Undaunted by the skepticism of the investment firms, Jacobs tried another tack. "I met with a lot of individual investors to try to convince them to buy some stock," he says. "I was introduced to them by friends and friends of friends. I did anything I could think of, including calling people cold. It was the toughest selling job I think anybody could have done, trying to sell shares in a company that owned very small stations, with no good prospects of becoming a big broadcasting company."
Back home in Cincinnati, Jacobs liquidated almost everything he owned except Jacor stock and put it all into the company. His wife, Susan, and their three children, long accustomed to his six-figure salary, were reduced to a Spartan budget -- no vacations, no new cars or new clothing. There was money for bare necessities only -- groceries and mortgage payments.
"My wife thought I was nuts when I left AFC making the kind of money I was making, and now I wasn't making anything," he says. "In fact, I was loaning money to the company out of my own savings and investments. So we went from having all the money we could spend to not having much to spend at all. Fortunately the kids were not yet in college.'
The pressure was tremendous. "There was this constant fear that this might not work and I might lose everything," he recalls. "You can never be comfortable, you can never relax, the business is always on your mind. I went through periods of not sleeping very well, which created health problems."
Time was running out. Under the terms established for the IPO, Jacor had set a "best efforts" minimum sale of $1.1 million. The Securities and Exchange Commission allowed 90 days to complete an S-18 filing, permitting one 30-day extension. Jacobs had taken the extension. And it was only at 5:00 p.m. on November 4, 1982, the very last day, that he got the part that put him over the hump, a $50,000 sale to a private investor.
"That $1.1-million offering netted us just over $800,000, because we had huge expenses," Jacobs says. "But it allowed us to pay down our bank debt by $500,000. It also allowed us to go out and buy another station, in a little bigger market. That station made some money. So we could then do another public offering -- a real public offering -- in October 1983."
That one brought in $3.5 million, netting $3.1 million. Jacobs paid off the rest of his bank debt and was able to buy his first major station, an AM-FM combination in Jacksonville, Fla., in May 1984. "The Jacksonville buy was critical," he says, "because had those stations not performed well we probably would have gone under.'
But they prospered, and with new cash flow and added borrowing capacity, Jacor began an impressive acquisition spree. Over the next few years, it added stations in Cleveland, Atlanta, Cincinnati, Nashville, Knoxville, Tampa, and Denver, where its big-signal KOA-AM is "the voice of the Denver Broncos." The biggest of these purchases came in 1985 -- a three-station deal in Atlanta including WPCH, an easy-listening station. That involved a $20-million private placement with Shearson Lehman Brothers. "By then, New York investment bankers were coming to us without my going and begging," Jacobs says. He's already been offered more than $70 million for the Atlanta property -- not a bad return in less than four years.
No, money isn't really a big problem for Terry Jacobs anymore. Company revenues have escalated from $896,000 in 1981 to $78.5 million in 1988. This year marks Jacor's fourth straight appearance on the Inc. 100. And Jacobs enjoys encountering those doubters he met during the dark days of 1982. "I take great pride in showing them that not only did we make it, we are now the 13th largest radio broadcasting company in the United States.'
When Your Only Customer Goes Belly-Up
Company: Neoterik Health Technologies Inc., Woodsboro, Md.
Rank: #65
Founded: 1981
Sales: $6.5 million
Profits: ($39,000)
Business: Manufactures industrial respirators
CEO: Kenneth Vaughan
Age: 49
Imagine for a moment that you've left a good job with a big corporation to start your own company. A year later you have a great product and an order worth $360,000. Now, imagine that the customer -- your one and only -- runs into serious trouble, leaving you with an uncollectible receivable of $150,000. You owe suppliers $80,000, but you have no money. Your life savings are gone. Your company, your hopes -- they all lie on the brink of ruin. If you can imagine all that, you know how Kenneth Vaughan felt six years ago, when a spot on the Inc. 100 looked as distant as another galaxy.
A Welshman, Vaughan came to the United States with Racal Corp., a British defense contractor, and he rose to the post of general manager of Racal's U.S. safety company. But in 1981, yearning for a business of his own, Vaughan left Racal to set up shop in the basement of his house an hour north of Washington, D.C.
Then 41, degreed in electrical and mechanical engineering as well as mathematics, he had spied a niche in the hazardous environment-respirator business. Battery-powered industrial respirators were made chiefly by 3M, Mine Safety Appliances, and Racal itself. "These were specialized items, marketed and priced accordingly," Vaughan says. "The other manufacturers wanted to add more bells and whistles to further drive up the price. I saw the opportunity to provide a lowcost alternative.'
With $120,000 in savings and outside investment, Vaughan and his partner, engineer James R. Wiggins, established Neoterik Health Technologies Inc., derived from a Latinate word meaning "modern." By early 1982 they had their first product, and the company sold its first batch -- several hundred respirators for radiation-detection workers -- to Three Mile Island, the infamous nuclear power plant in Pennsylvania.
Searching for distributors that autumn, Vaughan came across the owner of Portable Air Supply Systems Inc., a Cleveland wholesaler. "I liked this guy," he recalls. "He had a lot of money behind him. He was in the same kind of industry we are in. Our product and the one he wanted to make -- a bottled-air respirator -- would not compete with each other, but they were for the same kind of users and distributors.
