When big-shot Blockbuster alums came calling with plans to start a national chain of florist shops, little guys like John Partridge and Greg Royer thought they'd hit the jackpot.
It was a heady time for John Partridge. Until the fall of 1998, Partridge had been minding his own business, which happened to be a highly profitable, $2-million flower shop in Augusta, Ga. Then, suddenly, he was being wined and dined by a group of former Blockbuster executives who were champing at the bit to buy his company. Their plan was wildly ambitious: to acquire 1,000 of the best local and regional florists in the country's 100 largest markets and to create a recognizable brand of flower shops. It would be a "roll-up," in which one company takes the lead and buys many smaller ones to create an instantly large company that typically goes public. For Partridge, the pitch was very seductive.
Partridge, who was then 45, had worked hard for years to build his business into the success that it was, but he was well aware that florist shops generally don't sell for large multiples of earnings. His own long-term exit strategy from the business he'd devoted his life to was less than clear.
And so, in September 1998, Partridge and nine other florists found themselves at the Hyatt Regency Pier Sixty-Six in Fort Lauderdale. The florists had been flown to Florida for a two-day "founders' meeting," and from the beginning it was clear that no expense had been spared. Among the big suits were Steven R. Berrard, who had been CEO of both Blockbuster Entertainment Group and AutoNation; Gerald R. Geddis, who'd once been Blockbuster's chief operating officer and worldwide operations vice-president; and Albert J. Detz and Adam D. Phillips, who'd been, respectively, chief financial officer and chief administrative officer at Blockbuster. "You know, I wear custom-made suits, too," says Partridge in a good-old-boy drawl. "But somehow because of their success with Blockbuster, I was in awe of these people. I thought they had the Midas touch."
Berrard, Geddis, and their colleagues were dead serious about the opportunity that the florist-chain roll-up offered. They were planning to sink $10 million of their own money -- along with a $20-million private placement underwritten by Allen & Co. -- into the venture. Blockbuster had grown from a single store in 1985 to 3,700 stores by the time it sold to Viacom, in 1994, for $8.4 billion. Why couldn't the new chain -- named Gerald Stevens after the two principal founders' first names -- do the same? "This is going to take the floral industry to a whole new level," Eric Luoma, the owner of Cactus Flower Florists, in Scottsdale, Ariz., remembers thinking. He looked around the room at his peers, and among them were Partridge, a former president of FTD (the prestigious national referral network) who was incredibly well connected in the industry; Greg Royer, whose Lebanon, Pa., operation was known for great productivity; and Tom Boesen, of Des Moines, who knew customer service inside out. Luoma considered himself a marketing expert. "We were the cream of the crop," Luoma says. "It seemed like a slam dunk."
The two-day founders' meeting, typical of the excesses of many well-financed start-ups of the 1990s, was designed to capitalize on that kind of excitement. The sponsors kicked off the meeting with a video. The florists, most of whom had already signed the final sale documents, were positioned in a horseshoe around an enormous movie screen in a conference room. The videocassette player rolled, and a finely edited compilation of movie clips -- from Casablanca, The Sound of Music, and other classics -- filled the room with a warm glow, and in all of them people were giving one another flowers. At the very end, the audience watched Humphrey Bogart deliver his famous "this is the beginning of a beautiful friendship" line.
Everybody in the room that day believed that it was also the start of a very lucrative friendship. No one made specific promises, but in one meeting the florists were shown a chart demonstrating that early investment in Blockbuster would have resulted in what Partridge calls "jaw dropping" returns by the time the company sold to Viacom. "We figured we'd be rolling in dough," says Partridge. "My wife and I went to Bermuda right after that meeting." It was, they would learn, a premature celebration.
In the late 1990s, the floral industry seemed ripe for a breakthrough. And who better to take on the challenge of developing a national chain in the $15-billion industry than some of the key people responsible for Blockbuster's stunning success? As Gerald Stevens cofounder Geddis told the Miami Herald at the time, the floral industry was "almost identical to the video industry in the mid 1980s. It's large, mature, fragmented, and there are no national brands."
Geddis and his colleagues came with strong credentials -- and they had a good story to sell. By combining the best and the brightest of the floral community with their own vast knowledge of operating multiple retail stores, they'd create a powerful national brand in an industry that had always been void of very big players. Not only would they offer the florists a healthy cash buyout, but they also would provide a shot at the public-market bonanza of the late '90s. (Under typical conditions, a florist can expect to sell for just 34% of annual sales plus inventory, according to The Business Reference Guide 2002.) The individual deals varied, depending on the size of the business and the negotiating skills of the florists, but the florists interviewed by Inc say that the package they were offered exceeded what they had ever believed they could sell the business for on their own, thanks to the upside potential of the stock options that most received.
