Astor & Black declares bankruptcy

[zale]

I first saw the story today on crownheights.info.

The strange thing is, earlier there were comments piling up about how the company was never really successful, and that Schottenstein's success was all a farce.

Now they removed all the comments, and replaced them with a comment explaining that when David Schottenstein ran the company it was "doing very well", and only after he sold it the new owners ran it into the ground.

If anyone has inside information here, I would be very interested to know what "really" happened.

[damaxer91]

Company did very well under Schottenstein but the fund that bought it hired too much management and did not have natural sales experience.

Its mostly a relationship business and once David left, they lost a lot of business

[zale]

Company did very well under Schottenstein but the fund that bought it hired too much management and did not have natural sales experience.

Its mostly a relationship business and once David left, they lost a lot of business

Why did he sell it in the first place? Did they make him an offer that was too good to refuse?

[damaxer91]

Why did he sell it in the first place? Did they make him an offer that was too good to refuse?

Correct.

He wasn't the only owner either and he had other business ventures up his sleeve

[Dan]

Company did very well under Schottenstein but the fund that bought it hired too much management and did not have natural sales experience.

Its mostly a relationship business and once David left, they lost a lot of business

Heard the same from a couple of their tailors.

[Freddie]

This is a sad day for metrosexuals everywhere.

[Dan]

This is a sad day for metrosexuals everywhere.

You seem to be one strange dude. Might want to lay off the tap water. Though you'll still have the PIT smog.

[Freddie]

You seem to be one strange dude. Might want to lay off the tap water. Though you still have the PIT smog.

If my real life personality were just an aggregate of my DDF posts, yes, I would be pretty strange. I shudder to think.

[Dan]

If my real life personality were just an aggregate of my DDF posts, yes, I would be pretty strange. I shudder to think.

Considering we have nothing else to base things on but your posts...

I recall AsherO once asking if his online persona matches his offline character.

[zale]

Correct.

He wasn't the only owner either and he had other business ventures up his sleeve

Something doesn't sound right about this. Look, I know david to be an honest guy, but the storyline is a little unusual. Young guy starts business, business is extremely successful, so...guy sells business?

If there was monkey business involved, I'm sure they will waste no time and file a lawsuit.

[CountValentine]

I recall AsherO once asking if his online persona matches his offline character.

...and the answer was?

[Dan]

Something doesn't sound right about this. Look, I know david to be an honest guy, but the storyline is a little unusual. Young guy starts business, business is extremely successful, so...guy sells business?

Right, because typically businesses that are unsuccessful are the ones that people are able to sell and make a boatload of money off of

[zale]

Right, because typically businesses that are unsuccessful are the ones that people are able to sell and make a boatload of money off of

It's not that black and white.

Many big corporations have been duped into buying smaller, private companies with the assumption that those companies are doing really well.

In fact, private companies are not required to divulge any of their finances. There are no public records on private companies. The only ones who really know what is going on are the company owners and the IRS (provided that the company does their business legally).

Now, in a buyout, the buyer will request to see that information, but many times a lot of problems can be cleverly hidden. This may include debts owed (both internally and externally), burned bridges with suppliers etc.

Thus my statement earlier, that if a lawsuit is filed against Schottenstein we will know exactly where the company left off when he sold it.

My point earlier was that if a guy starts a company doing something that he is really passionate about, and that company becomes really successful, they will usually want to continue building the company. They will only sell it for a ridiculously enormous amount of money, which I don't believe to be the case here. (It was a lot of money, but not enough to buy out something that he was passionate about and that was already "very successful").

[Dan]

My point earlier was that if a guy starts a company doing something that he is really passionate about, and that company becomes really successful, they will usually want to continue building the company. They will only sell it for a ridiculously enormous amount of money, which I don't believe to be the case here. (It was a lot of money, but not enough to buy out something that he was passionate about and that was already "very successful").

Based on? I heard it was tens of millions of dollars.

Lots of guys are startup entrepreneurs and have more ideas than they have time for.  Taking a big payday and moving on to new ventures fulfills many people's dreams.  People can be passionate about more than just one company.

[churnbabychurn]

It's not that black and white.

Many big corporations have been duped into buying smaller, private companies with the assumption that those companies are doing really well.

In fact, private companies are not required to divulge any of their finances. There are no public records on private companies. The only ones who really know what is going on are the company owners and the IRS (provided that the company does their business legally).

Now, in a buyout, the buyer will request to see that information, but many times a lot of problems can be cleverly hidden. This may include debts owed (both internally and externally), burned bridges with suppliers etc.

Thus my statement earlier, that if a lawsuit is filed against Schottenstein we will know exactly where the company left off when he sold it.

My point earlier was that if a guy starts a company doing something that he is really passionate about, and that company becomes really successful, they will usually want to continue building the company. They will only sell it for a ridiculously enormous amount of money, which I don't believe to be the case here. (It was a lot of money, but not enough to buy out something that he was passionate about and that was already "very successful").

Any buyer of a business should have it audited by a real auditor. Who on earth would buy a business blindly based on the owners figures?

[Dan]

Any buyer of a business should have it audited by a real auditor. Who on earth would buy a business blindly based on the owners figures?

Nobody. Definitely not for any kind of $$$$$.

[zale]

Based on? I heard it was tens of millions of dollars.

I heard a number of around 30 mil. Look, I don't know what he was earning, but putting things in perspective, that doesn't sound like a huge offer for a prestigious company that is just reeling in success. (This is what I was thinking when I first heard a while back that he sold it.)

Think about it. Think about what kind of money you would have to offer a SUCCESSFUL business in your area to buy them out.

Lots of guys are startup entrepreneurs and have more ideas than they have time for.  Taking a big payday and moving on to new ventures fulfills many people's dreams.  People can be passionate about more than just one company.

You might be referring to tech startups and venture capitalists.

This guy was in magazine article after magazine article talking about his passion for high end custom clothing. Of course, everyone has to beat their chest for PR purposes, but frankly, this is not the type of "quick money" business that you start with an exit strategy in mind.

I commend you standing up for him, but to me, this just doesn't compute.

[zale]

Any buyer of a business should have it audited by a real auditor. Who on earth would buy a business blindly based on the owners figures?

I am a business owner, and I can tell you that no auditor would find out the internal workings of the business. Not that I am C"V doing anything illegal, it's just that there is too many complexities to know what is really going on.

[damaxer91]

It's pretty simple.

In my neighborhood there was a Dry Cleaners. They did a pretty average (at best) job but most of the Frum people used them because the proprietor was a nice guy who was friends with everyone. He put up the business for sale and had some very impressive figures but the person buying it did not know that the majority of his business was relationship based. About a year after he bought it, the Dry Cleaners was closed

[zale]

It's pretty simple.

In my neighborhood there was a Dry Cleaners. They did a pretty average (at best) job but most of the Frum people used them because the proprietor was a nice guy who was friends with everyone. He put up the business for sale and had some very impressive figures but the person buying it did not know that the majority of his business was relationship based. About a year after he bought it, the Dry Cleaners was closed

I also know a story about a dry cleaners.

Guy who owned the dry cleaners was offered 1.5 mil for the property (small property). The buyer wanted to use that land as part of a condominium complex he was building.

The dry cleaner owner, who's business happened to be doing well, said no.

If he would have been offered 5 mil, that would have been a different story.

My point is, under normal circumstances, people don't sell a successful business unless they are offered a crazy amount of money. (in other words, unless the buyer is crazy for offering that much money).