The offers were nothing new. As the owners of Cleveland’s National Paper and Packaging, Jeff Grover and his brother, Brent, had fielded them for years.
This time, however, was different. A Pennsylvania businessman wanted to buy the company, yet leave its day-to-day operations untouched.
If they accepted the offer, the brothers would still manage the company, no one would lose their jobs and the business would retain its longstanding name. In an age of consolidations in which the identities of family-owned businesses are often destroyed, the offer was intriguing.
The only question was whether the brothers could hand over the 85-year-old business to a complete stranger and end a tradition that stretched back to 1914, when their grandfather founded National Paper and Twine in a Detroit warehouse.
“You don’t take something you’ve literally grown up with and just divorce yourself from it,” says Jeff Grover, the company’s executive vice president. “I feared I may be taking from my children the chance to perpetuate the business. I asked myself, ‘Is this something my father would have done?’”
The offer inspired some serious soul searching and left Jeff and Brent with the monumental task of deciding whether it was time to sell. After consulting with his wife and children, Brent, the company’s president, returned with an answer: He believed it was the right time, and Jeff agreed.
While attorneys hashed out the details, the brothers were quickly faced with other choices, such as how to break the news to their suppliers, distributors, and, most important, their employees.
“Because of our culture, because of our ability to maintain very good people, we’ve developed a familial loyalty,” explains Jeff. “You cannot walk around poker faced and get away with it. People over the years know you so well that, even if you’re saying one thing, if the body language doesn’t match, they know.”
Last May, Jeff called his managers together for a closed-door meeting to discuss the specifics of the purchase offer. He was eager to see how they would respond, and whether there were concerns that needed to be hammered out before the deal could proceed.
He explained that Bill Leith, CEO of Pennsylvania-based SupplyONE, had offered to purchase National Paper and Packaging as part of a national consortium of industrial packaging, equipment and supply companies he was assembling. He had already purchased two other companies and had an aggressive acquisition campaign lined up for the next several years.
“We actually gave them the option of telling us if this was something that wasn’t suitable,” Grover recalls of the management meeting. “We wanted to get their support and we were also willing to hear if there was anything we were missing … You’ve got to be willing to let other people within your company, who got you where you are, to be part of the loop.”
When a letter of intent to sell the company was signed three months later, Grover called all 100 employees together to formally announce the sale and answer questions about the ownership change. There was risk in such an open approach, especially since the sale would not be official for two more months, but Grover saw greater peril in trying to orchestrate the sale without his employees’ knowledge.
“I think the reason this worked is it precluded people saying, ‘You guys are doing things for your own Machiavellian reasons,’” says Grover. “You have to be mindful that, in our case, we’re not only dealing with 100 employees, we’re dealing with 100 families. You must have a conscience.”
Two months later, on a mid-October morning, Grover was on the floor of an industry trade show in Chicago. It also happened to be the day that the sale to SupplyONE became official.
He used the opportunity to connect with many of National Paper’s suppliers to tell them about the sale and explain that everything would be business as usual despite the ownership change.
“It was amazing how fast news got out on the floor,” he says. “After a while, it was like wildfire. But I had a chance to talk about it to them face to face. It was just a coincidence that it all happened to be timed with a trade show, but it was great. It was serendipity.”
In addition to his work at the trade show, Grover sent 7,000 letters announcing the sale to distributors and suppliers in the National Paper and Packaging database. Jeff and Brent then sat down at their telephones and called executives at the 30 firms they did the most business with to answer questions and calm concerns about the change in ownership.
Publicly, Grover wanted to keep a lower profile. He feared the media might make a big deal out of the fact that a family business with such a long local history had been sold. On the morning of Oct. 13, National Paper and Packaging released a simple statement announcing the sale and the positive changes that would be made now that the company was part of the SupplyONE network.
“We wanted it to be very low key and it was,” says Grover. “We didn’t want it to be something like, ‘85-year-old company sold. Disaster hits!’”
Today, almost six months after the sale, Jeff and Brent Grover are still tied to National Paper and Packaging, but the company is no longer tied to them. Despite the huge changes that have taken place behind the scenes, Jeff says his job as executive vice president has not changed much.
“I still think I own the company sometimes,” he jokes. “Maybe it’s time for somebody to tell me I don’t.”
Grover prides himself on the fact it really has been business as usual for National Paper since the contract was finalized in October. He does know, however, that selling the family business is not for everyone, because there is a sense of loss connected with the experience.
“You deal, obviously, if you’re a family person, and even if you aren’t, with change,” he says. “If your ego is tied into your business to the point where you have to say that you own it, you’re probably going to have difficulty.”
Grover says a lot of the decision to sell came from simply getting the right offer at the right time.
“Nobody had ever made a compelling reason for us to want to sell,” he says of offers that filtered in during the early 1990s. “It wasn’t just the compensation, it was the question, ‘What is (the company) going to look like?’ The ability to keep the business intact was a big factor in the decision to move forward with the sale to SupplyONE, as well as the advantages a national company brings to the table, like expanded geographic reach and e-commerce applications.”
Never far from the surface of any business sale are assumptions that the owners were obviously influenced by the handsome payoff of selling a successful company. Grover mentions this, then promptly bristles at the notion.
Instead, he’s thankful that he could sell the family business in a controlled environment that was free of warring family members, waning business or just a simple inability to cut it anymore in a competitive market.
“Obviously, people do things for different reasons,” he says. “I’m only grateful we did not have to do this. We weren’t forcing ourselves because we were running out of time or our customers or suppliers were leaving, or one of our principals was dying or we were just flaking out.
“It was just the optimum time.”
How to reach: National Paper and Packaging, (216) 621-7522
Jim Vickers ([email protected]) is an associate editor at SBN.