For many of the florists, the roll-up offered the fulfillment of desires that had always seemed unattainable. "It was almost as if someone dropped a golden egg in their lap," says Don Hotton, who sold his two San Francisco Bay Area shops to Gerald Stevens for approximately $325,000. But that wasn't the only selling point. "What [Gerald Stevens] offered me was the opportunity to run with guys from the upper echelon of the industry," Hotton says. Plus, adds Chris Rea,who sold Detroit area-based Thrifty Florist to Gerald Stevens, there were other consolidation plays in the marketplace, and independent florists, whose margins were already being squeezed, were getting nervous. "The feeling that most people had was that if you didn't do something, you'd be left behind," he says.
"It's very difficult to sell a flower shop," says Paul Goodman, editor of Floral Finance, an industry newsletter published by Teleflora. "Gerald Stevens was a train that came along once in a lifetime."
Like many of his peers, Greg Royer couldn't believe his good luck at being sought out by the former Blockbuster crowd to be part of their next big success. Until Gerald Stevens came along, in the spring of 1998, Royer -- along with his father and three brothers -- was running a profitable $17-million chain of 16 regional flower shops in Lebanon, Pa. Royer's Flowers was a third-generation family business, well known and respected not only in its community but also in the industry. But Royer was a bit restless and was itching to ratchet things up a notch.
"We had been looking at how to do a consolidation on our own," he recalls. The family had built the largest floral company in central Pennsylvania, but Royer and his father, Ken (from whom Royer and his brother Tom bought the stores in 1993), had a plan to expand their company's reach even further. They hoped to partner with three or four other major florists in the area to create a $40-million company, which they would then take public. With capital raised in the public offering, they imagined, they would acquire even more shops nationwide. "It was a dream I'd had since my early twenties to have flower shops across the country," says the 44-year-old Royer. So in the spring of 1998, he began shopping his plan around to venture capitalists; he says he even met with Merrill Lynch. But he hadn't gotten very far when Geddis called.
"It was pretty apparent that with their background, they should know how to handle Wall Street," says Royer. "And we knew the floral business. It seemed like a good marriage." Royer felt in his gut that the Gerald Stevens plan made great business sense. Few floral companies grow beyond the mom-and-pop stage simply because most florists lack the business acumen or the desire to implement the systems needed to support multiple locations. But the Royers had a system of employee training and productivity, which they implemented in all their stores and which they believed had helped them capture 25% to 30% of their market. "Part of the appeal for me was to take this operational system we had developed and put it in place at Gerald Stevens," says Royer.
For many of the florists, the idea of working with Geddis and other Blockbuster veterans was also highly seductive. "I spoke with other people who had done business with them and people who had worked with them at Blockbuster," recalls Royer. "You couldn't find anyone who said negative stuff. They were the real deal."
The Gerald Stevens founders readily conceded that they had scant knowledge of the florist industry and made clear that they intended to count on the owners to help guide the new company. Royer started out as a regional vice-president but was promoted to his dream job in March 1999: senior vice-president of operations at company headquarters in Fort Lauderdale. "I uprooted my wife and kids," he says. But it was a job that put him at the company's power center. Partridge was offered a position as a vice-president for mergers and acquisitions. His job was to proselytize the virtues of the new company to other florists who might join the roll-up.
For most of the florists, the prospect of being members of that team was intoxicating on many levels. "I remember the first management meeting we had in Dallas," recalls Partridge. "Gerry and Adam Phillips stood up and told us that we were the brightest people in the industry and that we were going to run the company with their help." Someone from management also suggested that Gerald Stevens's stock might easily trade one day at $100 a share, he says. At the time, most of the owners had stock valued in the teens. "Well, everybody's eyes lit up," says Partridge. "There were people there who had 200,000 to 300,000 shares."
On an operational level, Gerald Stevens promised to take myriad management inefficiencies and burdensome administrative hassles out of the florist business. "I was working 70 to 80 hours a week, and I was so burned out," says Gary Wagner, who sold his Pennsylvania flower shop, Phoebe Floral, to Gerald Stevens. "If companies older and bigger than mine had thought this thing through, I thought it must be a good decision for me, too. I could do what I loved without the pressure of entrepreneurial ownership." Plus, the company promised national marketing efforts, stepped-up customer service and sales training, and wholesale buying programs that would allow florists to purchase flowers directly from growers. Finally, says Royer, "there was going to be the latest and greatest computer system and people on staff to service it." It all seemed to make sense.
