|Faces of the Middle Market|
Thompson Hine LLP corporate partner Louis Solimine says negotiating a family-owned business is a family affair. Solimine was lead lawyer for Cold Spring, Ky., bakery feed and cooking oil recycling business Griffin Industries Inc., which sold itself to Irving, Texas, food byproduct recycling company Darling International Inc. for $840 million Nov. 9.
Griffin had tapped Mike Hogan and Glenn Gurtcheff at Harris Williams & Co. in mid-March 2010 while it was in the midst of developing a succession plan, according to Darling CEO Randall Stuewe and CFO John Muse on a conference call the day the deal was announced. But, says Solimine, it "was more complex than that."
"It wasn't just succession issues. I would say that would be an oversimplification," says the Cincinnati-based attorney, adding that members of the controlling family had diverging views on what to do with a company that had dominated their lives for decades.
The target began operations in 1943 as a one-man, one-truck shop run by John L. Griffin. Originally called Falmouth Fertilizer Co., its primary service was collecting waste byproducts from rural counties around Cincinnati. The business, which dates back to 1959, began to expand in the early '60s with the acquisition of a rendering plant in Columbus, Ind. Over two decades, Griffin brought his sons in to help run the company and began acquiring new facilities, eventually building a regional network and settling in Kentucky in 1975.
Since 1959, says Solimine, "it's been a loyal firm client. That's the reason they came to us."
Some 10 siblings were involved at the time of the sale. "This was the second generation that was leading the company. Anytime you have that many brothers and sisters, you're going to have different needs, different financial outlooks," Solimine says. Griffin had been courted previously, but Solimine says the brood was able to reach consensus on selling to Darling.
A family-owned company like Griffin becomes a living, breathing creature tied to a clan's internal dynamic, Solimine says. "It's organic, and it [reaches] a point where family issues and company issues are one." Some relatives might want to generate wealth for future generations, while others have no interest maintaining a family enterprise in a rapidly changing industry.
"If you've planned ahead, you can sell a family business and transfer a lot of the wealth that results from the sale to the younger generation," Solimine says.