Seventh decade… 2008 – 2018

Seventh Decade… 2008 - 2018

The Business would turn 60 without its founder.  Despite the ups downs and mistakes, the business had excellent name recognition. After 60 years in the same neighborhood, Leiser’s was the destination for 3 generations of customers. Two years after our father’s death, his estate planning would slowly surface as the sisters would decide to share the documents. My mother would receive a trust that would continually grow as loans my father made were repaid.  My father's collection of mounted animals and a one-room schoolhouse would be supported by a foundation that was funded by his share of the business. My fathers' favorite charities would receive cash gifts. As complete as my father’s estate planning was, there were no documents that would address the business transition.  If a transition plan existed, the sisters would never produce them.

My sisters would take control of the business, claiming my father's deathbed instructions would allow them to share the position of President.  My sisters who were minimal stockholders would ignore the legal procedure of including the stockholders in a reorganizational meeting to elect a new board of directors.  On a list of shareholders, my name would be on the top of the list with 18% ownership, my mother had 13%, my sisters would be 3^rd and 4^th on the list of shareholders with 10% each. Several employees had small amounts. 

My sisters would now make significant changes to the business. The sisters would reward themselves with substantial benefits package increases. They would discard the company's policy and procedures guide and would elevate themselves above the other shareholding salaried managers. They seemed to have unlimited paid vacations that averaged 8 weeks a year. The sisters would run the business as if they were the only shareholders. 

Sister one would bring one of her sons into the business and install him as an operations manager.  He would receive a hefty compensation package that would include the business purchasing and maintaining a truck for his personal use.  His only qualifications to execute the position of operations manager would be a few weeks during a summer break many years before.  He would enter the business with a college degree, however, with no business training or background.

While my father never spent a great deal of time poring over financial records, he understood the seasonal and economic ups and downs of the business.  He understood staffing and realized how far the company could be stretched financially before it broke.  This knowledge was beyond my sister's ability to comprehend.  While the company had a competent Accountant he would not be consulted as the sisters made significant changes to the company. My father had left a substantial rainy day fund; however, the sisters burned through that within a few years.

The primary deficiency in the business’s management would continue to be the understanding of human resources.  Even before my father’s death, the sisters would increase the staff. The payroll and benefits costs were growing faster than income.  Our business is very seasonal.  During May through October, cash comes in by the bucket. During the winter, the company operates at a loss. My sisters never understood how to budget for the seasonal and economic ups and downs to carry the business through the slow periods. Once the rainy day fund was gone, the sister’s just borrowed the money needed to take the company until spring. As each year passed, it became more challenging to repay those short term loans. Eventually, positive numbers turned into negative numbers as yearly debt increased. 

The sisters serving as co-presidents was a disaster from the start.  As the staff took sides, the morale among the other managers was now becoming a problem.  My mother, who had been asking me to get involved in the business since my father’s death, was now pressuring me to get re-involved as she found herself in the middle of sisters bickering.

In 2008 my mother and I would meet with the business’s attorney to get an understanding of our rights as shareholders.  After the visit with the lawyer, I met with some of the employee stockholders and asked for help to legally reorganizing the business and elect a new board of directors with a single president. The employee stockholders clearly saw the problem. However, they felt attempting to remove the sisters as co-presidents would make workplace life a living Hell.

Without a commitment of help from the employee shareholders, I could only stand back and watch the business implode.   

The sisters began cementing their own personal power by using company money to repurchase stock from those employees who had received shares as a gift from our father.  My sisters would cheat the employees by convincing them that the value of the stock was less than 25% of its actual value.  Locking away voting shares in the company safe would decrease any chance of losing power in a shareholder election. The sisters would even go into my father's foundation and remove stock at the same discounted price.

The sister's lack of financial understanding to see the business was sliding towards insolvency. My Stock, some of it that I had held since 1970, was decreasing in value.  I asked my sisters to purchase my Stock.  There offer of twenty-five cents on the dollar was unacceptable. With each share of stock, the company repurchased my influence in stockholder's votes increased.  If the sisters wanted complete legal ownership, they would need my Stock.

The sisters and the company Lawyer would broker a deal where my mother would purchase my stock. I would receive about 75% of the value our father put on the shares in 1995.

