Given the economy’s ups and downs over the past two decades, and the complexities of sustaining a business into the third generation and beyond, it’s not surprising that several of the companies featured in Family Business are no longer controlled by their founders’ descendants. A few of these companies collapsed owing to financial difficulties; others were sold by their family owners, who left their legacy in the hands of new stewards and moved on with their lives.
Selling a legacy business is one of the biggest decisions a family will have to make and is often preceded by emotional family discussions or wrenching internal debates. Yet many who have taken this step say the move gave them the wealth and the freedom to pursue personal interests. Countless families who have sold their firms continue to work together via joint investments, philanthropic ventures or, in some cases, a whole new family business.
The sale of a business puts an end to family control over its fate—even if the new owner mismanages it. But those who have planned well say a sale also opens the door to a fulfilling new beginning. (In my article entitled “‘I fired myself,’” in FB’s Summer 2001 issue, five former business leaders reminisced about the sale of their companies, and the late family business adviser Jeffrey Rothstein offered advice on how to let go.)
Kongo Gumi, an Osaka, Japan-based builder of temples founded in 578, was lauded in our Spring 2002 issue as the world’s oldest family company.
Epilogue: Kongo Gumi speculated in real estate, sustained $343 million in debt after the country’s land prices collapsed in the 1990s and since 2006 has been a wholly owned subsidiary of Takamatsu Construction, a public company. Taking Kongo Gumi’s place as the world’s oldest family firm is Houshi Onsen, a Tokyo spa and inn founded in 718, more than a century after Kongo Gumi. (See James Olan Hutcheson, “In with the old; out with the older,” FB, Autumn 2008.)
Hammond Inc., a map and atlas company in Maplewood, N.J., was profiled in April 1990 and again in Winter 1997 by reporter Stephen J. Simurda. Fourth-generation owners Caleb Dean Hammond III and his wife, Kathleen D. Hammond, had convinced family members not to sell the company although growth had stalled and potential buyers had approached the firm. Once they gained control, the couple turned Hammond around via investments in technology and a management restructuring. Their success came at a cost; Dean’s father, Bud, and Bud’s younger brother, Stuart, were asked to step aside, and the brothers’ relationship suffered.
Epilogue: Langenscheidt Publishers Inc. acquired Hammond’s assets in 1999. Langenscheidt’s American Map Corporation unit donated Hammond’s archives to the Library of Congress in December 2002.
The Krok family, owners of Epi Products USA Inc., were profiled in the September 1990 issue. The company owned the U.S. distribution rights to a hair-removal system invented in Israel that generated considerable publicity and retail success. The Krok family, natives of Johannesburg, South Africa, divided responsibilities among four sisters—one was president and the other three had the title of executive vice president. Speaking about the company’s structure, consultant Ivan Lansberg warned, “Sometimes a family can get into difficulty because they structure the company in order to fit the family without consideration for the company’s goals and financial situation.”
Epilogue: The Kroks —already mired in controversy because they had made their fortune by selling a line of skin-lightening creams in South Africa —were sued in 1990 for $25 million by a consortium of banks. The banks charged that the family “misrepresented assets, liabilities and overall financial condition of Epi Products” and that they “used Epi as a personal piggybank” and diverted $20 million to fund ventures including a Broadway play. The company filed for Chapter 11 bankruptcy protection, and the Kroks lost control of the business, which did not sell its products in the U.S. from 1992 until 1999. The intellectual property was acquired in 1999 by new owners, who changed the products’ hair-removal system to make it less painful and relaunched the company as Epilady 2000 LLC. In 2006 a new North American arm of the company, Epilady USA Inc., debuted.
For the November 1990 issue, Dan Rottenberg visited Adolph Coors Co.’s Golden, Colo., headquarters to interview chairman Bill Coors and his nephew, Peter, president of Coors Brewing Co. Brewing “[has] been the family livelihood,” Bill Coors said. Peter Coors, a conservative like his relatives, decried the U.S. tax laws. “It’s become increasingly difficult to maintain control within a family over several generations,” he said.
