A Small Town and a Forced Sale
A business planning story from a colleague in New England:
It’s a typical New England river town – once a thriving center of manufacturing, now it’s just a tired downtown, magnificent but abandoned brick mill buildings scattered on the riverbanks, and the rundown Victorian homes of the owners and execs. Even the river has seen better days.
It started its long trek downhill during the late 1920s. The advent of air-conditioning and rise of cheap labor in the South quickly stripped away businesses that had been thriving since before the Civil War. The final nails in the coffin were the Great Hurricane of 1938 and devastating floods in the mid-1950s.
By the 1970s, downtown was almost completely boarded up. It's too far from a city for people to commute to work and there were no jobs in town.
Then, two brothers came along. They looked like twins – they’re both tall, thin, avuncular, with pleasant, laugh-lined faces – though they were three years apart in age.
Around 1975 they bought – for pennies on the dollar – a long stretch of property on the river. They knocked down some ruins and built a modern, 110,000 square foot wire manufacturing plant. People thought they were crazy and had no problem telling them to their faces.
The business took off and became the largest employer in the area since the Depression. Main Street woke up, restaurants and bars were busy and the Art Deco movie theater reopened.
In the mid-80s they expanded with the full support of the town. They gave them property on the bank opposite their plant and the brothers built an almost identical building. The town floated tax abatements, widened roads, did everything they could to insure the brothers were comfortable and unimpeded by bureaucracy.
The company flourished and the town came even more alive. There were improvements and additions and more employees and more town concessions. Some of the Victorian homes lining the hill above town were renovated, two old mills were converted into apartments – wood floors, twenty-foot ceilings.
In 2010, the brothers hired consultants to look into expanding yet again. The town was thrilled and lined up to help.
Then, one bright sunny day in mid-2012 the younger brother was late for work – something that never happened. He showed up after lunch, marched directly to his brother’s office and said, “I’m done. I’m out. Call the lawyers,” and walked out. The last time he ever stepped foot in either plant.
He later demanded, in an email, to be bought out. In full. Down to the penny. Half of everything. And that was it. No explanation, just ‘write me a check.’
It goes without saying the first casualty was the expansion plans, by then in the late stages of development. It was clear that the only way to pay the brother was to sell.
The problem was that the business owners – brothers - had never discussed anything beyond the day-to-day running of the business. They never gave a thought to – never mind plan – exit and succession strategies.
Now, the original plant is busier than ever, the newer plant was sold and by 2020, before COVID hit, was on its third owner.
The town’s hanging in, barely, no one knows where the brother is, but he left with a ton of cash. Needless to say, even a modicum of business planning - from the start - would have averted . . . everything.