by Nancy A. Ruhling
The elevators on the 41st floor open to the waiting room of Triarc Companies, Inc., whose shining silver logo is splashed like a constellation in the sky across the wall above the sleek, wooden reception desk. At the end of a rug that could cover a volleyball court, two large chairs, their arms decorated with billiard-size black balls, stand elegantly on dainty ebony hooves before a bookcase filled with leather-bound classics.
In the center of the vintage red and gold japanned coffee table, surrounded by the daily papers—from The New York Times to the New York Post—sits the only modern piece in the room: a Lucite box that looks like an ice cube from King Kong’s cocktail glass.
The eye-catching piece isn’t so much sculpture as showcase or shrine. Inside, preserved for eternity, is a key piece of Triarc history: a bottle of Mistic Rain Forest Nectar, strawberry-banana flavor, whose orange and green parrot label is an exact match to the room’s color scheme.
Triarc’s Chairman and CEO, Nelson Peltz, notes that it’s there because it was the first company they acquired in the move to build their beverage business into an empire, and it paved the way for the addition of Snapple and then Stewart’s. And it was Snapple that was one of Triarc’s greater—and most publicized—success stories. In 1993, Quaker bought the high-profile beverage company (remember all those snappy Snapple Lady commercials?) for $1.7 billion. By 1997, Snapple was as flat as day-old soda pop and Quaker considered itself lucky to sell it to Triarc for $300 million. A mere three years later, Triarc had turned Snapple around and sold it and its other beverage brands to Cadbury Schweppes for a whopping $1.5 billion.
The story of Snapple is the story of Triarc, Peltz, and his business partner, Peter May. The Snapple scenario—taking over a faltering company, turning it around, and turning it over for giant profits—is rooted in the 1980s, when Peltz and May became the Kander and Ebb of the leveraged buyout. They took over Triangle Industries in 1983 and then three years later, with financing from Drexel Burnham, acquired National Can in one of the first buyout deals financed by high-yield bonds. The deals transformed Triangle. By 1988, only five years after Peltz and May took control, this relatively small concern was the world’s largest packaging company and the country’s 98th- largest industrial company with more than $4.5 billion in net sales. Its stock had nearly tripled. More recently, the golden boys look to be repeating their success with their acquisitions of several other companies, including Arby’s and Deerfield Capital Management.
But the story of how the 63-year-old Peltz came to be one of America’s most famous businessmen and one of the country’s richest people—on the Forbes’ 400 List in 2004 he was ranked No. 278 with an estimated net worth of $1 billion—is as incongruous and as intriguing as the bottle of Mistic planted prominently in the elegantly formal waiting room.
How did he do it? First off, he didn’t do anything by the book. And, a lot of things just happen, not by any grand design. In 1963, at a time when it wasn’t yet cool, he dropped out of the Wharton School at the University of Pennsylvania so he could be a ski bum. “The snow melted on the East Coast,” he says, “so I got a job teaching summer race camp in Oregon. But I needed money to get to Oregon.”
Sitting in in his glassed-in office in the sky, where the MetLife Building is so close you can almost reach out and put it in your vest pocket, Peltz looks like anything but a ski bum. Dapperly dressed in a crisp suit, the charming and courtly Peltz, Triarc “Cash Is King” coffee cup at hand, and the world at his blinking BlackBerry’s beck and call, looks as though he were born in a boardroom.
“So I took a job in the family food business—we sold fresh produce and frozen food in New York—driving a truck for two weeks for a hundred bucks a week to get gas money for Oregon. My father said I could have the job if I shaved my beard, so I did. It was a very small business, and I saw all the opportunities and all the mistakes everybody was making. My father said, ‘If you don’t like it, why don’t you change it?’”
And change it he did—with that trip to Oregon falling by the wayside. Between 1963 and 1978, he turned the $2.5-million private company into a $150-million publicly held company. Along the way, he started what he calls “a little investment fund on the side.” It was with the fund’s money that he began financing the leveraged buyouts that would make him rich and famous.
What’s the secret to his stunning success? The answer, he says, is simple: Common sense. “We didn’t invent anything—whether we built American National Can at the time into the world’s largest packaging company or resurrected Snapple or some of the other deals we did that were not as well known but were just as successful—all of them had the same ingredient: fundamental common sense,” he says. “Understanding your customer and understanding what that particular business needs, that’s essential. Some need a wider-angle vision, and some need a narrower focus. There’s no formula. But they all need a strong ingredient of common sense and getting away from all that clutter; understanding a road map for that business.”
