Tom

Upon graduation from Brown University in 1967, a politically centered institution at the time, I went to work for Enjay Chemical Company.  Enjay was a division of Standard Oil of New Jersey and now ExxonMobil.  Working for Enjay was a good decision.  Stable organization, smart people and growing opportunities as the chemical business was new and expanding.  I was placed in their “Plastics” division.  During my career I had many assignments in various disciplines.  Sales, marketing, financial planning and analysis, manufacturing, supply planning, forecasting and new product development.  After my first couple assignments I always had supervisory responsibility.  These assignments also required moving around a bit until finally landing in Houston for good in 1974.  In 1984, the company now called Exxon Chemical, was looking for new ventures and formed a department to search for them.  Seven senior folks from various department were brought together to lead this effort.  I was one of the group as was John Hartman who I knew through some interdepartmental work.  This exploratory group had a bit freer rein than the more established divisions.  This exposed us to more outside interactions and entrepreneurial thinking.  In August of 1985 just before leaving for a week of vacation in Bermuda, John asked me to his office.  He explained he was considering leaving Exxon to search for and purchase a company.  And he wanted to do this with a partner and was I interested in being that partner.  This was a surprise to me and caught my deep attention.  After outlining his thoughts which included remaining in the Houston area, I told John thanks for asking 

