Victor Posner
Encyclopedia
Victor Posner was an American
businessman. He was known as one of the highest paid business executives of his generation. He was a pioneer of the leveraged buyout
.
n descent, he was born in Baltimore, Maryland, one of nine children of grocers Morris and Mary Posner. Though he left school at age 13, he claimed to have earned his first million dollars by the age of 21 by investing in real estate, although financial records do not bear this out. Taking advantage of the post-World War II
demand for housing in America, in 1948, he began to develop land and build houses in the Baltimore area and by 1952 was building more than 1,100 dwellings per year. In 1954 he moved to Miami Beach, Florida
where he continued to invest in real estate and publicly traded companies. He became the head of numerous companies over his career, including Security Management Corporation (owner of rental property in Maryland and Florida), DWG Corporation (Arby's
and Royal Crown), NVF Company, Sharon Steel Corporation
, Pennsylvania Engineering Corporation, Salem Corporation, APL Corporation, Evans Products, Graniteville, and Southeastern Public Service Company.
from the mid-1980s on.
of Sharon Steel Corporation
in 1969, one of the earliest such takeovers in the United States. Sharon Steel had a coke
plant in Fairmont, West Virginia
, a steel plant in Sharon, Pennsylvania
, and a coal mine in Rachel, Pennsylvania. His purchase was motivated by the company's low valuation, level cash flow, and low debt. It was intended to become a source of cash for additional investments to capitalize on the rising price of coal during the energy crisis
of the early 1970s. His investment would be the forerunner of the leveraged buyout and junk bonds business of the 1980s. Meanwhile, the Fairmont coke plant was one of the worst polluters in the Monongahela Valley and Posner stopped investing in it. It closed in 1979.
Posner died of pneumonia after suffering declining health for several years.
and Gail — and two children from his second marriage — Tracy
and Lance. He was not married at the time of his death. His girlfriend, a former actress Brenda Nestor Castellano, was also a business partner.
In 1995, Steven sued his father over alleged mismanagement of his company, Security Management Corporation, claiming that the elder Posner was paying himself too much money and had wrongly removed Steven as a company director. They settled the suit by flipping a coin over the share of more than $200 million worth of property. Steven was killed in a high-speed boat crash near Miami
, Florida
on 29 November 2010. Gail died on 19 March 2010 in Miami Beach
, Florida
.
Shortly before he died, Posner prepared a new will that removed his children and grandchildren as heirs to his estate, which was valued somewhere between $200 million and $1 billion. Instead, Brenda Nestor was named as the main beneficiary. Posner's children and his adult grandchildren sued on grounds that he was not competent when he made the changes. The legal entanglements continued into 2004. Nestor operates Victor Posner Enterprises, a property development company in Florida.
Ear Institute (named in his honor)
and an Honorary Doctor of Laws Degree, University of Miami.
In 1988, three million dollars in charitable donations were ordered as part of a sentence for tax evasion. He was also required to work 5000 hours of community service time.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
businessman. He was known as one of the highest paid business executives of his generation. He was a pioneer of the leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
.
Career
Of RussiaRussia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
n descent, he was born in Baltimore, Maryland, one of nine children of grocers Morris and Mary Posner. Though he left school at age 13, he claimed to have earned his first million dollars by the age of 21 by investing in real estate, although financial records do not bear this out. Taking advantage of the post-World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
demand for housing in America, in 1948, he began to develop land and build houses in the Baltimore area and by 1952 was building more than 1,100 dwellings per year. In 1954 he moved to Miami Beach, Florida
Miami Beach, Florida
Miami Beach is a coastal resort city in Miami-Dade County, Florida, United States, incorporated on March 26, 1915. The municipality is located on a barrier island between the Atlantic Ocean and Biscayne Bay, the latter which separates the Beach from Miami city proper...
where he continued to invest in real estate and publicly traded companies. He became the head of numerous companies over his career, including Security Management Corporation (owner of rental property in Maryland and Florida), DWG Corporation (Arby's
Arby's
Arby's is a fast food restaurant chain in the United States and Canada. Roark Capital Group owns 81.5% of the company, with Wendy's Company owning the other 18.5%. It is primarily known for selling roast beef sandwiches and curly fries. The Arby's menu also includes chicken sandwiches, appetizers,...
and Royal Crown), NVF Company, Sharon Steel Corporation
Sharon Steel Corporation
The Sharon Steel Corporation was once a steel plant, and is notable due to its contribution toward the growth of the iron and steel industry in the Shenango River Valley, Mercer County, Pennsylvania....
