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Harrington Corporation

Professor Kevin Rock

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Background

• The Harrington Corporation is the leading producer of commercial desk calendars in the US at the time of the case– Founded by Joshua Harrington in 1920

– Headquartered in Boston

– Currently owned by Thaddeus Baring, a descendant of the founder

• Thaddeus Baring is contemplating retirement– The stress and strain of the calendar business is taking a

toll on his health

– “Every year another calendar: It’s relentless!”

Background• The prospect of Baring’s retirement is a source of

concern to the CFO, Paul Brooks– Baring intends to divest the business and relinquish control

– Baring is already soliciting offers in the $10M range and finding some interest among corporate buyers

• Notwithstanding Baring’s assurances that the current management team would be protected in the event of a change of control, Brooks is skeptical the new owner would leave everything as is– Two CFO’s?

• Twice the trouble and half the effectiveness of one CFO

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Background

• Brooks is not optimistic of duplicating his current situation at another employer– Current responsibilities include

• Shareholder reporting: one individual

• Capital budgeting: major capital expenditure program just completed

– Harrington facilities the most modern in the industry, excellently maintained

• Financial forecasting and planning: level production; 98% re-order rate for product

• Working capital management: pay cash for all orders when due

• Debt issuance: two unutilized $1M lines of credit

• Equity issuance and dividend policy: as Owner decides

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Background• Brooks is not optimistic …continued

– Brooks currently enjoys a compensation package of $45,000 per year plus 2.5% of pre-tax profits

• For a total of $80,000 in the most recent year, 1970

• Equivalent to $463,724 in 2011 dollars

– The prospect of an extended search and possible relocation does not appeal, particularly given Brooks’ employment history

• Graduated from a leading school of business administration

• Worked five years in the venture capital area of a large Boston bank

• Started own management consulting firm before joining Harrington– Which means out of work for two years

– Had to step over the laundry basket every day on way to the “office”5

Background

• Having surveyed his opportunities, Brooks gathers the management team together and proposes making a bid– Team members include Kim Darby (marketing), Keith

Jackson (manufacturing), and Waldo Sloane (controller) • Have a combined 90 years experience in the business

• Baring is amenable to a bid from management and willing to delay further solicitations of interest provided that– Proposal received in six weeks

– Meets Baring’s price of $10M, $8M of which is in cash• No more than $2M of seller financing

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Economics of the Transaction• The managers are unanimous that Baring’s retirement

presents a unique buying opportunity• Among Harrington Corporation’s favorable attributes:

– High barriers to entry, due to economies of scale in production• To match Harrington’s costs, an entrant would have to match its

investment in high speed printing presses, leading to overcapacity and a debilitating price war

– Virtually recession-proof product• Desk calendars disproportionately favored by those who work at

desks; i.e., in the service rather than manufacturing sector– The service sector is historically less susceptible to economic downturns

• A desk calendar is an inexpensive but essential part of office routine, virtually immune from budget cutting

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Economics of the Transaction

• Favorable attributes …continued – High customer re-order rate (98%)

• Harrington desk calendars are competitively priced; company supplies its own stands

• Want to order another calendar? Better shop around hard and buy a stand yourself

– Plus, better do it in August when your Purchasing Department is sending out the requisition forms ; Purchasing wants it done early to take advantage of Harrington’s discount

– Multiple expansion opportunities• Personalized appointment books, day planners, desktop accessories

• All vetoed by Baring, because dilute profitability and returns– Though returns still higher than cost of capital

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Economics of the Transaction• Favorable attributes …continued

– Minimal capital expenditures on core business until 1975 • Recently renovated plant in Puerto Rico; permanently exempt from

U.S. taxation and from Puerto Rican taxation until 1982

– Unutilized debt capacity• $2.88M cash as of December 31, 1970

• $2M undrawn working capital lines

• $0M long term debt and trade financing

• Excellent receivables collection experience

– Eminently realizable cost savings • Baring’s salary of $200K per year

• Management bonuses of $140K per year, if need be– Combined savings of $272K after tax (20%). At a 10× multiple, worth $2.7M

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Economics of the Transaction

• Favorable attributes …continued – Insider deal; Brooks enjoys favor of Owner

• Brooks increasingly responsible for general management of business as Baring disengages

– Insider price• Granted right of first offer

– exclusive right to enter into good faith negotiation with seller before seller entertains other bids

