Jordan Industries, Inc.
Jordan Industries, Inc.
Wholly Owned Subsidiary of The Jordan Company LLC
Sales: $776.9 million (1999)
NAIC: 421450 Medical Supplies Wholesaling; 511130 Book Publishers; 335312 Motor and Generator Manufacturing; 336399 All Other Motor Vehicle Parts Manufacturing
Jordan Industries, Inc. (JII) is a vast and varied conglomerate, made up of dozens of companies with overall revenues nearing $780 million. This quiet, unassuming corporation touches the lives of most Americans on a daily basis: from Riverside Bibles to direct mail, from transmission parts to school yearbooks, from elevator motors to home medical sup-plies, JII is always on the prowl for private companies with a market niche and an itch to expand. There is, however, a crucial difference between a Jordan Industries-style acquisition and those of other firms—at Jordan, the family bond usually lasts for life and new subsidiaries gain access to a strong balance sheet without losing their top executives. Existing management teams are neither stripped nor sent packing; most continue to run their companies with little interference. In JII lingo, buyouts are pursued for long-term growth for both the parent company as well as its subsidiaries.
A Fighting Irish Beginning: Late 1960s
John W. “Jay” Jordan II grew up in Kansas City, Kansas, and attended Pembroke Country Day School. After graduating from high school, Jordan traveled to South Bend, Indiana, to attend the University of Notre Dame, home of the legendary Fighting Irish sports teams. There he met his roommate, Thomas H. Quinn, and the two had much in common. Both were bright, ambitious and played football for Notre Dame. Quinn was a defensive back and even played in the famous 10-10 tie with rival Michigan State University.
After college Jordan went on to Carl Marks and Company in New York City as a venture capitalist and then hooked up with David Zalaznick to found The Jordan Company LLC, an investment firm, in 1982. Tom Quinn, meanwhile, had worked in the medical equipment and supplies field for the Deerfield, Illinois-based Baxter International. Quinn’s business savvy helped in-crease sales volume by nearly $1 billion at a Baxter subsidiary, American Hospital Supplies. He later left his position as a group vice-president at Baxter and teamed up with his old college roommate. The two would become famous for an extensive list of LBOs crisscrossing North America, and occasionally over-seas, in the 1980s and 1990s.
Buy, Build, and Improve: Late 1980s
Jordan Industries, Inc. was founded in 1988 and was inextricably bound to The Jordan Company, not only by name but by the men running both businesses. The younger company’s logo featured “JIF’ and while this was an acronym representing its name, it could just as easily stand for “Jordan the Second” since it was founded in the image of its predecessor. Jay Jordan was chairman and CEO of the new holding company, and Tom Quinn was named president and COO. As Quinn explained to a Chicago Tribune writer, his partner was “the financial genius” in their business ventures and he was “the operations man.” Whatever the formula, the team had already made a name for itself with the New York City investment firm, and planned to do the same for the new Chicago-area subsidiary.
Headquartered in Deerfield, a suburb of Chicago, JII was created as a holding company to house a number of independently run subsidiaries in diverse fields of business. Soon after JIFs formation, Jordan and Quinn scoured the marketplace for possible acquisitions and one of the earliest was the Kentucky-based Dura-Line Corporation, the leading manufacturer of plastic duct pipes used to install fiber-optic and coaxial cabling in the burgeoning telecommunications industry. Another early acquisition was Dacco, a manufacturer of rebuilt transmission torque converters and other auto aftermarket parts, with head-quarters in Tennessee. These two buys were followed by a string of disparate purchases, including Florida-based AIM Electronics, Iowa’s Riverside Book & Bible House, and Garden, California’s Beemak Plastics.
By the early 1990s more than two dozen family-owned and -operated companies entered the Jordan and Quinn stables, ranging in value from $5 million to upwards of $200 million. Both JII and The Jordan Company maintained healthy stashes of cash for purchases ($100 million for the former and $40 million for the latter in 1991), to complement their established business sectors, though they were not averse to entering new markets if the timing and products were on target. In any given year, Jordan and Quinn analyzed thousands of companies as potential acquisitions, scrutinized under a predetermined set of specifications. These requirements, published in JII corporate materials, formed the bedrock of JII’s corporate policy. Any interested party had to meet one or more of the following: 1) Companies that enjoy high margins through proprietary products or services; 2) Historically profitable, well-managed private companies with a consistent track record of sales and earnings; 3) Companies with excellent growth prospects; 4) Synergistic acquisitions of businesses related to its current companies; 5) Subsidiaries and divisions of larger corporate entities, the industry and products of which coincide with JII’s strategic objectives.