I need to explain my mother's involvement in the business. As of January of 2020, my mother has been suffering from Alzheimer's for almost 10 years. However, before my mother's memory was affected, my mother was never involved in the business or included in any business decisions. All of my father's purchases and financial dealings were handled by having my mother stop by the lawyer's office or stop at the bank and sign papers. 

My youngest sister spent the winter before our father's death in Florida, helping my father finish his estate planning. Sister was mostly driving our father between attorney and accountant appointments. During the winter of 2006, this sister would gain power of attorney for both of my parents.

The one question is why our father would give such power to one person who has no understanding of financial or legal oversite, knowing our mother was equally blind to family and business financial decisions?

I can only think that he believed his estate planning couldn’t be amended.

Many of the financial decisions the sisters made were completed without professional advice. My mother's accounts were drained of significant assets that were used to cement the sister's ownership of the business or a temporary patch on a failing company. 

Completing this transaction without professional approval, at a minimum, would be unethical. I have asked many times for financial oversite of my mother's finances; however, the sister has a power of attorney to prevent my access.

No sooner than the Stock transaction between my mother and me was complete; the sisters would go into my mother’s accounts and remove all of her stock, including the shares my mother just purchased from me.  The Stock that the sisters withdrew would be split between them. By collecting the shares from my mother’s account, my sisters would now wholly control the company without spending a dime of their own money.

The older sister who worked so hard to push me out of the business now only had one obstacle in her way to gain complete control of the company. She knew the younger sister couldn’t stand up to her. For the employees who have been tiptoeing around the feuding co-presidents, things were about to change. The sisters would complete a plan that they started when they used my mother's money to purchase my stock.

 The younger sister would now sell her Stock back to the company for a significant retirement and benefits package.  The sisters would enter into the agreement without consulting the accountant or informing the Bank. The deal would be completed even though there was not enough cash in the business that was already deep in red ink to complete this transaction.

The next move the sisters made was truly diabolical. The sisters would hatch a plan to use the rent payment to finance the stock purchase.

The first step would send the sisters back into my mother’s account and cancel the Mortgage on the business’s property. Without a mortgage, the rent would go directly to the three partners. With ten years left on the mortgage, this would rob $600,000.00 out of our mother's account.  

I need to explain the Partnership. The Business property was owned by a Partnership of my two sisters and myself. This partnership was created by my father and his attorney in the early stages of his estate planning. Selling this property and holding the mortgage would reduce tax exposure. This partnership, established in 1993, would purchase the property, and the partnership would collect rent from the business. The agreement sale gave us three years to raise the $14,000.00 down payment.

Once the down payment was raised, the transaction would be completed. My father was always concerned that we never got something for nothing. We would receive $6000.00 a month in rent from the business. The six thousand dollars was just enough to cover the Thirty-year mortgage. The lease was written to be priced under market value. The property was priced over the market value. With my father owning a majority of the company's stock, a rent increase could never be negotiated while he was still in control. Our father's instructions were once he had passed or gave up control of the business, we could cut our salaries and raise the rent to save on taxes. The sisters who controlled the partnership with a two against one vote refused to consider a rent increase after our father's death.

The next step in the plan, the sisters, would rewrite and sign a new lease that removed penalties for late or missed payments. The sister's next step was for the company to stop paying rent to the partnership. I did receive my share of the rent payment for a few months before it stopped. When I realized that I hadn’t received my share, I asked the sisters why? They explained they never paid rent in the winter. When it was mid-summer of 2013 and still no rent check, I hired a lawyer.

As my attorney read the partnership, a disagreement called for the partners to either buy out the one partner or dissolve the partnership. The sisters agreed to dissolve the partnership and sell the property. A real estate agent of the sisters choosing was hired, and the work began.

Why wouldn’t the sisters just pay me my share of the rent to keep me quiet and in the partnership?

Greed!

Why were the sisters so agreeable to sell the property that the business was located on?

As my father's health was failing, he could no longer pick-up a paintbrush or a hammer and make the repairs to the property. (this was a triple net lease where the tenant is responsible for all repairs and taxes.) The building was dying; the property was unkempt, and the sisters and nephews felt they could find another location for less money. With siding falling off, broken areas of flooring, and a leaky roof was turning the customer areas into a moldy dump. The idea was piles of garbage, and broken equipment would scare off any potential buyer.

Attorney Visit Summer 2017

It worked!

This would give the sister and nephew time to find a new location.

