Family
Business Magazine E-Newsletter
August
19, 2008
Contents
1.
Toll Bros. CEO to sell 3 million shares.
2.
Non-family member named president of Enterprise Rent-A-Car.
3.
Boscov's family owners tried desperately to stave off bankruptcy.
4.
Clear Channel will likely focus on fewer markets.
5.
Newspaper news 1: Copley family puts San
Diego Union-Tribune on the block.
6.
Newspaper news 2: Cox Enterprises seeks sale of papers in three states.
7.
Newspaper news 3: Hearst buys Connecticut
Post, other papers.
8.
Resolving family ownership issues.
9.
Careful succession planning helps your customers, too.
1. Toll Bros. CEO to sell 3 million
shares. Robert I. Toll, chairman and CEO of Horsham,
Pa.-based giant home builder Toll Bros., plans to sell up to 3 million
of his shares in the company by July 2009, the Philadelphia Inquirer reported.
"The company said his intention was to diversify his portfolio, deal
with estate planning, and handle charitable-donation obligations," the
article said. As of March 2008, Toll reportedly owned 20.8 million
shares, or 13% of the outstanding shares. (Source: Philadelphia Inquirer, July 31,
2008.)
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2. Non-family member named president
of Enterprise Rent-A-Car. Non-family member Pamela M.
Nicholson has been appointed president of Enterprise Rent-A-Car,
founded by the Taylor family and the likely successor to CEO Andrew
Taylor, 60, the son of company founder Jack Taylor, the Wall Street Journal reported. "That
for the first time puts a woman and non-family member in line for the
driver's seat," the Journal
noted. She succeeds Donald Ross, the company's first non-family
president, who will remain vice chairman. The Taylor family owns about
98% of the company, and five family members hold corporate posts,
according to the report. Nicholson "is going to have to be a great
communicator about the business to the family," Andrew Taylor told the Journal. The family hopes Nicholson
will "occupy the CEO spot until [the] third generation is ready to take
command, a decade or more in the future," the article said.
(Source: Wall Street Journal,
Aug. 4, 2008.)
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3. Boscov's family owners tried
desperately to stave off bankruptcy. Before the Boscov
department store chain filed for Chapter 11 bankruptcy earlier this
month, the company's family owners "scraped and scrounged to save their
beloved Boscov's," the Philadelphia
Inquirer reported. "They cut costs. Dumped millions of their own
money into the ... department store chain. Refinanced debt and promised
vendors they'd make good on late payments. They even courted
private-equity investors." The Reading, Pa.-based company's
reorganization plan "could potentially include putting itself up for
sale to generate cash to pay off the debts that triggered the crisis,"
the Inquirer article said.
Third-generation CEO Ken Lakin told the Inquirer that the days spent trying
to stave off bankruptcy were an "emotional roller coaster."
(Source: Philadelphia Inquirer,
Aug. 5, 2008.)
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4. Clear Channel will likely focus on
fewer markets. Now that Clear Channel Communications Inc.
has taken the company private in a deal with a private equity firms
Bain Capital Partners LLC and Thomas H. Lee Partners LP, the company is
expected to sell more of its radio stations, the San Antonio Business Journal reported.
Clear Channel now operates around 900 radio stations, down from nearly
1,200 before the deal, the article said. "But more than 50 of the
remaining stations, as of July 30, have been spun off to what is called
the Aloha Trust," which "will oversee operations and management of
those properties until they can be sold," the report noted. An industry
observer told the Business Journal that "the stations have
been placed in the trust because Clear Channel exceeds Federal
Communications Commission station ownership limits." Because the
private equity deal involved a change of ownership, the company's
"grandfathered exceptions to those limits no longer apply," the article
said. (Source: San Antonio
Business Journal, Aug. 8, 2008.)