• And nearly granted right of first refusal– Baring seems to be suggesting the company is theirs if only the

management team can meet the $10M price

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Financing• Although the economics look good, the financing does not

– Brooks and fellow team members only have $250K of capital

• Brooks is tasked with raising more money– Over next three weeks, Brooks obtains a tentative commitment for an

unsecured loan, in the amount of $3M• The loan would be provided by a New York City bank, rather than Brooks’ former

employer in Boston

– Brooks also reaches an understanding with Baring to accept a five year subordinate note in lieu of $2M in cash

• The note would carry a below market rate of 4%, in order to minimize strain on the company’s cash flow; as a result, the principal amount of the note would exceed $2M ($3M to be precise)

• In return for these concessions, Baring insists the management team personally endorse the note, making them and their families potentially liable for the entire amount

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Financing

• With three weeks to go, Brooks is still short $4.75M– Turns to his old venture capital contacts

– His venture sources are willing to fund the remaining $4.75M in the form of a 20 year debenture but at a steep price

• Want the debt to include an equity kicker – stock warrants, to be exact – exercisable into common stock at $1 per share

– The same price paid by Brooks and the other members of the management team in acquiring their own stock

• Also want an 8% – 9% coupon plus the ability to exercise the warrants in kind (by surrender of equivalent principal amount) rather than in cash

– All-in-all, the venture investors are looking for a return of 20% - 25% over their estimated holding period of six years (to 1976)

• With considerably more downside protection than the management team

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Financing

• Brooks finds an alternative funding source for part of the shortfall in Harrington’s two, unutilized working capital lines– Rate of 6.25% instead of 20% - 25%

– Availability up to $2M

• By drawing on the lines for seasonal working capital needs, some of December’s estimated cash balance of $2.881M can be remitted to Baring just before closing– Reducing the purchase price to the management group on a dollar for

dollar basis

• The size of the remittance depends critically on the timing of– The compensating balance requirements

– The net working capital positions

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Financing

• For the forthcoming year, 1971, the non-financial working capital accounts are expected to be 5% higher than 1970 (Ex. 4)

• Thus, the forecast quarterly and peak net working capital positions are

• Preliminarily, Brooks assumes a $1.75M disbursement at close– Reducing the venture funding requirement to a nice, round $3M

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Non Financial WCAP (Quarterly + Peak) 12/31/1970 3/31/1971 6/30/1971 8/31/1971 9/30/1971 12/31/1971accounts receivable 1,270 385 317 3,205 3,236 1,334inventories 294 1,160 2,015 877 276 309current liabilities (633) (652) (706) (638) (616) (665)non financial net working capital 931 894 1,626 3,443 2,896 978change in non-financial WCAP (37) 733 1,817 (547) (1,918)

Initial Cash Positionbegin cash 2,881 cash left behind (Baring) (1,750)remaining cash 1,131

Financing

• Assuming the term loan is paid monthly and the compensating balance requirements apply monthly as well, Brooks arrives at a preliminary estimate of a $1.851M shortfall in August, the peak borrowing month– The shortfall can easily be covered by drawing on the $2M working

capital line

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Non Financial WCAP (Quarterly + Peak) 12/31/1970 3/31/1971 6/30/1971 8/31/1971 9/30/1971 12/31/1971accounts receivable (Exhibit 4, 5% growth) 1,270 385 317 3,205 3,236 1,334inventories 294 1,160 2,015 877 276 309current liabilities (633) (652) (706) (638) (616) (665)non financial net working capital 931 894 1,626 3,443 2,896 978change in non-financial WCAP (37) 733 1,817 (547) (1,918)

Cash Positionforecast cash (Exhibit 4, 5% growth) 2,881 2,833 2,151 402 1,076 3,025cash left behind (Baring) (1,750) (1,750) (1,750) (1,750) (1,750) (1,750)remaining cash 1,131 1,083 401 (1,348) (674) 1,275

Bank Term LoanLoan outstanding (monthly payments) 3,000$ 2,819$ 2,638$ 2,517$ 2,457$ 2,276$ compensating balance (20% term loan) 600 564 528 503 491 455Balance surplus (deficiency) 531 519 (126) (1,851) (1,165) 820

Financing

• A more refined estimate, based on a forecast of all the monthly inflows and outflows, shows a slightly smaller August draw of $1.832M