By April 1999 the newly formed company had acquired a critical mass of florists and had begun the journey that everyone expected would make all the participants rich. On April 30, Gerald Stevens went public at $15 a share by doing a reverse merger with a Nasdaq-listed concern called Florafax International. (In a reverse merger, a new company merges with a company that is already public, and the merged entity is allowed to continue doing business as the listed company.) Florafax made sense as a reverse-merger partner. It was, at the time, a $13-million flowers-by-wire service that would direct business to Gerald Stevens's retailers. The market seemed to love the deal. In December 1998, Florafax's stock was trading at $10, but by the beginning of February, after the merger was announced, the price topped $20.
During the next several months, the company continued to expand ferociously, using a strategy that relied on large industry leaders like Royer and Partridge to go into the marketplace like missionaries and spread the gospel to their smaller colleagues. And it all started out well, according to half a dozen florists who were part of the Gerald Stevens chain. The head office set high standards and shared market knowledge and business practices that were invaluable to the florists, many of whom had run their businesses by intuition and elbow grease alone. "We learned from their research what customers want," says Wagner. "And there were techniques relating to productivity and record keeping that they implemented." Wagner was able to consolidate his Christmas buying with other florists to get the best price and merchandise for his customers. Gerald Stevens had purchased its own floral importer, AGA Flowers, which bought flowers directly from growers and sold them to retailers at highly competitive prices. Management also brought nationally recognized sales and customer-service trainers to Fort Lauderdale to educate the florists in a way the entrepreneurs never could have afforded on their own. And they held "best practice" roundtables, creating a community of peers that is rarely available to local small-business owners.
In July 1999, Geddis gave a glowing account of Gerald Stevens's third-quarter progress. "We have now clearly established ourselves as the leader in transforming the $15-billion floral industry in the United States," he wrote in the company's quarterly report, in which he also announced the acquisition of another order-generating company, National Flora; seven additional retailers, which brought the company's store total to 131; and direct-from-grower catalog company Calyx & Corolla. There were also Web deals with Yahoo and CNN.com. "We are now building on a solid foundation in each segment of the floral industry that touches the consumer," Geddis continued. "We believe we are well on our way to transforming, and becoming the dominant brand in, the floral industry."
But flowers are not videos, as the Gerald Stevens executives were beginning to realize. "They came from an industry that was one SKU [product code]," says Karen Akin, of Dallas-based Apples to Zinnias. "And this industry is aesthetic." And emotional. Life-defining events, like marriage, birth, and death, are a florist's stock-in-trade. In the beginning, Gerald Stevens's management team readily acknowledged those truths.
Over the next few months, however, a thousand little things just didn't go as planned. (Geddis confirmed many of the details of the company's history but declined to be quoted extensively. Other principals either declined to comment or could not be reached.)
Company executives found that the initial acquisition stage of the business plan was far easier than actually integrating small, independent companies into a large public corporation. That difficulty was compounded by another problem. "I'm not sure the company ever understood that there are different niches within the industry," says Royer. "They thought a florist is a florist, and that just isn't true." And so there was trouble when Gerald Stevens began implementing policies that were designed to create exactly the kinds of economies of scale and uniformity that are the hallmarks of successful roll-ups. "We were fortunate to have some of the best florists in the industry," Geddis says. "It wasn't that we didn't appreciate their success stories, but we needed uniformity, consistency, and best practices."
"It all depended on whether you were going to fight the system or go with the system," says Don Hotton, who was a regional mergers-and-acquisitions director for Gerald Stevens. "If you understood the concept and believed in the system, then your store did very well." But that wasn't the case for everyone. Karen Akin, for example, complained bitterly about Gerald Stevens's wholesaler. "The quality of our flowers went down substantially, and people didn't want to do business with us," she says. "We talked to Gerald Stevens about that until we were blue in the face, but they wanted us to buy from the company they owned even if it was costing us customers."
The company also centralized the telephone systems of several local florist shops into a hub so that orders could be taken and distributed from a single place. But, claims Royer, where customer service wasn't equal to the task, sales declined and deliveries became less flexible. Gerald Stevens's direct-marketing program -- glossy brochures with standardized arrangements -- also backfired for some of the florists. "It lowered our average transaction substantially," says Akin. "My day-to-day customer is going to spend $75 to $100 on an arrangement for a birthday. But because of the marketing program, people would say, 'I want what's on page eight for $40."
