The Anatomy of a Sale--Ours

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Fourth, there was the black-hole factor, which might also be called the private company factor. The two magazines had not been operated as separate businesses but as units of G+J USA, and neither one had the audited financials that would normally be an important part of the offering materials. That's not unlike the situation would-be buyers often face when they decide whether, and how much, to bid for private companies. Because the bidders don't have access to the quantity and quality of information they would have if they were evaluating a public company, skill and intuition and even luck play a larger role. There's more opportunity for shrewd investors to find hidden value that may not be evident to other bidders. In addition, a buyer's own assets are more important than they might otherwise be. If the buyer has particular business skills that others lack, he or she may be able to project better results, which would justify a higher bid. To be sure, it's also true that the risks are greater when you buy an unaudited company.

Axel Ganz
President, G+J AG
Magazine Division for
France and U.S.

Last but not least was the Axel Ganz factor. Ganz, who works from Paris, is the architect and former president of G+J's international magazine division, although he'd recently scaled back his activities, becoming president of G+J AG's magazine division for France and the United States. A legendary figure in the industry, he had pushed hard for the acquisition of Inc. and the women's magazines (although not Fast Company), and—as he neared retirement after a successful career—he had to be terribly disappointed over the failure of G+J USA. I had never met Ganz, but Koten knew him reasonably well and believed that his personal view of the magazines' value, his contacts throughout the industry, and his own emotional state as he neared retirement could affect the sale, though exactly how was hard to say. "There's a human side to Axel that's important here," Koten said early on. "He knows a lot of big players in the industry who might think they could use their personal influence with him to gain an edge. It's a wild card."

Indeed, all five factors were wild cards to some degree, and they promised to make the next month or so interesting. And stressful. We could hope only that, when it was over, we'd have a new owner we liked—unless, that is, we wound up owning the magazine ourselves.

Do It Yourself

That thought had occurred to several people in the company, including me. I was worried about what was going to happen to Inc.—that is, the Inc. first imagined by Bernie Goldhirsh in 1979 and then shaped, honed, and nurtured by all of us who had worked there over the next 26 years. I doubted that the magazine I knew and loved could survive another upheaval like the one we'd experienced following the sale to G+J. At the same time, I thought it would be incredibly exciting and rewarding if we had the opportunity to build an entrepreneurial company resembling the best of those we write about—and maybe even do it in partnership with some of the entrepreneurs we most admire. Accordingly, my first calls were to Jack Stack, CEO of SRC Holdings, with whom I've written two books, and Norm Brodsky, CEO of CitiStorage, with whom I write the Street Smarts column in Inc. I also sought advice from Staples co-founder Tom Stemberg, who is now a partner in a venture capital firm.

Koten was thinking along the same lines. He was already trying to contact Intuit founder Scott Cook and Oracle founder Larry Ellison, both former Inc. 500 CEOs. He told me he was passionate about Inc. and wanted to buy it. (That took me by surprise. He hadn't been passionate about it when he'd first arrived in 2002. At the time, I didn't think he even understood Inc. and its market. Most journalists don't, especially if they come from other business publications, as Koten had. He had recently admitted as much, but said that, in the intervening years, he'd come to appreciate the potential of Inc. to transform the way people think about business.) I said that if he was that interested in buying it, we might want to meet first with Brodsky and his partner, Sam Kaplan. He readily agreed.

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Bo Burlingham

Burlingham joined Inc. in 1983. An editor at large, he is the author of Small Giants: Companies That Choose to Be Great Instead of Big. The book was a finalist for the Financial Times/Goldman Sachs Business Book of the Year Award in 2006. Burlingham is also the co-author with Norm Brodsky of The Knack; and the co-author with Jack Stack of The Great Game of Business and A Stake in the Outcome.

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