And yet: the fact was, by 1990, Mike Brooks was not a happy man.
Part of it, he knew, was the gnawing, stomach-churning feeling of never having enough cash. Making a seasonal product like hunting boots, the company had huge amounts of money tied up in raw materials and inventory for months at a time. Worse, every step along the growth path consumed capital. Fraedrich worked tirelessly on the finances, but he could never bring in as much cash as the company needed. Stores were clamoring for more hunting boots? Tough luck: Brooks couldn't finance the additional production. The plant and equipment were old? Live with it: there was no money to replace them.
Then there was the difficulty of coping with crises in what had become a far-flung enterprise. Mike had grown accustomed, for example, to hearing that the power in the Dominican plant had gone off for a few hours. He had bought some big diesel generators and sent them down so Beraza could keep the cutting and stitching machines running. But then, in 1990, oil prices rose. The Dominican government abruptly ended its policy of subsidizing oil purchases. The country's oil supply dropped to a trickle. Mike grew desperate. Without oil, the plant would shut down. He began loading the raw-materials containers that he shipped from Ohio to the Dominican plant with 55-gallon drums of diesel fuel. Was it legal? He had no idea.
All those problems seemed to coalesce in what was an increasingly strained relationship with his father.
For most of the '80s, John Brooks had supported Mike, just as he had in the early years. To be sure, he hadn't always agreed with Mike's moves. The labor-intensive complexities of using Gore-Tex, he liked to say, set shoemaking back a hundred years. He looked back wistfully on the days when you didn't make shoes until you had an order from someone like Sears. But John had given Mike both his blessing and his financial imprimatur. The more the company grew, the more debt it had to take on. John wasn't a rich man, but he had personally signed for every nickel, as the banks required. By the end of the decade, he was on the hook for some $10 million.
When Mike had proposed the first offshore factory, though, John drew a line in the sand. It wasn't that he thought it was a terrible idea; he was willing to let Mike build the Dominican plant. But do it with company funds? No chance. Too risky. For almost the first time, the two men found themselves shouting at each other. Eventually, they found a compromise: Mike, John, and the three other managers, including Beraza, would each put up some money of their own. Mike had to borrow his share from the bank. It irked him that he couldn't spend company funds on a move he thought necessary for the company's very survival.
From then on, the relationship was never quite as smooth. Mike wanted to expand the Dominican operation; John was opposed. Mike talked about taking the company public; John wouldn't hear of it. "I got close to leaving," Mike says now, pausing to reflect. "Very close. Very, very close." He had plenty of opportunities in the industry. But he didn't want to let the family down.
And then, one day in August 1991, it was over. John came into Mike's office. That's it, he said. I'm retiring. I'm giving the business to you and your brothers and sisters. There were reasons. John was then 70. His wife -- Mike's mother -- was ill and needed care. And there was a wrinkle. Since John would no longer be the owner of the company, the banks wanted him off the note. All five siblings and their spouses would have to sign it. The total debt, by then, was $11.25 million. None of the Brooks siblings had significant funds of their own.
* * *
The 1990s. The new economy is in full bloom. Now the issue is who will get to play in it. Over time, entrepreneurial companies sort themselves out. Some stay small, content with tiny niches. Some look for bigger partners and vanish into the mergers-and-acquisitions maw.
But some go for the gold ring. They seek out the capital that will enable them to develop their lines, to expand their markets, to operate nationally or even internationally.
* * *
Looked at coldly, the logical next step for the Brooks family would have been to sell the company. It wouldn't have been hard. Rocky had a well-known brand and a solid niche in the marketplace. It had a well-developed distribution network, not to mention plants and equipment in three locations. But Mike, with his siblings, had just inherited a company -- and he wasn't selling, he was dreaming. By 1992 sales were nearing $30 million. He had just introduced a line of hand-sewn shoes, and he had some ideas about other lines. Put them together, he figured, and you could imagine a $100-million -- even a $200-million -- company.
But without money, it was all just fantasy. And Rocky had no money beyond what was needed to finance the factory and pay the interest. There was only one place to get the capital he needed: from the public markets. Mike and Dave Fraedrich met with potential underwriters. Eventually, they chose J. C. Bradford & Co., out of Nashville, and set in motion the complex mechanisms of an initial public offering.
