When john cook was chief financial officer at Caldor Stores in the late 1980s, he hired a little-known "recovery auditing" firm run by a former colleague. In short order the auditors found $2 million in overpayments Caldor had made to vendors. Cook, now 58, was so impressed that in 1990 he quit his job, put up his home as collateral and raised $1 million in debt to buy the company, then known as Roy Greene Associates. He renamed it Profit Recovery Group and built it into a powerhouse player, based on a simple sales pitch: We pore over your accounts payable in search of overpayments and pocket 25% to 50% of what we find—and if we can't find anything, we get zip.
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