Several florists also claim that their reputation in the community suffered. In many markets Gerald Stevens added its corporate moniker to local brand identities that customers had come to trust. Even more painful to some of the florists was a corporate mandate to pull out of local chambers of commerce and charitable groups, says Eric Luoma of Cactus Flower. As for donations, florists who may have given away, say, $50,000 worth of flowers annually -- and reaped marketing and public-relations benefits from their largesse -- were compelled to cut back to $20,000. "When you disappear from your community, you're going to experience loss of revenue," says Luoma. Sales at Cactus Flower dropped by 8% a month.
Gary Wagner recalls the day he lost a longtime customer because Gerald Stevens began insisting that all accounts receivable be collected in 30 days. "This was an excellent customer," says Wagner. "But they were always in the habit of paying in 60 days, even though they were making payments every month. So the corporation came along and said the invoice has to be paid in 30 days. I said, 'They won't do it.' We lost the customer." Wagner says the receivables policy cost him $100,000 in lost revenue.
Complaints became more and more frequent, and Royer heard them all. As vice-president of operations, his job demanded that he stay in close contact with the florists as an interpreter and enforcer of corporate policy. Initially, he dismissed many of the florists' gripes as entrepreneurial stubbornness and unwillingness to get on board with corporate policies that made good business sense but that put them in uncomfortable positions with customers. He points out that collecting receivables, for example, was an unpleasant task, and many of the florists simply put it on the back burner. He also rejects the idea that product quality suffered. "Mostly, florists were getting better quality for a better price," he says but concedes that "some top-end florists were hurt." It was the same story with the marketing program -- a boon for many but a disaster for the more elite. And as for memberships in local chambers of commerce, well, the florists no longer owned their companies and had to learn to accept that they couldn't continue to spend money as they pleased. Royer says that florists were allowed to remain in their local chambers if they could make a case for membership as a revenue-generating strategy.
But Royer also knew, often firsthand, that some policies were inflicting real damage. For instance, he says, he fought "tooth and nail" when the company wanted to eliminate accounts receivable and require that customers use credit cards. "They were asking us to put things in place that would shut down new accounts," says Royer. "And they were always trying to maximize fees, like pushing us to increase delivery charges. Those things come back to slap you in the head." His own company, for example, was compelled to charge for hospital deliveries, a service that Royer's Flowers had always provided at no extra charge. As Royer puts it, "[Customers] complained with their feet."
"These were family businesses that were successful at what they were doing," Geddis says. "To pull them into a uniform national model ... it was a little bigger hill than we thought it would be." Royer's father's analysis lays more of the blame on the small-business owners than on management. "The people running those businesses were given a good salary, and for the first time in their lives they had money in the bank," Ken Royer says. "They didn't have earnouts, so I think a lot of them just sort of relaxed."
But there were more fundamental troubles plaguing the company. "We had flower shops operating on six different computer platforms, and the seventh method was a shoebox," says Eric Luoma. "There were no synergies." Luoma, who was a Gerald Stevens regional vice-president, says that the company rejected the idea of off-the-shelf floral-industry software in favor of developing its own. So management spent approximately $5 million on a technology program, called LeafNet, that was delayed for more than a year. "They made me the senior vice-president of LeafNet operations," recalls Luoma. "And my first recommendation was to shut it down." Royer confirms that the long-awaited system never worked properly. In the meantime, florists sent their weekly sales numbers to Fort Lauderdale, where legions of accountants and bookkeepers tried to make sense of them. It often took management weeks to slog through the reports, and those delays made it difficult to do meaningful analysis. More than once, accounting errors weren't found until it was too late to fix them. "Around Christmas of 1999, we thought we were having a great year," says Royer. "Then we realized that the numbers were overstated in several markets by 15% to 20%." It turned out that some florists who were transferring orders to other shops had reported total sales, and not just their commissions, as revenue. "There was a huge Bermuda Triangle between corporate management and the mom-and-pop retailers who didn't know what P&L and EBITDA are," says Karen Akin. That year the company would post a net loss of $12 million on revenue of nearly $111 million.
The lack of financial systems didn't deter Gerald Stevens from acquiring even more companies. "There was a commitment made to shareholders about how fast the company was going to grow," recalls Royer. "The M&A team was pressured to buy whatever could be bought." Eventually, Gerald Stevens acquired more than 150 companies with 300 retail locations -- and wildly varying business models. And it seemed that every other kind of floral business -- including a cataloger, four call centers, an importer, and several Web sites -- found its way into the company stable as well. Revenue skyrocketed, but the company was bleeding cash.