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Cash Flow (Quarterly and August Peak) 12/31/70 3/31/71 6/30/71 6/30 - 8/31 8/31 - 9/30 12/31/71 TotalCash flow from operations (post interest) 216 216 144 72 216less investment in non-financial WCAP (37) 733 1817 (547) (1,918) 47less capx 15 15 10 5 15less repayment of bank loan 181 181 121 60 181cash flow, after invest and debt service 57 (713) (1804) 554 1938plus begin cash 1,131 1,188 528 503 491 less comp balance req't (20% loan) (564) (528) (503) (491) (455)equals excess (deficiency) 624 (53) (1779) 566 1,974 plus seasonal draw (max highlighted) 0 53 1779 (566) (1267)equals end cash (begin + cflow +draw) 1,188 528 503 491 1,162 change in cash 57 (660) (24) (12) 671 31

change in WCAP 78

begin seasonal loan 0 0 53 1832 1267end seasonal loan 0 53 1832 1267 0Bank term loan (monthly payments) 3,000$ 2,819$ 2,638$ 2,517$ 2,457$ 2,276$ minimum balance (20% term loan) 564 528 503 491 455

assumes Jan 1 close; operating flows not seasonalized

Financing• Since the anticipated August draw is still $168K under the

borrowing limit, Brooks is tempted to increase the upfront payment to Baring a comparable amount, from $1.75 to $1.918M

• Brooks soon realizes , however, even a small increase could cause trouble with the working capital covenant on the term loan

• Compensating balances are classified as current or non-current according to the loan itself– Since the term loan is non-current, so are the balances

– In the March quarter, the net working capital is $894K, exclusive of cash

– Therefore, adding the $624K of cash not held as compensating balances (the “excess” in the preceding slide) gives working capital of $1.518M, which is too close to the covenant, $1.5M, to permit any change

• Brooks has squeezed all the cash out of the firm he prudently can17

Financing

• The proposed financing package is, therefore,

• The main question is whether it satisfies the management’s and V.C.’s objectives– V.C.’s need a 20% - 25% return to 1976 (exit)

– Management needs to retain control (>50%), in the event the warrants are exercised

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Financing for Harrington Buyout $000's

Cash left in company 1,750$ Term loan 3,000Venture capital debenture plus warrants 3,000Baring subordinated note 2,000Management equity 250Total 10,000$

Valuation

• Seek to value the management equity using the APV method to value the firm

• APV seems a sensible approach because the debt schedule is fixed in dollar terms until the anticipated exit date, 12/31/1976– Flows to capital is a less preferred alternative because the methodology

assumes a constant proportional capital structure• Meaning the debt is fixed as a constant percentage of firm value; not true of

Harrington until after 1976

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Unlevered equity flows 1971 1972 1973 1974 1975 1976

EBIT 1,516$ 1,636$ 1,717$ 1,804$ 1,894$ 1,988$ tax rate 15.6% 17.3% 18.4% 20.5% 22.1% 22.5%EBIAT 1,280 1,353 1,401 1,434 1,475 1,541plus non cash charges 120 130 142 150 155 170less increase in working capital 78 82 86 90 95 100less capital expenditures 60 67 71 75 233 300equals unlevered equity flows 1,262$ 1,334$ 1,386$ 1,419$ 1,303$ 1,311$

Valuation

• Need an unlevered cost of equity to discount the unlevered cash flows– But case written before CAPM – no beta! - what to do?

– Use Gordon growth model: Pstock = d.p.s./(ke−g)• Where d.p.s. is dividend per share and g is the growth rate (in dividends or sales)

– Flipping the Gordon model around, ke=g+(d.p.s./ Pstock ); the term in the parentheses is known as the “dividend yield”

– Applying the model to the comparables in Exhibit 5 gives an unlevered cost of equity of ku,e=11.6% (rounded to 11.5%)

• good method of estimating equity costs in developing economies, such as China

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Comparables dividend yield + rev growth '66-'70 = cost of equity -riskless rate ÷ MRP =beta × % equity = β unlev'd Est'd unlev'd keKane 8.7% 1.9% 10.6% 5.25% 8.80% 0.61 71.5% 0.44Granger 3.7% 12.5% 16.2% 5.25% 8.80% 1.24 79.6% 0.99Linden-Johns 5.5% 9.2% 14.7% 5.25% 8.80% 1.07 70.3% 0.75