me and I would give it serious consideration while on vacation.  Contemplating a major career change while on the beach in Bermuda felt very good.  Betsey and I discussed this opportunity and came to a positive yes decision.  She was not hesitant and fully supported me.  What a wonderful partner!  One underlying push for joining with John was “company politics.”  The higher one rose in the organization the more politics seemed to have an impact on decision making and career progress.  Upon return from vacation, I advised John that I would be glad to join him, we shook hands and began contemplating our new adventure.  At this point we did not resign from Exxon.  Becoming entrepreneurs was our second job.  In spare time, on weekends and during evening hours we planned for an acquisition of a business.  We had a lot to learn and began the process.  We found a terrific book titled “How to Do a Leveraged Buyout.”  We read, reread and took notes from that book which became our execution plan.  We searched for information on companies in the Houston area of a size that met our purchase capabilities.  This was before the internet so finding information meant trips to the business library at Rice University, asking contacts at banks with whom we were establishing relations (They lend to small businesses.), reviewing Chamber of Commerce data and tapping into our own knowledge base. We also did a lot of gathering of our own personal information (financial, curriculum vitae etc.) knowing banks would want that informational to lend us money.  John and I had fun having quiet discussions at work, over lunch and while walking around the beautiful, wooded Exxon Chemical site with its lakes and manicured paths.  It was OK to leave that behind as a small price for becoming independent businessmen.  Having two jobs was not easy especially since one of them was, hopefully, not of a long-term nature.  We were making progress and by January of ‘86 we had a real interest in a Houston firm L D Blackwell.  This was an established company that produced plastic molded parts and assemblies.  “LD” liked us, he was probably mildly interested in finding what his business could garner and he gave us his financial documents.  We studied and analyzed them and made an offer.  He rejected it and we knew we were far apart, so we left LD Blackwell behind.   But we had made an offer so we knew we were serious.  At this time Houston and the entire energy sector was headed for a deep depression.  Crude oil prices tumbled to under $10 per barrel, Houston real estate values were significantly declining and the major energy companies were scrambling.  Exxon was no exception.  We found that small businesses were also affected.  Their owners had a hard time accepting that the value of their company had come down from the boom days of the 70’s and early 80’s.  It was in April that rumors at Exxon started circulating about a restructuring and layoffs.  Some of our colleagues were nervous. The owner of a company in which we had a keen interest, Fred Allen Company, had a son-in-law in the printing business.  He told us his son -in-law had just received a contract from Exxon in Houston to print material for a major personnel announcement.  John and I smiled when he told us this.  Sure enough, on May 8, 1986, Exxon distributed to all employees throughout the world an announcement on reorganizations and special severance packages.  Exxon wanted to reduce the number of employees by 15%.  They offered employees to terminate on July 31, 1986 and in return would continue salary payment and health insurance for an extended period of time related to one’s years of service.  For me the formula meant one year of salary and health coverage.  Same for John.  This was terrific and the very next morning we accepted the special severance package.  Some of our fellow employees were surprised by our decision but not all.  Everyone with whom I had contact offered congratulations and good luck.  I could tell there were some who wished to take up the severance offer but had no plans in place to do so.  Those nearing retirement age were positioned nicely to accept the plan as it was structured so that they could retire early with full benefits.  I believe Exxon achieved its goal of reducing its workforce by 15%.  John and I felt liberated as we no longer had to keep our intentions to ourselves.  We approached our immediate boss and explained there was no need for us to continue to come to work at Exxon Chemical and to our slight surprise he agreed.  We had to conclude some immediate work and report back on our last day of July 31.  John then contacted a good friend, E. Ted Davis, a Houstonian who John knew from days at UT and Harvard Business School.  Ted was a successful businessperson with a successful financial consulting company, many great contacts in Houston and rentable office space.  We took up space with Ted and continued our search.  We soon received a call from a fellow Exxon employee Tom Grant.  Tom played tennis with a friend who had a company he was interested in selling.  If Exxon had not offered the severance package allowing us to go public this contact might not have happened.  We pursued Tom’s lead and on a Saturday afternoon, after a Huntwick swim meet, we met George Colvill at his Lubrication Systems Company office on Stebbins Drive in Houston.  A strange first impression as the front door was locked with a sign to use the side entrance.  Front offices were shuttered because business was not good.   The three of us got along very well.  George was early sixties and seemed ready to move on.  He told us about LSC and its unique oil mist lubrication technology.    He gave us company literature and we then went off to study and learn more.  The more we investigated LSC the more interested we became.  I had heard about oil mist when working at the Baytown Chemical Plant.  Exxon was a user of oil mist.  Another positive was that a well-known rotating machinery expert named Heinz Bloch was a believer.  Heinz worked for a technology division of Exxon and had also announced he was leaving Exxon to become an independent consultant.  Small world as I knew Heinz when I worked at Baytown.  In late July we attended a going away dinner at Exxon Chemical and were on our independent way.  John and I liked LSC but we did not stop looking into other opportunities.  We talked to owners and visited more than twenty companies.  But the more we surveyed and dug the more we liked LSC.  It was not doing well financially at the time, but we saw potential and a need for new leadership.  We believed we could provide that necessary leadership.  On July 30, 1986, we presented a Letter of Intent to purchase LSC from George.  It did not take many days for both parties to sign the LOI.  Date of signing was August 8, 1986.  At that point George felt the need to announce to his employees his intention to sell the business and introduce us to them.  We did that one morning and he invited us to office at LSC and essentially step in and run the business until the purchase was final.  That was a very nice gesture and demonstrated his confidence the deal would be completed.  Along with getting to know LSC, John and I had to secure bank financing.  We had made contacts along the way, and they expressed real interest in funding us.  That was until we really needed them.  We made presentations to three banks and got rejected by each.  The environment in Houston for lending money had turned far south.  Banks did not want to get involved with any deal that involved Houston real estate as part of the collateral and we were going to purchase the LSC building.  Our friend Ted Davis came to our rescue.  He was on the board of Post Oak Bank and got us the opportunity to make our presentation to them.  It went well, and we knew Ted supported us.  They gave us the lending commitment we needed.  On November 6. 1986 the transaction was completed.  George Colvill had his money and John and Tom owned LSC.

We enjoyed our time at LSC.  We had a few down times but not many.  The company became very international with about half its sales outside North America.  Lots of business in the Middle East and Asia.  We became dominant and the industry leader in oil mist lubrication.  By 2005 we were letting our thoughts drift to retirement and soon got interested in selling.  We engaged an investment bank to lead this effort and were successful in securing several offers.  We wound up doing a deal with Colfax Corporation that closed in January 2007.  We were very please with our sale price as the funds allowed us to retire comfortably.  What started as taking a risk to leave an established career with a fine company resulted in a financially sound retirement and a great adventure along the way.  When taking a risk, do your best to understand what is involved and work hard to maximize a positive outcome.  Life cannot be lived without risk, but we can and should minimize the negatives.  This is what John and I learned from our acquisition of LSC and eventual sale of it.