Simmons deal shows Eitel team has answers
David Perry Executive editor -- Furniture Today, November 30, 2003
How do you double the value of a company engaged in an ultra-competitive market in less than five years?
If Charlie Eitel faced that question in business school at Oklahoma State University, he probably would have shaken his head in dismay. But the lessons he learned at OSU, where he finished first in his class, and in the sterling business career that he went on to fashion, enabled Eitel and his team at Simmons to come up with the right answers.
In mid-November, Thomas H. Lee Partners, together with Eitel and his senior management team at Simmons, said they had struck a megadeal for the sale of the company. The deal, expected to close this month, values Simmons at $1.1 billion.
Simmons is being purchased from Fenway Partners, which paid about $513 million to acquire it in October 1998. Fenway will retain a 10% stake.
That $1.1 Billion valuation is an eye-opener. Like the ultimate final exam, it validates the leadership story written by Eitel at Simmons in less than four years. He arrived in January 2000, just as the company was introducing a bold new single-sided mattress. The move, and the better sleep that Simmons says it has provided to consumers, was a resounding hit. Simmons hasn't looked back since.
Eitel, 54, now has wrapped up the first chapter of his Simmons story, one that saw sales and profits climb steadily as innovative products joined the mix and sales of better bedding soared. To the surprise of some in the bedding industry, Eitel, who has written a number of business books, will begin a second chapter at Simmons.
In announcing in August that Simmons was exploring the sale of the company, Eitel promised that "the management team will remain in place as we move the business forward, whether or not there is an ownership change." The deal makes that pledge a reality. The Simmons management team remains in place.
On the day the sale was announced, Eitel noted that Simmons would not have fetched a billion dollar-plus valuation if the buyer wasn't impressed with management. "We've made a lot of good longterm decisions from day one," he said.
When he joined Simmons, "we were on defense," Eitel said. "Today we have the ball and our objective is to keep it. I think we are just getting started."
He talked about the culture that has been established at Simmons, the product leadership and the "tangible performance" of the company's growing portfolio of brands, "products that work and that consumers are willing to pay for."
And he said he's still energized by the challenges of the business. "I don't like to follow," Eitel said. "I want to be part of the culture that will find the next right answers."
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