Average 6.0% 7.9% 13.8% 73.8% 0.73 11.6%

Gordon Growth Model

Valuation• For the terminal value, want to estimate WACC in 1976

– Using a capital structure typical of firms in the industry, namely 75% equity and 25% debt (see preceding slide)

• Harrington is expected to be a typical firm at that time; management and V.C.’s expected to cash out

– At a 7.25% rate, equivalent to the current bank term loan, the WACC is about the same as the unlevered ke

– The result is not too surprising, as the tax shields are small and the bank rate is high

• P + 2% is no bargain for the most senior debt in a relatively stable company 21

WACC calculationtarget equity 75%unlevered beta 0.70ke 13%pre tax cost of debt 7.25%tax rate (1976) 22.5%kd 6%

WACC 11.5%

Valuation• Estimating a growth rate for the post 1976 cash flows is

challenging– Surge in capital expenditures in 1975 and 1976

– Incremental increases in tax rate every year, notwithstanding Puerto Rican operations totally tax exempt until 1982 (shifting production to US?)

• Assuming the trends in capex and tax continue, growth in cash flow should be restrained, even though sales increasing at 5%/yr– 1%? 2%? Split the difference and say g=1.5% per year

– Therefore, a rough terminal value estimate is

• Note the terminal value includes the PVITS from 1977 onward 22

,1976 $1,311$13,111

10%

ueFCF

WACC g

Same as FCFcap of course

Valuation

• One way to check the terminal value is to compare it to the initial value

• It better be the case that Harrington can be sold at the same multiple of EBIAT in 1976 that management paid in 1970– Management is supposed to be getting a good price from the Owner

• After deducting the excess cash of $1.75M which is not part of the deal, the investors are paying $8.25M for the company– Or a multiple of 8.39 times 1970’s EBIAT of $983K

• In 1976, Harrington’s EBIAT forecast is $1.541M (slide 19)

• Thus, its estimated value at that time is $12.993M– Virtually identical to the $13.111M from the perpetuity method, the

number used henceforth below

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Valuation

• Ignoring, for the moment, the interest tax shields to 1976, the firm/enterprise value of Harrington is

• Based on an acquisition price of $8.25M net, the equity investors are getting a very good deal – an NPV of over $4M– But who exactly are the equity investors? Management? VC’s? Both?

• Need to come back to this question

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Valuation, excluding PVITS ('71-'76) 1971 1972 1973 1974 1975 1976EBIT 1,516$ 1,636$ 1,717$ 1,804$ 1,894$ 1,988$ tax rate 15.6% 17.3% 18.4% 20.5% 22.1% 22.5%EBIAT 1,280 1,353 1,401 1,434 1,475 1,541plus non cash charges 120 130 142 150 155 170less increase in working capital 78 82 86 90 95 100less capital expenditures 60 67 71 75 233 300plus terminal value 13,111equals unlevered equity flows + TV 1,262$ 1,334$ 1,386$ 1,419$ 1,303$ 14,422$

unlevered cost of equity 11.5%firm value & enterprise value 12,384$

PVITS

• The missing interest tax shields are unlikely to add significant value because of the low tax rate in the 1971-76 period

• An approximation to their present value can be obtained by discounting the shields by the unlevered cost of equity

• To do the PVITS calculation the right way, however, it is necessary to discount the shields separately for each layer of debt– At each debt layer’s yield to maturity

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PVITS 1971-76, simple method 1971 1972 1973 1974 1975 1976

interest expense 637$ 585$ 523$ 454$ 400$ 400$ times tax rate 15.6% 17.3% 18.4% 20.5% 22.1% 22.5%equals interest tax shield 99$ 101$ 96$ 93$ 88$ 90$

PV at unlevered cost of equity (=11.5%) $398.30

PVITS

• Here are the results of the so-called “accurate method”

• Theory says the accurate method results in a higher PVITS– And so it does here, but the difference is small ≈4%

