Wabash's offer left Yeoman feeling angry and emotionally blackmailed. "I didn't know what to do," she recalls. "I was afraid that they would put me out of business if I didn't sell." But she was determined to tough it out. "When I came in here, people trusted me with their lives. How could I turn them over to Wabash?"
Yeoman's impulse to invest in technology turned the company into takeover bait. When Wabash made a list of several local shops it would consider acquiring, Yeoman's was at the top.
Numerous calls from Inc. to Wabash's president and CEO, Jerry Gallagher, went unreturned. David Bovenizer, who worked in Kearney's corporate office at the time of the attempted buyout and handled the negotiations, cites harsh industry economics as the trigger for Wabash's actions. As a supplier to the auto industry, Wabash was "forced to take initiatives to lower our costs," he says. "We explained to her what our problem was."
Bovenizer asserts that the offer was fair: two and a half times what it would have cost Wabash to enter the mold-making business itself. "We offered her a significant premium," he says. Yeoman calls that estimate "bullshit," saying it would have covered only used equipment and an untrained workforce. Guenin estimates that if Wabash had started up its own operations, it "would have cost $3.5 million."
Bovenizer says that Wabash wasn't trying to put Shari Yeoman out of business, but he warned her that trying to rebuild her customer base quickly would be difficult. "I expressed my concern to her," he says, "but she was confident that she could replace the business."
In the wake of the aborted buyout, Wabash took some of its mold making in-house and didn't offer any more to Yeoman Engineering, forcing Shari Yeoman to scramble. She hit the road, exhibiting at trade shows, hoping not only to replace the lost volume but also to diversify beyond the auto sector. But the markets for new molds in industries such as medical supplies and capital goods were slow, giving customers little incentive to try out new suppliers.
To buoy cash flow, Yeoman increased maintenance and repair work on molds out in the field and shrank her workforce from 27 to 15 employees. Despite the CEO's efforts, the company ran through its cash reserves and began depleting a bank line of credit.
Yeoman's cash diminished, but seemingly not her optimism. In a January 1999 interview with Inc. she described herself as upbeat and exhilarated by the challenge. "We are more efficient than we have ever been; we're more cost-effective in the way we quote jobs," she said. "In 11 years I never really had to go out into the real world. This makes me stronger."
Inside the company, however, the actions of some staff members were undermining that strength. The generous CEO had bought a computer for one of her best employees so that he could work at home: he used it to plan a competing business. Another employee left to start his own tool-and-die shop and immediately began soliciting business from Yeoman's remaining customers.
Still, Yeoman Engineering remained attractive to would-be acquirers. In the final six months of the company's life, three separate investment groups offered to rescue the business, but Yeoman saw them as financial opportunists, eager to flip the company and cash out. "They had no clue about the business," she says. "They weren't in it for the long haul."
Last September, Yeoman finally decided to close the doors. The timing seemed strange. New orders were starting to come in, and "there was a lot of life left in the company," says Mark Bailey, the design engineer. But Yeoman says the flow of work was unpredictable. She could no longer afford to live off her credit line month to month.
"I saw no other choice," she says now. "If I had stayed in business longer, it could have been a disaster for the company. I wouldn't have been able to pay off my debts." But what practicality enforced, Yeoman still finds difficult to accept. "I used to think that if I could just get away from this, it would be a blessing," she says. "I didn't realize how much I would miss it. It gets in your blood."
A few months before the end, Yeoman called in consultant Joe Elkins to tell her what ailed her business. Elkins had bought a metal-stamping plant in 1990, when it was "eight months from auction," he says. That company had sales of $1.9 million and 18 employees. When he sold it, in 1997, it had $11 million in revenues and 100 employees. Yeoman figured Elkins knew something she didn't.
But Elkins, too, was puzzled. "She had a wonderful shop," he says. "When you go into a business that is struggling, you normally see a lot of inventory, the shop is dirty, and people don't care. This was just the opposite."
So what was Elkins's secret? "Delight the customers," he replies. "Make them smile."
That's what Yeoman Engineering did for 40 years. In the end, it didn't matter.
Edward O. Welles is a senior feature writer at Inc.
Please e-mail your comments to editors@inc.com.