The high-yield bond deals that left other businessmen shaking their heads and that made him a headline name in the 1980s were crucial to his success. “It was a brilliant instrument and an instrument that was very necessary,” he says. “Big companies in those days, like AT&T and GM, could issue long-term debt; smaller guys like me could only borrow from a bank to take over a big company. You needed to get capital on a different basis, and when that capital arrived, it was an eye-opener for me—it was a great facilitator. But once you acquire the business, then you have to make something of it in relatively quick fashion because you have this interest ticking at a pretty high rate.”
Peltz looks for companies that are undervalued or undermanaged. Then, his winning formula starts clicking in: “What would we do differently? If we have a vision for that business, we will make an investment. We then work with management or bring in new management and that management has to share that vision. I just liked building businesses; I didn’t have a passion for one particular business.”
While he was salvaging unwanted companies, he developed a keen interest in investing. “I used to read every annual report I could get my hands on, and I used to go through the monthly S&P stock digest cover to cover looking for investment opportunities,” he says. “I traded stocks and futures and just had a good time doing it. I did this in my free time, at night, and on weekends. I started to learn what business is really about, which is free cash flow.”
The best business plan is a simple business plan, he says. “You have to say, here’s a business. Do I like that business? Do I think that business has a future? Do its products have a future and can they make it in the marketplace, given a Wal-Mart on one side and China on the other? You have to ask questions that you intuitively know the answer to. You can do all your research, but you have to listen to your stomach. It’s much more important to feel that you’re intuitively on the right track. Then, you do all your work and find out if your investment thesis is appropriate.”
Peltz says that he’s never been one to go by the numbers alone when it comes to making business decisions. “I believe that business rescues are about investment and values that have not been recognized and how to extract that value.”
And he makes it his business to be well-rounded: Family, he says, is extremely important. The father of 10, ages are 40 to 2—an antique table placed prominently in his office where he can see it is filled with their smiling framed photos—finds himself playing hockey dad more often than not. “Each one of my kids is very special, and each one I have a very special relationship with,” he says. “It sounds hard with 10 kids, and sometimes it is hard. I try to give them my best advice, and they cut me a certain amount of slack.”
Peltz is involved with a number of philanthropic organizations that range from the Prostate Cancer Foundation to the Intrepid Museum Foundation. His work with the Simon Wiesenthal Center—he’s cochairman of the board of directors and chairman of the New York Tolerance Center—is particularly close to his heart. “I like the fact the Wiesenthal Center is a hard-hitting social action organization that wants to do something about intolerance, bigotry, and hatred,” he says. “More people should get behind this.”
As he knows from personal experience, antisemitism is growing. “We have to be on watch for intolerance. And I don’t just mean antisemitism, I mean intolerance against African-Americans, Hispanics, Asians, and others,” he maintains. “The minute you see it, you can’t just turn the other cheek. Nobody is born with these feelings in their DNA. This is strictly from their upbringing. Parents have to be aware of what they are teaching their kids.”
He knows firsthand how easy it is for hatred to get out of hand. He tells of an incident that occurred many years ago at Madison Square Garden. A group of drunken men made disparaging remarks about him and his friends. Before he knew it, the dispute went from verbal to violent. He and his friends filed a complaint with the Anti-Defamation League and forced the employer of the men to apologize and donate to the organization. “I think that those people were very careful before they opened their mouths again. I could easily have turned the other cheek. Things start from little incidents, and if you deal with the little incidents immediately, you nip them in the bud. I’ve seen it close up, and my kids have seen it close up over the years. Not a lot, but enough. It shouldn’t be there. Once you realize that we all have a certain amount of prejudice, then you can start to deal with it.”
Despite his successes, Peltz doesn’t see himself as a role model. “There are a lot of other people—Bill Gates comes to mind—who are a lot more interesting than me,” he says modestly. “I expected to achieve things, and I don’t know that I’ve achieved anything that spectacular. I don’t know if just making money is a great achievement.”
Where’s the real measure of achievement? It’s on the golf course. “I’d like to shoot par,” he says and chuckles. “And that’s really hard to do for a guy who gets to play probably once or twice a month.”
He takes another sip of his coffee and scans the cityscape from his glass box high in the sky. His BlackBerry is blinking, but for the moment, he puts it on hold. “I’m pleased with the way my life has turned out,” he says and smiles.
Source: Lifestyles Magazine