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5. Newspaper news 1: Copley family
puts San Diego Union-Tribune
on the block. Copley Press, publisher of the San Diego Union-Tribune has hired
an investment banking firm "to pursue options, including selling the
newspaper" and other properties, the Union-Tribune
reported. The family firm "has been scaling back its media holdings and
real estate assets amid declining circulation and other challenges
affecting the newspaper industry," the article said. "David C. Copley,
president and CEO of the company, decided ... to explore a sale after
talking with his top advisers." The announcement "was a surprise to
many observers because the publisher had been selling off other assets
to provide a financial cushion for its flagship newspaper," including
its news service, the Torrance, Calif., Daily Breeze, weekly newspapers in
Illinois and Ohio, and a resort it owned for nearly five decades, the Los Angeles Times reported. Karin
Winner, editor and vice president of the Union-Tribune -- which since 2006
has cut staff through buyouts and layoffs -- said, "It's the end of an
era for those of us who've worked for the Copley family and those
who've read our family-owned newspapers for many decades," according to
the Union-Tribune report.
(Source: San Diego Union-Tribune,
July 25, 2008; Los Angeles Times,
July 25, 2008.)
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6. Newspaper news 2: Cox Enterprises
seeks sale of papers in three states. Cox Enterprises, a
family company based in Atlanta, announced it is seeking to sell 29
daily newspapers in Texas, Colorado and North Carolina as well as
Valpak, a direct mail advertising subsidiary of Cox Communications.
"Cox will hold onto its home paper, the Atlanta Journal-Constitution, as
well as smaller papers in Ohio and Florida," said an article in the Austin American-Statesman, one of
the Cox papers that's up for sale. Cox chairman and CEO Jim Kennedy,
grandson of the founder, said in a statement, "The decision was made as
part of an ongoing strategic review of our portfolio and enables us to
maintain our strong and stable financial performance by further paying
down debt." (Source: Austin
American-Statesman, Aug. 14, 2008.)
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7. Newspaper news 3: Hearst buys Connecticut Post, other
papers. Meanwhile, media empire Hearst Corp., one of
America's largest family companies, has purchased the Connecticut Post and seven
weeklies from MediaNews Group Inc. It also has assumed management of
three additional daily newspapers in Fairfield County, Conn., according
to a report in the Danbury, Conn., News-Times,
one of the papers involved in the deal. (Source: Danbury News-Times, Aug. 8, 2008.)
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8. Resolving family ownership issues.
Businesses need capital to grow; families need capital to live. In a
family company's early years, both goals can be accomplished rather
simply: Family members are compensated for working in the business, and
profits are reinvested in the company. But when the business
transitions to later generations, things get complicated because there
are likely to be family shareholders who don't work for the company.
These shareholders may be relying on dividends from the business to
fund their lifestyles. Since they have little firsthand experience with
the business, they may not understand its needs, and may not go along
with management's plans to forgo dividends in favor of investing in new
equipment or new ventures. There are several things a business family
can do to prevent such impasses. One is to keep inactive shareholders
informed about plans for the business so they understand why it's
crucial to fund the strategic plan. Another remedy is to provide a
means for unhappy shareholders to cash out through buy-sell agreements.
Yet another solution is to seek outside sources of capital so the needs
of the family and the business can be accommodated.
For more
information on balancing the needs of a family business and its owners,
see The Family Business
Shareholder's Handbook. Learn more about the book and view the
table of contents here.
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9. Careful succession planning helps
your customers, too. Proactive succession planning not
only helps ensure family control of its business -- it also "has the
added benefit of helping a company's customers adjust to the
changeover," writes attorney Don S. Hershman in the current issue of Family Business Magazine. He cites
a transition plan developed by a family-owned logistics business. The
plan called for the founder to take regular vacations, during which his
son (the heir apparent) assumed more company responsibilities. "The
gradual transition helped the family slowly change the management
structure according to a well-planned timeline," Hershman writes. "It
also allowed the company's longtime clients to adjust, since they were
accustomed to working with the founder personally."
For Hershman's
advice on instituting sound governance practices and defining family
members' roles, see his article, "Professionalizing your firm helps to
ensure continuity," in the Summer 2008 issue of Family Business Magazine. See here
for subscription information.
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