Chapter 10: The New Man

The meeting with Jonas Faraday was fascinating. I had tipped my banker, Seth Fielder, to what was going on, and I wanted him to be included if it got to the point where we could seriously look at some type of ownership position. Seth was excited that this had come about so quickly, and was grateful that I had thought to include him in the early stages. He promised he would make himself available to me at a moment's notice. Then he dropped the bomb. He was also Jonas Faraday's banker. He said we would work out the conflict of interest issues when the time came.

I was ushered into the old man's office-den by his housekeeper. Jonas was lean and tall, and surprisingly erect for a man of his age. His eyes were bright, and he still had most of his silver hair, combed neatly back. He was a stately figure of a man, and I found myself hoping I would look this good at anywhere near his age.

When we entered the large room, another man stood and stepped toward me. Jonas immediately introduced him.

"Stanley, this is my son, Gabriel. Gabriel, meet Stanley Copely."

We shook hands, and I was directed to a large, leather wing chair at a conference table.

The housekeeper entered and served coffee and a selection of cookies. With the introductions and some small talk out of the way, Jonas decided to get to the reason for the meeting.

"Stanley, for the past three years, I have been selling off some development property I own in order to raise the cash to quietly buy back some of the F & C stock I surrendered nearly ten years ago. It was a bad decision on my part, and I regret it to this day. However, I have now recaptured a sizeable amount, and with my son's shares, we are almost in majority ownership. With a couple of votes from some of the minority shareholders, we would be in complete control of Faraday and Crosse once more.

"Should we accomplish that, it would allow me to set the company back on a course toward rebuilding its reputation, as well as its profitability. The business is losing money as you might have suspected, but not so much that it can't be salvaged with some astute moves. That's where Gabriel comes into the picture," he finished, nodding to his son.

"I've been in the venture capital business for some years now," the younger Faraday began. "By and large, my partners and I have been very successful at finding weak businesses and restoring them. In almost every case, the key ingredient has been to find the right people to run them.

"Dad has been trying to get me to step in at F & C, but that wasn't going to happen unless we could secure the majority vote on the board. We've been doing a bit of behind the scenes lobbying, and we are confident we have the required votes to take back control of the company. That's the easy part. What we need is someone who can lead the business back into the black and make it sustainable. That's the hard part," he grinned.

"I've done some poking around and asking some knowledgeable people about the situation and I wanted to bounce some ideas off you. I think you're close enough to the workings still to know what might work and what won't." He paused for a moment to sip his coffee before continuing.

"I don't think the future of F & C is in the manufacture of packaging machinery. It has slipped too far behind the pack of competitors -- many foreign -- to recover without a massive investment in manufacturing machinery, and even then, there's no guarantee we could be competitive. So we decided to look at it from a different angle."

Gabriel paused again, taking another sip of the coffee as he collected his thoughts. I was fascinated at where this conversation was going.

"I think what might work is a distributorship with assembly and service capability. In other words, we would approach a number of machinery manufacturers to act as their distribution and service arms throughout the U.S. In addition, we would set up a separate business to assemble components into finished machines for these companies. It would be to their benefit as well as ours. It would mitigate import duties, and give them 'American' content. Finally, we would also set up a separate service department that would do what you are doing today. Taking on all comers," he smiled.

I didn't say anything right away, trying to digest just what Gabriel had proposed. My thinking wasn't interrupted as they waited for my response.

"I like parts of it, for sure. I agree, it's probably too late to catch up on our ... your ... own. The question is, how divorced from the distributorship is the service division? Are we ... you ... going to have problems with the manufacturers when we service competitors' equipment?" I was having trouble not thinking of myself as part of this company, and I could see Gabriel and Jonas smiling at my awkwardness.

"Everything has to be above board, but then, I really don't see a big problem," Gabriel noted. "It's in their best interests to have the top service available. They aren't able to provide it, especially from a foreign country that can be thousands of miles from here. Their interest is in selling machines, and that's something that F & C still knows how to do. It's the other parts of the business that are weak; particularly the service end."

Jonas then added his voice for the first time. "That's where you come in, Stanley. I can't think of anyone who is better able to understand the service requirements than you. That includes training, both in-house, and at the customer level. What it will take is leadership. The kind of leadership you showed at Winston Candy on the Helmvac installation."

"I gather you've been talking to Byron Mulliner," I smiled.

"Yes indeed. He gave me chapter and verse about what you accomplished and just how quickly it was done. I saw the machine, and it was pretty damned impressive, considering you had never seen one before."

"Yeah ... well ... I had a bit of luck, along with some good people."

"Mr. Mulliner and his staff think otherwise. But nonetheless, you led by example and got them out of a big jam. That's the kind of leadership that fixing F & C is going to need." He sat back, looking quite satisfied with himself.

"Maybe you'd better spell out what you have in mind. Anything along the lines of investment by me is going to require the advice of my banker. I understand you know him, Jonas — Seth Fielder."

Both men chuckled. "He's my banker, all right, but he's also a friend. Very progressive young man is Seth. Something like you, I think. That's probably why he has such a high opinion of you, Stanley."

"Yeah. We work well together," I agreed. "So, tell me what you have in mind, please."

"The service business would be owned and operated by you, just as Copely Services is today. In fact, it might be wise to let it remain Copely Services and just continue to expand it the way you have," Gabriel suggested. "You would receive twenty percent of the outstanding F & C shares to complement your investment, and as payment for your company's good will. We stand to gain a lot with your name as president."

I nodded. It didn't sound too adventuresome yet.

