPA, I heard about the company's plans for further expansion. Already spilling out of the 30,000-square-foot building it had occupied only since April 1998, it was leasing another 60,000 square feet in a building across the street. The hunt was already under way for still larger quarters, as much as 250,000 square feet, which IPA projected it might need by 2001.
Burgess exuded optimism as he described an array of new ventures already operating in the IPA orbit, ventures boosted by its formidable sales-and-marketing machine. A partnership with International Tax Associates added $5 million in revenues in 1999, on top of IPA's $105 million, Burgess said, and IPA M&A, Burgess's mergers-and-acquisitions company started in October 1998, generated another $13 million. A sideline created in 1999, the coaching of business owners in professional development, brought in $1.5 million in sales in its first five months.
At the close of the Christmas brunch the previous day, just before announcing the new and larger sales quotas for the year 2000, Burgess had trumpeted IPA as "the fastest-growing company in the state of Illinois," a claim he based on the Inc. 500 private-company rankings of 1996 and 1997. For next year's Christmas party he's working to line up Margaret Thatcher or Jimmy Carter. If he fails, it won't be because he's too timid to ask.
Joseph Rosenbloom is a senior editor at Inc.
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