In the spring of 2000, it seemed clear that the company was in a tailspin. Valentine's Day, Easter, and Mother's Day are among the biggest days of the year for florists, but sales still fell short of quarterly forecasts. Akin quit. "I didn't want my reputation associated with a company that was going downhill that fast," Akin explains. But many of the other florists were desperate to believe that the roll-up could still pay off. Royer, for one, clung to the hope that with a little more effort the idea would work. And he had a lot at stake in that dream. In May, after he was promoted to chief operating officer of the retail division, he bought another 100,000 shares of stock, bringing his total to 600,000 shares. By that point, the price had dropped dramatically (to less than $4 a share), but Royer says he had so much faith in the company that it seemed worth taking the risk. Today he calls that decision "stupid from an investment standpoint. But I really did think we were going to pull out of it." Unfortunately, that hope was misplaced. In June acquisitions were suspended, and shortly thereafter Geddis stepped down from his post as CEO to become president of the company's retail division. John Hall, a partner in Steve Berrard's investment company, which at the time owned 17.8% of Gerald Stevens, replaced Geddis. Around the same time, CFO Al Detz and senior vice-president Adam Phillips left the company.
By November the stock price had sunk so low that the company was forced to do a 1-for-5 reverse stock split in order to boost its share price high enough to remain on the Nasdaq. For fiscal year 2000, which ended in August, operating losses were $42 million. In December the stock was delisted from the Nasdaq and moved to the OTC Bulletin Board, where it traded for $1 to $2 a share.
To control costs, the company began laying off employees and continued demanding that the florists cut expenses and raise prices and fees. For Royer the pain became personal. He was beginning to understand the disastrous effects of the fast growth that once had looked so attractive. "My job was to try to get stores to work with fewer and fewer people," he says. "I had to tell people I hadn't even hired that they didn't have a job anymore. And that took a lot of the fun out of it for me." John Partridge was also starting to experience the fallout. "I began getting calls from vendors that they weren't getting paid," he recalls. "Those were people I had known for years." Partridge called Fort Lauderdale, only to be told "It's just a cash-flow issue -- they'll get paid." But, claims Partridge, many never did.
In an attempt to raise cash, in February 2001, Gerald Stevens announced that it was selling catalog company Calyx & Corolla and Florafax for $20 million to a company led by a Gerald Stevens director. CEO Hall said the sale was part of "our continuing efforts to improve the company's financial condition and position Gerald Stevens for future growth." But it was not to be. On April 23, 2001, the company filed for Chapter 11 protection. Gerald Stevens had drawn down a $32-million line of credit, had lost another $5 million in the first quarter of 2001, and had seen its stock price plunge to 9 cents.
With the benefit of hindsight, many of the florists who had become part of Gerald Stevens consider themselves lucky. Originally, they thought that they couldn't just start over; most had signed noncompete agreements. But by the fall of 2001, when it became clear that the September 11 terrorist attacks were having a major impact on the capital markets, Gerald Stevens was forced to scrap its plans to resurrect the company. Instead, it decided to sell the companies that it had worked so hard to acquire over the past three years -- and approximately half of the florists simply bought back their original stores. They were pleasantly surprised by how much they were able to get for their money. Eric Luoma, for example, was back in control at Cactus Flower, having paid half of his original sale price for twice the number of stores. John Partridge partnered with a friend in Charlotte, N.C., to buy his own shop plus florists in five other markets. Karen Akin abandoned a fledgling career as a consultant to buy back Apples to Zinnias for a fraction of what she had sold it for, taking on a second shop in Dallas as well. Royer and his brother Tom negotiated a deal to buy back their former stores in addition to purchasing shops in three markets -- Tampa, Las Vegas, and Columbus, Ohio -- that the company was eager to unload. Partnering with the former owner of the Columbus shops, they closed a $7.8-million deal in the middle of November. Ten days later, they sold the Las Vegas and Tampa markets for $800,000 to another former Gerald Stevens florist.
Shortly thereafter, on November 30, Gerald Stevens ceased operations, having spent $135 million to acquire approximately 300 flower shops in 33 markets. According to public documents, the company had raised slightly less than $52 million from the sale of its stores; it posted $73 million in liabilities.