Epilogue: Coors merged with Canada’s Molson to become the Molson Coors Brewing Company in 2005, one of several high-profile consolidations in the beer industry. Peter Coors is vice chairman of the parent company and vice chairman of MillerCoors, a joint venture with SABMiller to sell the companies’ U.S. brands.
In an Autumn 1995 article entitled “Mid-career passages,” Jayne Pearl interviewed three potential successors who left their family businesses. One of them, Fred Hochberg, resigned from catalog retailer Lillian Vernon Inc. because he didn’t expect his mother, founder Lillian Hochberg, to step aside and let him take charge. “At some point,” Fred Hochberg told Pearl, “there’s room for only one strong-willed person.” A member of the Democratic National Committee, Fred served as deputy and then acting administrator of the Small Business Administration in the Clinton administration. In January, President Obama named him chair of the Export-Import Bank. Fred’s brother, David, Lillian Vernon’s vice president of public affairs, told Pearl he didn’t want the firm’s top job.
Epilogue: Lillian and David Hochberg had tried to take the American Stock Exchange company private in the spring of 1995 by selling about 75% of it to private investment firm Freeman Spogli & Co., but the deal fell through. In July 2003, the board sold the company to investment firm ZelnickMedia, which was backed by private equity firm Ripplewood Holdings LLC. ZelnickMedia later bought Time Life Inc. and created Direct Holdings Worldwide LLC as the parent of Lillian Vernon and Time Life. Lillian Vernon’s last year as a public company was 2003.
In May 2006, Direct Holdings Worldwide sold Lillian Vernon to investment firm Sun Capital Partners. On Feb. 15, 2008, after a bad holiday season, the company laid off half its employees; the next week it filed for Chapter 11 bankruptcy protection. In April 2008, the company was sold to the highest bidder, Current USA, a subsidiary of Minnesota conglomerate Taylor Corp.—Lillian Vernon’s fourth owner in five years. According to news reports, the retailer had not posted a profit for about a decade.
Dan Gerber, a director of Gerber Products Co., was the subject of an October 1990 cover story by Howard Muson. Gerber, a poet and author whose novel A Voice from the River tells of a father-son succession struggle, had once contemplated resigning from the board of his family’s publicly traded baby food company. Convinced by his father to stay on as a director of the Fremont, Mich., firm, Gerber later found he had a head for business. After his father’s death he helped shepherd the firm through a series of challenges, including a court battle to block a takeover bid, reports of glass shards in baby food jars, low profits following unprofitable acquisitions, and the search for a new CEO.
Epilogue: In 1994, Gerber was sold to Sandoz AG, a predecessor of Novartis AG. Novartis sold the company to Nestle in 2007. Dan Gerber received the Mark Twain Award for Distinguished Contributions to Midwestern Literature in 2001 for his book A Second Life.
I profiled The Dwyer Group, based in Waco, Texas, for the Spring 2002 issue. Don Dwyer, the charismatic founder of the publicly traded plumbing, appliance repair and home-improvement franchiser, had died suddenly, without a succession plan, in 1994. Dwyer was succeeded at first by Robert Tunmire, his ex-son-in-law, who had stayed at the company even after divorcing Dwyer’s daughter Donna. Tunmire, who had previously focused on franchise recruitment, led the company during a period of major challenges. Rapid expansion had created a need for more infrastructure, which resulted in high overhead that lowered profitability. Two subsidiaries were cut and administrative expenses were slashed, but franchise sales fell as Tunmire concentrated on the other problem areas. With outside shareholders calling for change, Tunmire accepted a demotion in favor of his former sister-in-law, Dina Dwyer-Owens. Earnings per share grew as Dwyer-Owens proved herself a capable leader in a global business environment, managing the complex operation while maintaining harmony among a team of subordinates that included Tunmire, three of her siblings and her husband.