The real estate agent found a few good prospects that the sister chased off. When we were about to sign a contract, the sister and nephew decided they would buy the property instead. The sister and nephew acquired a loan, and they only needed to raise a down payment. For part of the down payment, a significant portion of the rental equipment was sold off. For the rest of the down payment, the sisters went back into my mother's account for a loan. When the bank learned of the rental equipment sale, the loan was pulled. It was easy to see that without the equipment that was sold off, the business could never repay the loan.

The loan from my mother's account was used to reduce some of the outstanding debt and has never been repaid.

During the summer of 2017, the partners with there attornies met for a tour of the property. The attornies must have been shocked at the deplorable condition because behind the dirty showroom was a 2-acre junkyard. The three attorneys agreed to force the nephew to clean up the property. This cleanup project was never started. In late 2017 another potential buyer was scared off by the condition of the property, and an eviction notice was issued.

After four years of past-due rent, the nephew received the notice he could not ignore and had 90 days to vacate the property. 

Post evection cleanout

 April 2018, the nephew moved the business to a building not far down the road. The building only had a quarter of usable warehouse space and was hidden behind trees. The move was made without proper advertising, and many customers never found them.

And for the first time in 5 years, they had to pay rent.

Eighth Decade…2019

A decision was made to eliminate tool rentals and just rent party equipment. January 2, 2019, was the first day of a Party Rental only business. The remaining tools were sold off in a few auctions.

Today rental specialization is the rule rather than the exception. Most general rental stores are converting to there strength. Leiser’s Rental in Bethlehem is one of the oldest tool rental stores in Pennsylvania. Eliminating the companies strength and focusing on the weaker side was the last dumb decision. For the money spent on a new website and thousands spent on high-end advertising, it was too little too late.

On September 30, 2019, the end came quickly. The door that was unlocked for the first time in 1948 was locked permanently for the last time at 5pm on September 30, 2019.

My store in Forks Township remains open for business. The Forks Township store was my father's test to see if I could repeat what he did in 1948. Forks was opened using repurposed old farm buildings similar to what he did in 1948. My rental inventory was equipment salvaged from the closing of the Macungie store in 1985.

Obviously, I passed the test.

I turn 65 in 2020, and my business does not have a succession plan. My store will be open as I transition the company to continue on in semi-retirement. 

The End

Afterword

In hindsight, it is very easy to spot the mistakes.  I can tell you from being involved all my life they were not so easy to spot while they were happening.  My Father built a very successful business, starting with only a Jeep and a Rototiller.  He enjoyed building the company; he did not enjoy running the business.  My Father loved hunting and traveling; however, the love of his life was building. During the last 20 years of my Father’s life, he had his airplane, his rifle, and he had his hammer; this is what his life was all about for him.

There were many mistakes made over the last 70 years. Some businesses survive most, don’t., this happens with every business. My father blazed new trails in a new industry and found success. My sisters and nephew chose to ignore his path to success. When my father passed, the business had the depth and strength to shake off mistakes. While my father learned from his mistakes, my sisters didn’t. 

I have worked with my father since 1963. It is sickening to watch the greed of my sisters and nephew take down something I helped build since I was 7 years old. 

I offered the sisters and nephew help and advice. For that, I was ridiculed and slandered. Statistics will show that more than 50% of family businesses will fail when the second generation takes over.  After the transition into the third generation, 90% of family businesses will fail.  This statistic seems to be true.

Do I believe my Sisters hid the business transition documents?  Not likely, it was more likely by reading my Father's letters that he didn’t expect the business to survive after his involvement ended.  My Father spent the last year of his life updating his estate plans.  If he felt the company needed to be addressed, he would have.

My Sisters never wanted to invest the time to learn the Business.  My Nephew never worked in the business before taking the helm.   

When my father passed in 2006, I could have legally booted my Sisters off the board of directors, and cleaned out the deadwood why didn’t I?  Doing so without any cooperation from the staff while running my own business was not worth the aggravation.

 

How is my Mother doing financially? 

Who knows Sister 2 is keeping my Mother's financial status hidden from the rest of the family.

 

How am I doing? 

Despite my limitations of operating out of a collection of farm buildings, my business continues to grow and will be celebrating its 35^th anniversary in 2020.

What about my fathers hunting trophy collection and his foundation?

Aproxemently 35 full mounted animals ranging from Geese to a Moose and Polar Bear well hauled off to a local auction and sold by the nephew without the family's permission.