- 11 -
dominant force in its market and wanted to expand the
company. Although their corporate contacts and experience
in retail sales and distribution provided a significant
benefit to SWI, Messrs. Jacobson and Henochowicz were both
aware that they lacked the experience and capital necessary
to expand the company. Accordingly, Messrs. Jacobson and
Henochowicz sold their SWI stock to Dubin Clark in January
1989, although they continued working for the company after
Dubin Clark's acquisition.
Dubin Clark's purchase of SWI was structured as a
stock purchase followed by a merger. Old SWI was merged
into new SWI, and new SWI was the surviving entity. In
exchange for their stock in old SWI, the selling share-
holders were to receive a total of $5 million in cash, the
right to purchase approximately 27 percent of the stock of
new SWI for $60.98 per share, and contingent annual cash
payments for 5 years following the sale equal to 30 percent
of the company's operating profit in excess of $4 million
per year. One-half of the contingent payments was
designated as "incentive compensation" to insure the
continuing involvement of the selling shareholders in the
management of SWI. The other half was designated as "earn-
out" payments.
SWI calculated the $60.98 price per share that the
former owners paid for the stock of new SWI by dividing
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011