Family Business Magazine E-Newsletter
October 7, 2008
Contents
1.
'A seller's market' for small businesses.
2.
Agnellis' Ifil, Ifi holding companies to merge.
3.
Activist investors want family to relinquish control of Dillard's.
4.
Phila. PE firm is 'stalking horse' bidder for Boscov's.
5.
Mothers Work co-founder retiring.
6.
Tisch: Partnerships are powerful.
7.
Meeting minutes serve multiple purposes.
8.
World's oldest family firms operate in a wide range of industries.
1. 'A
seller's market' for small businesses. The economic
downturn is increasing demand among buyers seeking small businesses and
reducing the supply of companies for sale, according to a report in the
Business Journal of Milwaukee. "It's
a seller's market because we will have 100 potential buyers looking at
every business we list," Jeff Braun, owner of business brokerage FNBC
Wisconsin, told the journal. Mike Handelsman, general manager of
national listing company BizBuySell, told the jourmal that "The supply
of businesses for sale is actually decreasing. A lot of business owners
don't want to sell their business during an economic downturn."
Handelsman said many downsized workers are seeking companies to buy.
"What we see happening is that, as unemployment grows, the interest in
buying businesses grows," he told the journal. "More people are in the
marketplace with severance packages from previous employers and a need
to create their own careers." (Source: Business Journal of Milwaukee,
Sept. 19, 2008.)
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2. Agnellis'
Ifil, Ifi holding companies to merge. Ifil and Ifi, two of
the Agnelli family's holding companies, have agreed to merge, the Wall Street Journal reported. The
article said the move "was designed to simplify the family's holdings."
The companies, both based in Turin, Italy, have controlling stakes in
Italian auto maker Fiat SpA, Italian soccer club Juventus and U.S. real
estate company Cushman & Wakefield, the report noted. Ifil will be
delisted from the Italian stock exchange and absorbed into Ifi,
according to the report. "The merger will shorten the route along which
dividends travel from Fiat to the family," the article said. "Among
other advantages, the shorter chain resulting from the merger means
there is less dilution of dividends paid to the controlling
shareholders.... The merger will have little impact on Fiat, although
the merger could be taken as an indication of the Agnellis' faith in
the company's prospects." John Elkann, an Agnelli family member, will
be chairman of Ifi, according to the report. (Source: Wall Street Journal, Sept. 9, 2008.)
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3. Activist
investors want family to relinquish control of Dillard's.
Hedge funds Barington Capital Group and Clinton Capital Group "are
pushing the family that controls Dillard's Inc. to relinquish control
of the struggling regional department-store chain," the Wall Street Journal reported. In a
letter to the board, the activist investors "called for a special
committee of independent directors to look into buying the Dillard
family's super-voting Class B shares, and requested a special meeting
of shareholders to consider such a move," the article said. The
founding family owns almost all of the company's Class B shares, which
control eight of the 12 seats on the board; Barington and Clinton
together own 5.7% of the Class A shares, the report noted. In a letter
to the board last year, the investors "noted that the company's four
most senior executives were members of the Dillard family and blamed
them for the retailer's sagging performance," the Journal article said. Under the
terms of "a truce" between the funds and Dillard's management
last spring, Barington and Clinton nominated two members to the board;
another investor, Southeastern Management, nominated two others, the Journal reported. Earlier in
September, Dillard's said it had sold one of its four corporate jets,
closed four stores and planned to close ten more. The 70-year-old
company is based in Little Rock, Ark. (Source: Wall Street Journal, Sept. 25,
2008.)
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4. Phila. PE
firm is 'stalking horse' bidder for Boscov's. Department
store chain Bsocov's Inc. "has put itself on the auction block, with
the 39-store company pushing for a sale by the end of October to help
avoid liquidation," the News Journal
of Delaware reported. The company chose Philadelphia private equity
firm Versa Capital Management Inc. as the "stalking horse" bidder on
its capital assets, meaning that Versa's $11 million bid sets the price
floor for an auction. "It has been reported that family members have
looked into making an offer" to buy back the company, the News Journal article said. CEO Ken
Lakin, whose father and uncle ran the company until January 2006, "has
said the family hoped to emerge from the proceedings healthier and able
to continue to operate, rather than being sold in pieces to satisfy
debts," the Philadelphia Inquirer reported.
