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Timing has a lot to
1972 – 1983 COO the CEO, Major Aircraft and Parts Distributor and Dealer The aircraft company was a public company with sales of about $33 million. They had a new plane and parts distribution agreement with a major aircraft manufacturer for all or part of 13 states in the mid-section of the country. They also owned the world’s (arguably) largest Fixed Base operation and aircraft dealership. They had supplied many of the planes that the aircraft rental company had purchased, and therefore were not strangers. Both the major aircraft manufacturer and the aircraft distribution company were involved in a $100+ million antitrust lawsuit. The aircraft distribution’s contract with the aircraft manufacturer went back to the 1950s, but it was a one-year renewable contract. No one wanted this puppy. But some homework showed that even with these negative factors this could be the new ship. In the spring of 1972 a fixed-price option was obtained on a majority of the aircraft distributor’s stock. A financing package was structured with a major bank that included a rights offering to the acquiring company’s shareholders. The acquisition was structured as an asset purchase and a definitive agreement was signed in July 1972. Buck closed the acquisition for assets and stated liabilities in October 1972 and took the company private. Based on the fixed-price negotiation there was an extra bonus, the company ended up with about a million dollars in negative good will. Buck took control of the company, established a relationship with the aircraft manufacturer and the distributor’s dealer organization, put in strong reporting functions, a heavy-duty number crunching department, established a sales plan with review and rewards and let the existing sales management run with the ball, of course with ongoing oversight. It was important to put a President and Chief Operating Officer in place. Buck had the exceptional good fortune to find such a person within the aircraft manufacturer. With a strong organization and repayment plan in place, the original stockholders of the acquiring company were offered the option of selling back their stock. The majority offered their stock and not only got back their original investment, but a good premium as well. In April 1983 the company’s license agreement to distribute aircraft was sold back to the aircraft manufacturer producing about a 300% return. The license to sell parts had been sold back several years earlier for several million dollars and the fixed base operation had also been sold for a seven-figure price. In addition the company had earned 7-figure income since the first day. The sales had grown to $100,000,000 at the time of sale from $33,000,000 at acquisition and that was after selling the fixed based operation and parts business that had been about 50% of the business at the acquisition date. The General Aviation business started its decline about April 1983 and virtually went to zero, with the exception of the business jet market. Good timing never hurts Along the way and as a part of the lawsuit the company was involved with, the aircraft manufacturer required the sale of the aircraft dealership that was part of the original acquisition. Buck put together a sale with an east-coast company for a seven-figure price, cash and notes. Several years after the sale and as a part of the monitoring process allowed by virtue of the notes taken in conjunction with the sale, it was discovered that some of the aircraft inventory had been sold out of trust, perhaps a million dollars or more. The bank involved was the company’s, as they had continued their relationship with the dealership after the sale. After a series of hurried meetings, Buck agreed to buy back the company, take a debtor-in-possession credit line from the bank, and immediately place the company in a Chapter 11 proceeding and fix it. The company was stabilized within months based upon the efforts of the management that was put in place, and then returned to profitability and sold. >> More |