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PVITS 1971 to 1976 ($ 000's) 1971 1972 1973 1974 1975 1976Bank loan:

average balance 2,638$ 1,851$ 945$ 233$ 700$ 900$ interest at 7.25% 191 134 69 17 51 65

tax shield 30 23 13 3 11 15Present value at 7.25% 78$

Seasonal loan:interest (plug) 56$ 61$ 64$ 59$ 32$ 65$

tax shield 9 11 12 12 7 15Present value at 6.25% 52$

VC debtaverage balance 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$

interest at 9.00% 270 270 270 270 270 270tax shield 42 47 50 55 60 61

Present value at 11% (est'd stripped yield) 217$

Baring noteaverage balance $3,000 $3,000 $3,000 $2,704 $1,192 $0

interest at 4.00% 120 120 120 108 48 0tax shield 19 21 22 22 11 0

Present value at 13.4% (IRR) 67$ Total PVITS 413.9$

PVITS• Note the assumed yield to maturity on the VC debt is 11%

– Lower than the 13.4% yield on the Baring note because Baring has the more subordinated claim

– Higher than the 6.25% yield on the 10 year Treasury bond (not in case) because the VC debt is illiquid and non-investment grade (“junk”)

• B-rated spreads to long Treasuries are normally 4% - 5%; here 4.75%

• As a straight debt security, the VC bond is only worth $2.746M, assuming an annual coupon of 9% and callable at par on 12/31/76

• So, why would the VC’s pay $3M?• The difference of $254K is the price of the “equity kicker”

(warrant) 27

VC debt, price to call (12/31/1976) 12/31/71 12/31/72 12/31/73 12/31/74 12/31/75 12/31/76interest & principal repayment 270 270 270 270 270 3270assumed yield 11%

present value (price) $2,746

The VC Debt plus Warrants• How do the VC’s know what the warrant is worth?

– An equity warrant is the same as a stock option, except the exercise price is paid to the company, not a third party

– Formula for valuing options (Black Scholes) not published until 1973!

• First, the VC’s compare their deal to management’s– Upfront cost of the warrant is the essentially the same as management’s

stock: $254K versus $250K, same number of shares

– VC’s, however, have an additional $250K outlay upon exercise• But that’s not for six years; can earn VC-like returns in the interim ≈ 20%

• And don’t forget: half of that outlay goes back to VC’s as 50% owners

• Thus, net cost of exercise only $125K; $42K on a PV basis (20% rate)– Even less if take into account VC’s can “put” the debt back at par as exercise consideration

– Bottom line: The VC’s pay less than a $42K premium relative to management for an approximately equal stake in the company

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The VC Debt plus Warrants• Second, the VC’s compare their deal to previous deals

– See if they earn a 20% - 25% holding period return, using the base case forecast and a 50% equity position

• Here is the equity value in 1976, when the VC’s expect to exit

• The estimate assumes the VC’s exercise the warrants in cash– Again, if the debt is trading below par at that point, it would be better

for the VC’s to use $250K of bonds at face value in lieu of money

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Terminal value of equity (12/31/1976)Terminal value of firm 13,110$ less bank term loan (399)

less seasonal 0less sub debt (3,000)

less Baring 0

plus proceeds upon exercise of warrants 250equals equity value 9,961$

VC stake (50%) 4,981$ management stake (50%) 4,981$

The VC Debt plus Warrants• Based on the terminal equity estimate, the VC’s returns are

• Note the VC’s meet their hurdle rate of 20%– The calculated return of 23.5% is in the approximate middle of the

required range of 20% - 25%

• Therefore, have a workable deal – management has a positive NPV opportunity and the VC’s meet their return objective without exceeding 50% ownership– But can management do better?

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VC cash and percentage returns 1970 1971 1972 1973 1974 1975 1976

interest 270$ 270$ 270$ 270$ 270$ 270$ principal less exercise cost ($250K) 2,750

terminal equity stake 4,981initial investment (3,000)

Total (3,000)$ 270$ 270$ 270$ 270$ 270$ 8,001$ IRR: 23.5%

Management• How well is management doing in the transaction as currently

structured?– Put in $250K

– Equity worth $4.981M in 1976

– Receive no dividends in the meantime

• Therefore, management is looking at an expected return of 64.6% per year

• Is a 64.6% annual return enough? Hard to say, highly risky position– Last to get out

– Restricted compensation

– Unlimited downside• have pledged house, car, and even little Thaddeus the cat

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Management • Perhaps a different perspective might help; here is the NPV of

the entire transaction

• There is $4.548M of value in Harrington over and above the company’s price; who are the rightful owners of this NPV?– The equity investors, clearly