As JII grew and earned a solid reputation, it was continually mistaken for its New York counterpart. Business and financial writers confused the two, either believing the two companies were in fact one, which operated under either name, or attributing the actions of one to the other and vice versa, since Jordan and Quinn were the executives running both. Yet the most distinct difference was that The Jordan Company, parent to JII, was an investment firm, and the flashier of the two. Another factor was the type of purchases pursued by each company: JII leaned towards products with industrial or business applications, while The Jordan Company acquired some well known consumer brands and franchised food businesses.
“Masters of the Mundane” (Not): 1990s
Although Jay Jordan considered himself and Tom Quinn “masters of the mundane,” their success was anything but. Both The Jordan Company and JII were fostering growth in a myriad of business sectors, allowing mom-and-pop companies a new lease on life through expansion and increased brand recognition. By early 1990, JII had acquired majority stakes in 17 companies, and the following year sales topped $300 million. Dura-Line Corp. and Dacco were both leading their business segments; Dura-Line had quintupled sales from $8 million to $40 million in just three years, with quadrupled capacity and new plants in Nevada and the United Kingdom. Dacco, too, experienced healthy sales and expanded into California. Yet the biggest splash of the year went to JII’s parent company for the purchase of the Archibald Candy Corporation, a name few recognized—except for its subsidiary, Fannie May Candy Shops Inc. Unfortunately, once again, Jordan Industries was credited with the purchase because the 71-year-old Fannie May’s headquarters were in Chicago, close to JII headquarters.
Archibald Candy had turned out to be a major coup for The Jordan Company, and it later became North America’s largest candy retailer. Jordan Industries, on the other hand, was also reaping the rewards of its newfangled LBO strategies. Two new companies came into its printing and packaging division, the Fremont, California-based Valmark Industries, Inc. and Des Plaines, Illinois’s Pamco Printed Tape & Label Company. Both specialized in pressure-sensitive labels and other labeling or printed materials, and joined two Ohio companies bought by JII in the late 1980s. Overall year-end revenues for JII were expected to reach $450 million; its fast-growing subsidiary, Dura-Line Corp., once again bested forecasts by bringing in more than $60 million, with estimates of reaching $100 million before the end of the decade.
Building Up Old & New Markets: 1995–99
At the mid-point of the 1990s, JII was looking to create a healthcare division through several acquisitions. The first of these was Georgia-based Duro-Med Industries, which manufactured and distributed a variety of home healthcare and foot care products under both the Duro-Med name as well as that of a division called Stein’s Health Industries. Next came two more Georgia-based healthcare products companies: GAM Industries Inc. (a manufacturer of hot and cold compresses) and TheraBeads (creator and manufacturer of microwaveable heat therapy items) in 1996. Beyond GAM and TheraBeads were many other acquisitions, including two Illinois-based companies (Barber-Coleman Motors and Merkle-Korff Industries) and Minnesota-based Johnson Components, the former two for the Motors & Gears division and the latter for the telecommunications unit.
Jordan Industries, Inc. (JII) pursues a unique vision within the realms of American business. It is a vision that has captured the attention of the financial press and the respect of the industries in which the company’s subsidiaries operate. Simply put, JII is a diversified holding company that acquires companies to foster their growth.
With the dawn of 1997 came another healthcare buy, ChoPat, Inc., a trademarked designer and manufacturer of orthopedic devices sold mostly to the sports-medicine market. Year-end revenues topped $707.1 million (over the previous year’s $601.6 million), with JII’s assets now worth $930.2 million (well over last year’s $682 million). In the later 1990s JII was content to be in its parent company’s shadow as The Jordan Company’s AmeriKing Corp. had become the second largest Burger King franchisee in the U.S., while Fannie May collabo-rated on a sweet deal with Hallmark’s Golden Crown stores. Yet JII was no slouch; the company had racked up 13 additional acquisitions of its own in the year, which helped fuel 1998 revenues of $943.6 million. In addition, for the first time in its ten-year history, JIFs assets were valued at over $1 billion (The Jordan Company’s assets were closer to $3 billion).
In 1999, JII conducted business much like it had in the past: by acquiring 15 diversified companies in the first eight months alone. For its direct marketing unit, SourceLink Inc., came a small outfit called DRG (Direct Results Group, Inc.) with offices on both the East and West Coasts. As Phineas Gray, cofounder and CFO of DRG explained in a February 1999 Adweek article, being brought into the JII family was “really the best of both worlds. We have a company that is still within our control, but now we have the capital to go out and grow as fast as we want.” DRG joined other recent direct mail acquisitions including Illinois-based Paw Print Direct Marketing and Zydeco Direct, located in Ontario.
The scant 15,000-square-foot Deerfield headquarters housed JIFs ever-evolving roster of companies, having gone from seven major divisions to 11 in late 1999. Jay Jordan and his other brainchild, The Jordan Company, were set to move into additional digs in the John Hancock Center in New York City during the year. While Jordan was predominantly in New York and Quinn mostly in Illinois, each bounced from one to another of their respective companies’ headquarters, scattered throughout the United States and in China, India, Italy, England, Malaysia, Spain, and Sweden.
