In this issue
Recently, a young man called me with a vexing problem. His father, Joe Johnson, had started a home construction company in Georgia 42 years ago, and with great effort had created a solid, profitable business. The caller was Joe's son, Larry. He had six brothers and sisters, but was the only child to make his career in the family firm.
My grandfather, Maxwell Grossman, was a practical man. He had started our family’s business—the Massachusetts Envelope Co.—in 1910, and built it by building strong relationships. He also knew when to cut a deal, even with his competitors. When his second son—my father—was born in 1919, my grandfather walked into the rival Boston Envelope Co. to see the owner, Edgar McCallum. My grandfather said, “Mr. McCallum, I have a cigar for you. My wife has just given birth to our second lovely boy.”
Edgar McCallum said, “Have you decided what to name him, Max?”
When i was growing up in Brooklyn, my father had a small business which consisted of anywhere from two to five stores—depending on the year—in downtown Manhattan. Though my father’s business was called House of Cutlery, his stores carried a remarkable range of items, usually closeout items at wholesale prices, from sauteed rooster combs imported from France to dishware and spices.
The pattern of events is classic: A large multifaceted company finds that your business is an attractive candidate for acquisition. You have what it wants: a different market, specific customers, a unique method of doing business, even some key management people. Conversely, you are reaching out for a suitor, to improve cash flow or capitalization or to gain management expertise. Or perhaps, there is no family successor, or you feel it is time to move on to other interests, and selling is the only way for you to cash out.