– That’s management …

– Plus the warrant holders• As the transaction is currently structured, the warrant holders are entitled to a half

share in the upside (≈$2.27M), once they have paid the exercise price

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Harrington Enterprise Value and NPV simple APV accurate APVPresent value, unlevered equity flows 12,384$ 12,384$

interest tax shields 398 414

Total value, levered firm and enterprise 12,782$ 12,798$ less purchase price (8,250) (8,250)

NPV 4,532$ 4,548$

Management• Want to have one more look at the valuation

– Check the pricing of the debt as well as the equity

• Suppose all the principal payments scheduled up to 12/31/76 are rolled over with interest until the exit date– Like carrying a balance on a credit card until you get paid

• The accumulated principal and interest is $13.85M

• Consider what the equity is worth at that time, as a function of the firm value, VF

• For simplicity, assume the warrants expire at 12/31/76 and have a zero exercise price

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Harrington buyout debt $000's yield1976 acc'd princ'l & int

Term loan 3,000$ 7.25% 4,566$ Venture capital debt 3,000 9.00% 5,031Baring subordinated note 2,000 13.40% 4,253Total estimated value at 12/31/70 8,000$ 13,850$

Management• The value of the equity on that date is max[VF−$13.85M, 0]

– The equity equals the value of the firm less the debt • As long as that difference is positive; else, zero

• The equity value at exit is the same as the payoff of a call option– the underlying asset is the firm, whose initial value is $12.798M (pg. 32)

– the exercise price is $13.85M ; the exercise date is 6 years; the 6 year riskless rate is 6.25% (equal to the 10 year Treasury note, pg. 27)

– the volatility of the firm is assumed to be 30%, indicative of a safe business

– the equity value includes the warrants, which are either converted to stock on that date or thrown away

• Putting these parameters into the Black-Scholes model values the option and therefore, the equity plus warrants at $5.08M– Go to http://www.xleverywhere.com/samples/bs/bs.htm and try it!

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Management• The implied equity & warrant value of $5.08M is virtually

identical to the original estimate – The difference of $44K looks a lot like the exercise cost of the warrants,

which was ignored for simplicity in the option analysis

– The cost adds to value because it is a deferred payment for equity

• Therefore, if the firm is properly priced and the equity & warrants are properly priced, then the debt is properly priced– Here, debt refers to the aggregate debt, stripped of the warrants

• Cannot really comment, however, on the accuracy of the pricing of any particular debt instrument, just the totality

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Value of equity plus warrants at 12/31/1970 $000's Price paid for management equity 250$

Price paid for warrants 254NPV shared by mgnt. and wt. holders (pg. 32) 4,548

Total 5,052$

Management

• This analysis confirms management and the VC’s get basically the same deal as far as their equity interests are concerned– Both pay about $250K for a 50% interest

• That doesn’t sound fair– Management doing all the work; even betting the cat

– VC’s need to give up some of their equity percentage

• How far down can VC’s go and still clear their hurdle? 35.2%– in which case, management’s return increases to 72% and justice is done

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VC cash and percentage returns 1970 1971 1972 1973 1974 1975 1976

interest 270$ 270$ 270$ 270$ 270$ 270$ principal less exercise cost ($250K) 2,750

terminal equity stake (35.2%) 3,516initial investment (3,000)

Total (3,000)$ 270$ 270$ 270$ 270$ 270$ 6,536$ IRR: 20.0%

What happened

• Harrington Corporation is actually Keith Clark Calendar

• In 1967, John Keith “Pete” Clark decided to retire after 28 years and sold his company to four men– James O’Neill, Jay Negin, Robert Nevin, and Samuel Negin

• O’Neill became President, Jay Negin CFO, Robert Nevin Vice President, and Samuel Negin Treasurer

• In the mid 1970’s, these individuals sold the company to Lewis Cullman for $13M cash– Very close to the assumed terminal value of $13.11M used above

– Thus, the management team realized a better than 64.6% annual return• No information on the VC share, so how much better than 64.6% is not known

• But that’s not the end of the story – it’s more like the beginning

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What happened

• In Lewis Cullman’s autobiography, he described the Keith Clark Calendar business “as about as good as it gets”– Agrees with our assessment!

• Over the next 22 years, Cullman expanded the company until it had a 90% market share, while remaining sole owner

• In 1999, he sold the company to Mead Paper for $550M

• He and his wife, Dorothy, then embarked on a career of philanthropy, giving away $233M to a variety of educational institutions and medical centers

• You can read about it in his book http://www.lewiscullman.com/pages/cullman_bio.html

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