Change and Refocusing, 2000 and Beyond
In a move contrary to its general philosophy, JII sold off its telecommunications segment (consisting of Dura-Line, LoDan West, inc., Northern Technologies, Inc., and several others) to the St. Louis-based Emerson Electric Company for $440 million (and $540 million in debt) in early 2000. Its ten remaining business units were the Business, Industrial & Consumer Group (graphics, temporary staffing, Riverside bibles, machine parts, and more); Capita Technologies, Inc. (eBusiness services); Internet Services Management Group (Internet networking); Flavor & Fragrance Group (selling to specialty manufacturers using fragrances and flavors in their products); Jordan Specialty Plastics, Inc. (plastic products for industrial and consumer use); Jordan Auto Aftermarket, Inc. (from torque converters to A/C compressors and beyond); the Healthcare Products Group, Inc. (from asthma and allergy meds to medical devices); Jordan Specialty Printing & Packaging Group (calenders, school yearbooks, paperboard products, and labels); the Motors & Gears, Inc. unit (motors, gears, starters, pumps, electric control panels, and more), and SourceLink, Inc. (marketing services, direct mail and otherwise).
Jordan Industries in 2000 was still researching and seeking out private companies for possible acquisition. In February JII bought Los Angeles-based M/S Database Marketing and was said to be seeking acquisitions in micrographics and document management services. Its Capita Technologies division had successfully revamped Fannie May’s web site and online catalogue services, and added healthy Internet sales to the candymaker’s revenues. Dealmakers Jay Jordan and Tom Quinn’s reputations preceded them and they no longer had to find companies to acquire; scores of middle-range private outfits came to them instead, more than willing to jump into the Jordan corral. While neither The Jordan Company nor Jordan Industries Inc. was a household name, many of their subsidiaries had nevertheless become an integral part in the daily lives of millions.
Principal Operating Units
Business, Industrial & Consumer Group; Capita Technologies, Inc.; Internet Services Management Group; Flavor & Fragrance Group; Jordan Specialty Plastics, Inc.; Jordan Auto Aftermarket, Inc.; Healthcare Products Group, Inc.; Jordan Specialty Printing & Packaging Group; Motors & Gears, Inc.; SourceLink, Inc.
- Company is formed, buys Dura-Line Corp. and three other companies.
- Jordan purchases AIM Electronics and Beemak Plastics.
- Sales top $300 million.
- Company begins healthcare unit with purchase of Duro-Med Industries.
- Revenues pass $600 million.
- Assets are valued at more than $ 1 billion for the first time.
- Jordan buys 20 companies in a matter of months; revenues top $776 million.
- Company breaks with tradition and sells telecommunications division to Emerson Electronics.
“Candy Land County Has a Mouthful of Sweet Tooths,” Chicago Tribune, October 25, 1992, p. 1.
“Emerson Electric Acquires Telco Firm for $440 Million,” St. Louis Business Journal, December 20, 1999, p. 10.
Fraser, Jill Andresky, “Plans to Grow By,” Inc., January 1990, p. 111.
Gruber, William, “Firm with Fingers in Many Pies Anticipates Sweet Slice of Profits,” Chicago Tribune, November 25, 1994, p. 3.
Jones, Sarah, “Sale Gives DRG ‘Best of Both Worlds“Adweek, New England Advertising Week, February 8, 1999, p. 3.
“Jordan Co., Officers Buy Fannie May,” Chicago Tribune, November 5, 1991, p. 1.
Lazarus, George, “AmeriKing’s Reign Has Burger King Taking Closer Look,” Chicago Tribune, February 4, 1999, p. 3.
______, “Archibald Sweetening Its Candy Stable,” Chicago Tribune, December 2, 1998, p. 3.
______, “Fannie May, Hallmark Alliance Could Be Sweet,” Chicago Tribune, January 20, 1998, p. 3.
______, “Fannie May’s Parent Sinks Teeth into Whopper,” Chicago Tribune, September 9, 1994, p. 2.
______, “Firm a Whopper Among Burger King Franchisees,” Chicago Tribune, December 5, 1994, p. 4.
______, “Jordan Co. Hot on Acquisition Trail, Buying Duro-Med,” Chicago Tribune, November 22, 1995, p. 3.
______, “LBOs Are Forever at Jordan Industries: Growth, Not Fast Payoff, Is Firm’s Goal,” Chicago Tribune, December 1, 1991, p. 3.
Margolies, Dan, “Winning Ways: Jordan Negotiates LBO; Former KC Resident Would Take Control in $245 Million Deal,” Kansas City Business Journal, November 29, 1996, p. 1.