Epilogue: The Riverside Company, a buyout firm, acquired the Dwyer Group in 2003. Dwyer became a closely held unit of Riverside after the sale.
Rottenberg profiled Rosenbluth Travel in the January/February 1991 issue. Fourth-generation CEO Hal Rosenbluth’s innovations, including the introduction of computers, expansion of staff and a focus on corporate travel, propelled the Philadelphia-based company from $40 million in billings to the nation’s fifth-largest travel company, with billings of $1.3 billion, 2,500 employees and 400 offices.
Epilogue: American Express Co. acquired Rosenbluth International in July 2003. At the time of the acquisition, Rosenbluth generated more than $3 billion in annual travel volume and had more than 4,300 associates and operations in 15 countries.
In the Winter 1998 issue, Mark Fischetti wrote about BackSaver Products Co., makers of high-end, ergonomic chairs, including one used by Judge Lance Ito and shown daily on TV during the marathon murder trial of O.J. Simpson. Founder Sam Sheldon and his son, Allen, had defined a new niche and continued to refine their products through continual research and development. The company’s success, Fischetti wrote, was also attributable to their resolve to focus on their strengths and broaden their product line only within their specialty. But the company seemed as if it might get tripped up by succession issues. Sam, at 87, was still president of the Holliston, Mass., company, “and it remains to be seen whether he and Allen have the spine to confront this issue directly,” Fischetti wrote.
Epilogue: BackSaver Products was acquired by Relax The Back Corp. in May 1998. BackSaver is now a manufacturing subsidiary of Relax The Back, which was acquired by Dominion Ventures in 2001.
In Summer 1999, we published excerpts from notes written by Nick Lyons, founder and chairman of Lyons Press in New York City, to his son Tony, who had taken over as publisher at the company, which specialized in books related to outdoor sports and also published fiction. “I am satisfied that putting the financial fortunes of me, your mother, and your sister and brothers in your hands is the wisest thing for me to do now,” Nick Lyons wrote.
Epilogue: Globe Pequot Press, the book publishing division of Morris Communi-cations Co., acquired Lyons Press in 2001.
Muson interviewed Maidenform Inc.’s president and CEO, Robert Brawer, and Brawer’s sister-in-law Elizabeth Coleman, the company’s chairman, in the Winter 1992 issue. Brawer and Coleman took charge of the lingerie company upon the death of Coleman’s mother, Beatrice Coleman, in 1990. Elizabeth Coleman and her sister Catherine, Brawer’s wife, each owned 50% of the company. The successors had designed their own transition plan.
Epilogue: As we reported in a 2002 follow-up, Brawer retired as CEO in 1995 and was succeeded by Coleman. By 1997, the company faced a sizable debt load. After a proposed sale to VF Corporation fell through, Maidenform filed a Chapter 11 bankruptcy petition in July 1997. It emerged from bankruptcy two years later, giving creditors equity in exchange for wiping out the debt. The family had relinquished control when Coleman stepped down as chairman in December 1997. The company’s records from its founding in 1922—including documents from Beatrice Coleman’s mother, Ida Rosenthal, who is credited with inventing the modern bra—are housed at the Smithsonian Institution’s Archives Center.
Reporter Kerry Pechter recounted the hiring of a non-family CEO at Pennsylvania beef processing firm Moyer Packing Company (MOPAC) in Spring 1998. Curtis F. Moyer, chairman of the 120-year-old firm, hired consultant and former insurance executive Lee Delp, who had no prior meat industry experience, as the first non-family leader in the company’s history. “Though Curt Moyer’s son and daughter are involved in the company,” Pechter wrote, “neither was eager to run the $570 million agribusiness, which is one of the top ten in the industry but competes with giant Midwestern conglomerates such as IBP Inc., ConAgra and Cargill.”
Epilogue: In 2001, pork industry giant Smithfield Foods Inc. acquired MOPAC, marking Smithfield’s entry into the beef processing market.