"The component assembly operation would be under your supervision. Our belief is that you can implement the kinds of quality control that will be essential to restore our good name. In return, you would receive a further twenty percent of our F & C shares. Keep in mind that the outstanding shares are about forty-seven percent, so roughly half the total number of shares. The two offerings would then amount to about nineteen percent of the total shares of F & C," Gabriel explained.

"In addition, the success of the company will permit us to offer you further share options as performance bonuses for each of the divisions. Until we know what our valuation of the shares is, I can't tell you specifically what the worth would be, but I can tell you that even at this low ebb in the company's affairs, it is a very handsome amount. Naturally, you would want that substantiated by an independent source to satisfy yourself that it is as represented."

My head was spinning. It was too much, too quickly, but if I understood the gist of it, I hadn't heard where I had to put up my money to get into this plan.

"So ... what do I have to invest to become part of the Faraday and Crosse group?"

"We would want a one hundred thousand dollar bond, to be held in trust for two years. After that, you would have either exited the partnership, or become a fully vested member. You see, we need you more than you need us. Yes, we have to protect ourselves, but we are very confident that you can help us bring our family's company back to life. To make the Faraday and Crosse name mean something again."

"So, really, I'm borrowing a hundred thousand for two years to get almost twenty percent of the company, is that about it?"

Both men smiled. "That's about it, Stan," Gabriel grinned.

I nodded. "I'll have to talk to Seth, of course. He's my money man."

Jonas leaned forward in his chair. "I don't mean to meddle in your affairs, Stanley, but ... Seth and I have already discussed such a transaction in the abstract ... without mentioning names. He's pretty confident that he'd be agreeable if it was the right person." He gave me that satisfied smile once more. I'd been set up, but then again, no harm had been done.

"There are some other considerations that I haven't even thought about. I'm engaged to the production manager at Winston Candy in Charlotte. She has a great job and she's really just getting established there. That's going to influence any decision I make."

"I think I can put your mind at rest on that, Stan," Gabriel said. We intend to sell off all the equipment currently in this plant. This land is very valuable, but taxes are high. There are some attractive options to moving the new F & C to North Carolina. Little of what's on our current shop floor would be needed for a new plant. In other words, the company would relocate to ... oh say ... the Charlotte area," he smiled. He had inherited his father's smile.

"That would make my decision a lot easier," I admitted.

Jonas opened a file folder, took out several pages, and handed them to me. "Here's our proposal in writing. Have a lawyer and Seth look them over. I don't want any misunderstandings, so make sure you know what we are offering and what your risks are before we agree on anything. Just the same, I'm pretty sure you're going to find the terms very advantageous to you. We're interested in having you as a main pillar in the re-birth of Faraday and Crosse. I hope you'll agree."

"Thanks, Jonas ... Gabriel. This is completely unexpected, but exciting at the same time. I do have some questions, though. Do you have time to talk about them?"

"Yes ... but why don't we adjourn to my club for lunch. We can talk there in comfort," Gabriel suggested.

I rode in the back seat with Jonas while Gabriel drove us to a very exclusive businessman's club in the city. It gave me a chance to ask him what he had been doing while the new owners were running the business.

"Gnashing my teeth in frustration. I made a stupid error in judgment about the group that got control of the shares. I thought they would invest in making the company better, but just the opposite was true. F & C was a cash cow, and they were milking it for all it was worth. That's what has put it in the position it now finds itself. They probably would run out the game to the last dime, then declare Chapter 11. I'm determined not to let that happen."

That explained a lot. While a handful of upper management was pulling all kinds of cash out of the business, the rest of the worker-bees were pushed to keep the business going as long as possible. The "belt-tightening" wasn't happening in management, only with the staff and hourly people. I could feel the anger building as Jonas told the story.

"There was a time when I thought it might be best to let it slip into Chapter 11, but I guess my ego got in the way. Our name always represented something solid and secure. If we did declare bankruptcy, it would damage that reputation severely, and make it that much more difficult to recover. I've chosen to try and save the company instead," Jonas explained.

As I sat there beside him, I remember why I liked and admired this old man. He was class, through and through. His son seemed to be cut from the same cloth. These were people you could trust and work with. I had a more confident feeling about this proposal, but I would heed their advice and get some expert opinion.

"What about the people still working at the plant? Have you given any thought to that?" I was enjoying an after-lunch ice tea as we picked up our discussion once more.

Gabriel chose to answer. "Yes. Subject to your approval, we would offer relocation to anyone who wished to remain with the company and move to North Carolina. I think you and some of the people you trust could pick out any who might not be appropriate. Those who didn't wish to move would be offered a severance based on years of service. We don't have any idea what percentage of the current employee base that might be."

"What about the management?" I asked, knowing what I would like to do.

"Well, if I had my way, I'd fire the whole damn lot of them," Jonas spoke up.

Gabriel and I laughed. That was no surprise.

"They're not all deadwood, Father. Besides, someone has to run the place, and we can't replace them all in a day. We'll have to take it one at a time, wouldn't you say, Stan?"

"Yeah. One at a time. Do you know where we can rent a set of public stocks?"

That brought a round of laughter and broke some of the tension. I was now immersing myself into this company, and I hadn't signed anything yet. I was feeling like I wanted this to work; not just for me, but for the Faradays, and the employees. Once more, I was at a crossroads, and I had some decisions to make.

We parted company just after two that afternoon, and I called Seth to see if I could meet with him. He must have anticipated my call, because he said to come right over. When I finished his call, I called Carmen. Teresa answered and I asked her for an appointment with Carmen ASAP, explaining what was happening. She said she'd call me back as soon as Carmen was back in the office.