Southerland, Inc. announced the company will be acquired by employees as an Employee Stock Ownership Plan (ESOP) buyout. The sale of the company to employees under the ESOP is a first for the company and, to a large extent, the furniture and bedding industry, and it is expected to be made final and effective March 31, 2010.
The new company will keep the Southerland name and will be led by two co-presidents, David Corbin and Stephen Russo, and executive vice president and CFO Bryan Smith. This shared leadership model, although new to the industry, has been adopted by several world-class companies including Google, Guess, Research-in-Motion (launched Blackberry), IMAX and Fortis.
Southerland has operated as a family-owned enterprise for more than a century, and is one of the leading independent bedding manufacturers in the U.S. The company built its heritage and reputation on its expert manufacturing capabilities and customer service. Over the past nine years, Southerland has grown into a three facility operation headquartered in Nashville, with additional facilities in Oklahoma City and Phoenix. These facilities offer scalability and capacity ideally suited for the company’s plans for further growth and distribution.
The move from family-owned to an ESOP-owned structure and recapitalization is being led by the new executive leadership at the company as well as members of the Southerland family and current management team. Under the new ESOP, employees will own 100 percent of Southerland. The new ESOP structure will result in significant tax efficiencies as well as additional incentives and exceptional retirement benefits for employees.
Under the new leadership team, Southerland will continue to develop its own brands as well as private label brands for regional bedding retailers. The company will continue its heritage of delivering high-quality bedding products at value-oriented prices. In addition to supervision of the day-to-day operations, Southerland’s new management team will focus on innovative and consumer-focused product development, a diversified licensed brand portfolio, optimization of its cost structure through lean practices, strategic sourcing and value-added sales efforts.
Corbin and Russo have been working as consultants with Southerland since mid-2009. Corbin is a former president and C-level executive with extensive background in marketing and new product development stemming from his brand management experience at Procter & Gamble and executive positions with Pulaski Furniture Corporation and Chromcraft Revington. Russo is a former president and operations expert who successfully ran Latex International, Consolidated Bedding and Restonic Mattress. Bryan Smith, who will be executive vice president and CFO of Southerland going forward, is a long-standing member of the Southerland management team, with 12 years experience at the company and more than 20 years total experience in managerial accounting.
Southerland, Inc. to be Acquired by Employees – Page 2
About ESOPs: Though not as visible as they once were, several of today’s category-leading companies are managed through ESOPs. Those companies include: Publix Super Markets, Inc.; Procter and Gamble Co.; The Sherwin-Williams Company; and Anheuser-Busch Companies. Statistics published by the ESOP Association show that the majority of employee-owned businesses benefit from improvements in information sharing, increased communications and involvement. Results show that employee-owned companies have a significant advantage over comparable traditionally-owned businesses in sales per employee, a commonly used measure of a company’s productivity.
A comprehensive study out of Rutgers University showed that ESOP companies stayed in business longer and were more likely to continue operating as independent companies over the course of several years. Research done by the Washington State Department of Community, Trade and Economic Development showed that ESOP not-publicly-traded companies paid better benefits, had twice the retirement income for employees, and paid higher wages than their non-ESOP counterparts.
About Southerland: Southerland, Inc. was founded in 1893 in Nashville, Tennessee, and has been family-owned since its inception. Throughout its history, Southerland earned and developed its reputation as a quality producer of value-oriented bedding.
From the original manufacturing site in Nashville to the opening of new facilities in Oklahoma City and Phoenix, Southerland now serves customers nationally as well as through regional focus areas throughout the East, Southwest and Midwest areas of the country. The company operates more than 274,000 square feet of combined production and distribution facilities and is one of the leading independent bedding manufacturers in the U.S.
With the announcement of the sale and recapitalization of Southerland through the ESOP, new management has initiated a new era at the company. Under its new ownership model, Southerland will be guided by the combined experience and expertise of David Corbin, Stephen Russo and Bryan Smith. As a management team, they will expand upon Southerland’s heritage of high quality, value-oriented products, and they will enhance Southerland by adding lean operational practices, branding and consumer-focused product development. This will enable Southerland to offer a powerful and compelling platform for growth for its customers, its suppliers and its employees.