Among NY’s most successful business moguls, Robert and Isaac Toussie say investors can learn recession investment strategy tips from their 1986 Heck’s department store ownership bid.
BROOKLYN, N.Y. / Nearly 25 years ago, a group led by the Toussies knew when step away. A proposed $145 million Toussie bid to acquire Heck’s Inc., a discount department store with locations in several states, had been reduced to $125 million, and it was quickly becoming apparent the deal wasn’t worth pursuing.
Even though the company seemed to fit the profile of many of Toussie’s corporate acquisitions, the warning signs of a company that had lost several million dollars in the last year were too loud to ignore. The Toussies have made bids for toy companies, natural resource conglomerates, food companies, and bible manufacturers
These successful entrepreneurs say an economic downturn is a great time for investors to look for companies which may have a solid structure in place and just need an infusion of capital to right the ship, but these investors should do their due diligence and see just how deep the company’s seemingly superficial problems run before risking their hard-earned money.
Why $145 million for Heck’s?
As the calendar turned to fall in 1986, a group led by the Toussies and Edward A. Viner & Company agreed to a deal to acquire Heck’s Inc. for nearly $145 million. To financial pundits in publications like the ‘New York Times’ and the ‘Wall Street Journal,’ the acquisition was met with a high level of interest because Heck’s had reported a loss in the previous year and Toussie had a reputation of taking companies in distress and reversing their fortunes.
When it came to Heck’s, Robert Toussie knew the company had a history of performance. The company was founded by entrepreneur Fred Haddad in 1963 and had expanded to 160 locations in several states by Toussie’s 1986 acquisition bid. Based in Nitro, W.Va., Heck’s provided discounted products like clothing, sporting goods, bedding, furniture, electronics and housewares in West Virginia, Ohio, Indiana, Virginia and Kentucky. The company also served as a retail arm of automotive supplier Steel City Products, Inc.
Robert Toussie: Why the deal did not consummate
For several decades ranging through the 1970s, 80s and 90s, The Toussies made multiple bids of more than $100 million for corporate acquisitions and they all had a similar theme. These companies had one specific trait in common, and it’s something investors should look for when investing in the current recession.
The acquisition targets were companies with stable businesses that were suffering from temporary, yet curable problems. The key in this economic climate, however, is finding a company that fits this profile, and isn’t simply a company on the verge of bankruptcy, which is precisely what killed the Toussie Heck’s deal. In February 1987, the merger agreement was terminated due to weak performance by the company in the final months of 1986.
About Robert Toussie: In addition to being a successful entrepreneur and investor, Robert Toussie is a national and international philanthropist who has donated millions of dollars to charity throughout his entrepreneurial career. Having amassed his fortune through successful corporate investing and asset buying, Toussie has committed himself to the cause of helping the less fortunate improve their quality of life. Toussie is also fiercely devoted to his family, which includes his four children, six grandchildren, and his wife of more than 40 years. Toussie received his MBA from Columbia University, and has been in business for more than five decades.
About Isaac Toussie: Continuing in the charitable path set forth by his father, Isaac Toussie is a New York-based philanthropist who has helped the less fortunate throughout the country. The younger Toussie graduated magna cum laude with a major in finance from the NYU Stern School of Business, and received his Masters in Business Administration from the NYU Business School at the age of 21, one of the youngest MBAs the school has ever produced. When he’s not continuing his working in the corporate sector as a writer, land developer or business advisor, Toussie is studies ethics, philosophy and law. He also enjoys boxing and karate in his spare time.