NEW YORK-The full-time profession of Henry J. Ritter, an attorney and accountant, is to put himself out of a job.
Ritter & Associates, headquartered in North Bethesda, Md., steps in to fill management voids within established and new telecommunications companies. The 10-year-old firm maintains a small core of full-time staff and a network of a few dozen associates available for individual projects that can be hired out to companies that need short-term management solutions.
“My long-run goal is to put myself out of a job because I get expensive on a day-to-day basis. … Compared to bigger firms that charge $400 an hour, I come relatively cheap,” Ritter said.
“We take a certain amount of cash plus options, stock or warrants we hope will be worth something someday, so we have a vested interest in the long-term success of a company.”
The assignments undertaken by Ritter & Associates have included helping companies to develop bidding strategies for RF auctions and assisting them in formulating plans for joint ventures and mergers and acquisitions.
Sometimes new companies tap Ritter & Associates’ talent temporarily at the point where they already have the accounting staff in place. “They are desperate for a CFO. I can come in and be a part-time CFO, making sure the comptroller is doing the job. I provide the link between the day-to-day operations and the strategic finance objectives,” he said.
“Or what happens if the CFO just quits and there is a crisis? I come in, plug the hole for awhile and perhaps help with the search process.”
Serving as a turn-around specialist for troubled companies is one aspect of consulting that Ritter & Associates has dabbled in and for which it anticipates a growing demand.
“There will be more need for this across the board in telecom. In wireless, the little guy will get squeezed out and become a reseller or seek a better opportunity as an Internet company that resells wireless to give customers access to its Web sites,” Ritter said.
Ritter & Associates also will help venture capitalists and financial institutions evaluate companies seeking their backing. It provides management reviews and audits of smaller companies that bigger players are considering whether to buy.
However, the firm prefers not to become involved in hands-on management of brand new enterprises with a good idea but not much beyond that.
“It’s a royal pain to educate entrepreneurs. It’s better when things have moved along. Some financing, even from friends and family, is in place. They have watched their operations and budget and there’s a feel for how the people work together,” Ritter said.
“There are times when I’m the proverbial Dutch boy with my finger in the dike, looking at basic financial systems, management controls and processes for evaluating the sales force. Sometimes companies need both concepts and implementation.”
Ritter sets up an appropriate structure and may also find, hire and train employees to fill the necessary positions.
“In some cases, I bring in my own person. The company may say, `We like you a lot and we’ll pay less if we hire you.’ In that case, they pay me a finder’s fee because I’ve lost an employee and they’ve gotten to test drive someone first, something they otherwise couldn’t do,” Ritter said.
“During the last 18 months, there has been an enormous shortage of workers. Stock options had held a lot of people in place, but share prices have dropped in the last six months, so the golden handcuffs are weakening.”
The situation is aggravated by the deliberate decimation of middle management ranks over the last decade.
“In an expanding universe, middle management is very necessary. In a shrinking universe, it is redundant. The same kind of thing is happening with customer care representatives,” Ritter said.
One source of talent for Ritter & Associates is the graduate business school at George Mason University in Fairfax, Va., where Ritter is an adjunct professor. He teaches courses in telecommunications about current events and strategic issues, the accounting and financial aspects of the regulatory process, structuring start-up companies and evaluating and implementing business plans.
Newer and smaller companies sometimes tend to view permanent outsourcing of critical functions as a cheaper alternative to hiring full-time staff. Ritter said he typically advises against this option.
“It comes from having sat inside companies. I want to have control of critical systems and my own people who know these systems,” he said.
“Outsourcing might be better for larger companies that have in-house expertise with the technical capability to monitor outsourcing, especially of critical components.”
Before founding his own consulting company, Ritter had an established career in telecommunications. Through his telecommunications financial and tax analysis work for Ernst & Ernst, now Ernst & Young, he knew Morgan O’Brien, a founder of Nextel Communications Inc. In the late 1980s, Ritter said he helped O’Brien establish Fleet Call, Nextel’s precursor. He then founded Dispatch Communications, the forerunner of Nextel Partners.
After selling Dispatch Communications to Nextel, Ritter established Ritter & Associates as a management circuit rider and troubleshooter for telecommunications companies.
In the mid-1990s, Ritter served as acting chief financial officer of North American Wireless, “a concept company formed by the AT&T equipment group and Cable & Wireless to serve as a network operations center for smaller PCS companies,” he said.
“It didn’t gel quickly enough, and getting agreements from the joint-venture partners was cumbersome, plus a number of the licensees cratered and others partnered with bigger companies.”