Former CEO Geddis, who is now chief operating officer of Davaco Inc., a store-fixture installation and services company in Dallas, blames the company's failure largely on the economy. "We were driven by a front-loaded acquisition program," he says. "When the money market slowed down, in 2000, our acquisitions slowed with it." Gerald Stevens never came close to its ambitious goal of acquiring 1,000 stores. Ken Royer is convinced that Wall Street and its lust for fast returns killed what was essentially a good idea. "If they had been willing to wait five years, it might have been an entirely different result," he says.
To anyone looking back at the ambition of the project, it's hardly shocking that Gerald Stevens went belly-up. Scores of similar companies have overestimated the ease with which entrepreneurial companies can be integrated into a large public company, and their ravenous appetites for revenue-building acquisitions have blinded them to fundamental flaws in their business models. What came as a surprise to Greg Royer -- and to many of his colleagues -- was the realization that they knew more about growing a company than they had given themselves credit for. "And I'm not usually shy about giving myself credit for knowing things," Royer says.
Royer is back at the helm of his company as a wiser and more confident entrepreneur, applying what he had known all along, as well as the lessons he learned from his perilous three years with Gerald Stevens. In general, the florists say, they learned some smart business fundamentals that were the hallmarks of the Gerald Stevens chain. Royer and a partner, Chuck Davis, bought back 24 stores from Gerald Stevens (though they soon closed 2 that were underperformers). Those shops are now bringing in $26 million annually, and Royer is talking about opening 2 to 4 more shops in the Columbus market in the next two or three years. He knows now that it takes that long to develop systems, train employees, and develop effective merchandising strategies for multiple stores. If there is one thing that his time at Gerald Stevens taught him, it's that there is no fast track.
As Partridge sees it, "I got an expensive education" -- he says he sold his stock, which at one time was worth as much as $4 million on paper, for $3,800 -- "but I came out of this deal smarter." Partridge says he learned how to buy directly from large wholesalers and how to centralize bookkeeping and payroll, skills that gave him the self-assurance to buy and run stores in five states, including his own original shop. "I don't think I could have grown this way on my own," he says. Don Hotton says he "cherishes the learning experience, even though it was a rough ride. I can't put a dollar value on what I learned." He says he's learned how to better control cash flow, track sales on a daily basis, and evaluate florists for potential acquisition based on the methods that Gerald Stevens founders taught him. Gary Wagner learned better inventory management, met new vendors, and adopted a new management style that cut his working hours by 25%. "My shop looks better, and my employees have better attitudes," he says. "It's a better company." Eric Luoma says he feels as if he "earned an M.B.A." and is using Gerald Stevens's system of daily flash reports to keep close track of sales and operations at his eight stores. "We're very charged up about expanding to at least one other city outside of Arizona," he says. "And we can do that because we learned a lot at Gerald Stevens about running stores in other cities."
Not all the florists were so lucky. "Some businesses were wounded, and others were utterly destroyed," says Royer. And there may be more pain on the way. According to D. Brett Marks, a lawyer at Kluger, Peretz, Kaplan & Berlin, Gerald Stevens's difficulties may not be over yet. His firm, which represents the company's liquidating trustee, is investigating whether any vendors may have been given preferential payments, plus whether company officers and employees "may have received improper payments up to a year before bankruptcy was declared." Another potential source of litigation: the original purchase prices of the florist businesses. "If the debtor [Gerald Stevens] overpaid, which we think happened in some cases, the seller may have to give back the difference," says Marks. (At this writing, no shareholder suits have been filed.)
Eric Luoma remembers how he felt at the founders' meeting in Fort Lauderdale. "If there was even the smallest indication that this idea would fail, I never would have done it," he says. "Our business is too important to my family, our employees, the community. I wouldn't have risked it." Both he and Royer still believe that consolidation in the floral industry is inevitable -- that it was the execution, and not the concept, that killed Gerald Stevens. Without the lessons of that failure, both men say, they wouldn't be where they are today. And they know that they're lucky that they had a chance to pick up where they left off before the roll-up. "I learned a lot about myself," says Royer. "For me to be truly happy, I've got to be in charge."
So although Royer hasn't given up on the dream he's had for 20 years, he's no longer chasing it frenetically. These days he's cultivating the dream slowly, carefully, thoughtfully. "I know now that you can't do it overnight," he says. "And I learned that the best people in big business aren't any smarter or more devoted than the best people in small business. It's just a different path."
Donna Fenn is a contributing editor at Inc.
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DONNA FENN is the author of Upstarts! How Gen Y Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success (McGraw-Hill, 2009), about ways Gen Y is changing the entrepreneurial landscape.