, Pennsylvania Engineering Corporation, Salem Corporation, APL Corporation, Evans Products, Graniteville, and Southeastern Public Service Company.
"Pioneer of the hostile takeover"
He was said by Forbes magazine to "have the arrogance of a banana republic dictator" and by the New York Times to be the "dean of the corporate takeover". The Economist said, after he died, "he was a pioneer of the hostile takeover of a public company. He was dismissive of the convention previously observed that a takeover should have the agreement of the existing board. He would spot a company whose assets he judged were undervalued, gain control and milk it. Some bits would be sold off, others would be closed. Previously unconsidered treasures, such as the employees' pension fund, would be raided and reinvested in Mr Posner's other companies." Posner was a maverick player in the world of corporate finance. Many of his dealings were alleged to be illegal and he was closely watched by the Securities and Exchange CommissionUnited States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
from the mid-1980s on.
Sharon Steel
He is perhaps best known for his hostile takeoverTakeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
of Sharon Steel Corporation
Sharon Steel Corporation
The Sharon Steel Corporation was once a steel plant, and is notable due to its contribution toward the growth of the iron and steel industry in the Shenango River Valley, Mercer County, Pennsylvania....
in 1969, one of the earliest such takeovers in the United States. Sharon Steel had a coke
Coke (fuel)
Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. Cokes from coal are grey, hard, and porous. While coke can be formed naturally, the commonly used form is man-made.- History :...
plant in Fairmont, West Virginia
Fairmont, West Virginia
Fairmont is a city in Marion County, West Virginia, United States. Nicknamed "The Friendly City". The population was 18,704 at the 2010 census...
, a steel plant in Sharon, Pennsylvania
Sharon, Pennsylvania
Sharon is a city in Mercer County, Pennsylvania, in the United States, northwest of Pittsburgh. It is part of the Youngstown–Warren–Boardman, OH-PA Metropolitan Statistical Area.- History :...
, and a coal mine in Rachel, Pennsylvania. His purchase was motivated by the company's low valuation, level cash flow, and low debt. It was intended to become a source of cash for additional investments to capitalize on the rising price of coal during the energy crisis
Energy crisis
An energy crisis is any great bottleneck in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles...
of the early 1970s. His investment would be the forerunner of the leveraged buyout and junk bonds business of the 1980s. Meanwhile, the Fairmont coke plant was one of the worst polluters in the Monongahela Valley and Posner stopped investing in it. It closed in 1979.
Decline
The late 1980s were the start of his downfall:- In 1987, Sharon Steel operated in Chapter 11Chapter 11, Title 11, United States CodeChapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
bankruptcy protection. At first, Posner stayed on as CEO and chairman as is customary in Chapter 11 business reorganizations. To Posner's objection, the bankruptcy court appointed a trustee to take over shortly thereafter, since Posner refused to undo some $10 million in payouts to himself and his son Steven (among other questionable transfers of corporate assets to other businesses controlled by Posner), at a time when Sharon Steel was hemorrhaging $2 million per month. On appeal, the Third Circuit affirmed. - DWG was the target of a takeover attempt by Granada Investments.