(Sources: News Journal, Sept.
26, 2008; Philadelphia Inquirer,
Sept. 19, 2008.)
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5. Mothers
Work co-founder retiring. Dan Mathias, co-founder and CEO
of Philadelphia-based maternity-wear retailer Mothers Work Inc., has
retired effective Sept. 30, the Philadelphia
Business Journal reported. He will continue as non-executive
chairman of the board and will remain as an adviser through Sept. 30,
2012, the article said. His wife and co-founder, Rebecca Mathias, will
continue as president and chief creative officer. She will report to
Edward Krell, the former COO, who took over as CEO effective Oct. 1.
Krell joined the company in 2002 as senior vice president and CFO and
became COO in July, the article said. "Mothers Work said that, with Dan
Matthias' retirement, it will incur a pre-tax charge of $2.5 million to
accelerate supplemental pension benefits," the report noted. "He will
also receive an annual fee of $200,000 for his role on the board and as
an adviser." (Source: Philadelphia
Business Journal, Sept. 29, 2008.)
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6. Tisch:
Partnerships are powerful. In a recent address to the
Greater Philadelphia Chamber of Commerce, Jonathan Tisch, chairman and
CEO of Loews Hotels, shared his views on the benefits of partnering
with employees, community members, competitors and other constituents.
He honed his views on partnerships, he told the audience, by observing
his father, Preston Robert (Bob) Tisch, and his uncle, Laurence (Larry)
Tisch, who ran Loews Corp. together. "I was very fortunate," Jonathan
Tisch said. "I learned from the best partners there were, and that was
my father and uncle. They were in business together for 57 years before
my uncle passed away.... And that partnership is carried on today
because I'm fortunate to run a corporation with my two cousins, and
we're always honest with each other." As for the next generation (his
sons are 17 and 14), Tisch said, "I wouldn't press anybody into any
business. I think there are too many options in today's world for
people to find happiness, for people to do what they want to do. It's
always great if a family member has the passion of the seniors for the
business ... but business is too tough today to layer over that a
family internal debate over what the next generation should be doing.
It's too hard out there, and why make it even harder than it already
is?"
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7. Meeting
minutes serve multiple purposes. "After contracts, minutes
are a business family's most valuable documents," writes family
business owner Larry Hollar in The
Family Business Shareholder's Handbook. "Minutes of your
shareholders' meetings and board meetings serve three purposes. They
are essentially a history of your business. They satisfy legal
imperatives. And they can refresh your memory about previous
discussions." Hollar adds, "Perhaps more important than satisfying the
rules governing what must be included, your minutes should show that
you've been acting like a separate legal entity, not like an
individual. If IRS agents come to visit, they have a right to inspect
your minutes. If you have no minutes, you could be taxed as an
individual instead of as a corporation or LLC. Similarly, minutes will
protect you from being sued as an individual. Isn't that why you
incorporated in the first place?"
For more advice for family business shareholders, see The Family Business Shareholder's
Handbook. Learn more about the book and see the table of
contents here.
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8. World's
oldest family firms operate in a wide range of industries.
The Autumn 2008 issue of Family
Business Magazine features an updated list of the world's oldest
family companies. The family firms on the list operate in a wide range
of industries -- from the practical, like paper (France's Richard de
Bas, #7) and pencils (Germany's Faber-Castell, tied for #100) to the
indulgent, like cologne (Farina Gegenuber of Cologne, Germany, #71) and
licorice (Amarelli Fabbrica de Liquirizia of Rossano Scalo, Italy,
#82). See the complete list here.
To learn how to subscribe to our award-winning
print edition, click here.
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