- Evans Products, operated in Chapter 11 and did not emerge until former Chairman and CEO Monford OrloffMonford OrloffMonford Arthur Orloff was an American businessman, financier, lawyer and philanthropist. He was married to Janice Orloff and had three children Jon, Carole and Chester. Mr...
was brought back to the company and vendors and lenders were assured that Posner would leave the company. - In 1988 he pleaded no contestNolo contendereis a legal term that comes from the Latin for "I do not wish to contend." It is also referred to as a plea of no contest.In criminal trials, and in some common law jurisdictions, it is a plea where the defendant neither admits nor disputes a charge, serving as an alternative to a pleading of...
to tax evasion and fraud for inflating the value of land he donated to Miami Christian College in 1975. He was ordered to pay more than $6 million in costs and fines and to devote 20 hours a week for five years to working with the homeless. - Also in 1988, the SEC sued Drexel Burnham LambertDrexel Burnham LambertDrexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
and charged Victor Posner and his son Steven PosnerSteven PosnerSteven Neil Posner was an American corporate raider who worked together on a number of major hostile takeovers with his father, Victor Posner, though the two would later have a falling out that resulted in a series of acrimonious lawsuits...
with scheming to conceal the Posner's purchase of stock the electrical contractor, Fischbach Corporation. - Again, in 1988 a bankruptcy judge ordered him to return several original Norman RockwellNorman RockwellNorman Percevel Rockwell was a 20th-century American painter and illustrator. His works enjoy a broad popular appeal in the United States for their reflection of American culture. Rockwell is most famous for the cover illustrations of everyday life scenarios he created for The Saturday Evening...
paintings to the Sharon Steel Corporation, which he had removed from the company's headquarters when he acquired the company. - In 1993 both he and Steven Posner were barred from being an officer or director of a public company by the SEC.
Posner died of pneumonia after suffering declining health for several years.
Personal life
Posner had two children from his first marriage — twins StevenSteven Posner
Steven Neil Posner was an American corporate raider who worked together on a number of major hostile takeovers with his father, Victor Posner, though the two would later have a falling out that resulted in a series of acrimonious lawsuits...
and Gail — and two children from his second marriage — Tracy
Tracy Posner
Tracy Posner Ward is an actress, animal rights rescuer and activist, with her husband, actor Burt Ward. She is a daughter of the late American businessman and philanthropist Victor Posner...
and Lance. He was not married at the time of his death. His girlfriend, a former actress Brenda Nestor Castellano, was also a business partner.
In 1995, Steven sued his father over alleged mismanagement of his company, Security Management Corporation, claiming that the elder Posner was paying himself too much money and had wrongly removed Steven as a company director. They settled the suit by flipping a coin over the share of more than $200 million worth of property. Steven was killed in a high-speed boat crash near Miami
Miami, Florida
Miami is a city located on the Atlantic coast in southeastern Florida and the county seat of Miami-Dade County, the most populous county in Florida and the eighth-most populous county in the United States with a population of 2,500,625...
, Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
on 29 November 2010. Gail died on 19 March 2010 in Miami Beach
Miami Beach, Florida
Miami Beach is a coastal resort city in Miami-Dade County, Florida, United States, incorporated on March 26, 1915. The municipality is located on a barrier island between the Atlantic Ocean and Biscayne Bay, the latter which separates the Beach from Miami city proper...
, Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
.
Shortly before he died, Posner prepared a new will that removed his children and grandchildren as heirs to his estate, which was valued somewhere between $200 million and $1 billion. Instead, Brenda Nestor was named as the main beneficiary. Posner's children and his adult grandchildren sued on grounds that he was not competent when he made the changes. The legal entanglements continued into 2004. Nestor operates Victor Posner Enterprises, a property development company in Florida.
Honors
Honors include the Victor Posner Center for Communicative Disorders, University of MiamiUniversity of Miami
The University of Miami is a private, non-sectarian university founded in 1925 with its main campus in Coral Gables, Florida, a medical campus in Miami city proper at Civic Center, and an oceanographic research facility on Virginia Key., the university currently enrolls 15,629 students in 12...
Ear Institute (named in his honor)
and an Honorary Doctor of Laws Degree, University of Miami.
In 1988, three million dollars in charitable donations were ordered as part of a sentence for tax evasion. He was also required to work 5000 hours of community service time.
Further reading
- Connie Bruck, The Predators' Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders, New York: Penguin Books, 1989
- Mark Reutter, Making steel: Sparrows Point and the rise and ruin of American industrial might, University of Illinois Press, 2004
- 2004 article on reinsurance scheme involving Posner and AIG Insurance