Employees to acquire bedding producer Southerland

New executive team will run company

David Perry -- Furniture Today, March 1, 2010

NASHVILLE, Tenn. — Independent bedding producer Southerland said it plans to sell the company to its employees in an Employee Stock Ownership Plan buyout led by a new executive team.

The new leadership team at bedding producer Southerland includes Steve Russo, left, David Corbin and Bryan Smith.

The deal is expected to close at the end of this month. Terms were not disclosed.

The new management team is led by two co-presidents, David Corbin and Steve Russo, and by Bryan Smith, Southerland's current president, who will be executive vice president and chief financial officer in the new leadership structure.

Corbin formerly held executive positions with Pulaski Furniture and Chromcraft Revington. Before that he was in brand management with Procter & Gamble. Russo, well-known in the bedding industry, formerly held executive posts with Latex International, Consolidated Bedding and Restonic.

Smith has worked at Southerland for 12 years and has more than 20 years of experience in managerial accounting.

Corbin said the new management team will bring fresh thinking, a consumer-focused approach to product development and strong marketing disciplines to Southerland, which will continue to produce value-priced bedding lines but will add innovative new lines as well, he said.

Corbin asserted that the company will emerge from the pack of second-tier producers by developing and testing new products with consumer panels, developing a diversified licensed brand portfolio, employing lean manufacturing practices and strategic sourcing, and using value-added sales efforts.

A key to the company's success will be its employee owners, Corbin said. The new ESOP ownership structure and recapitalization will be led by the new executive team and by members of the Southerland family and the current management. The new ESOP structure will result in significant tax efficiencies as well as additional incentives and "exceptional retirement benefits" for the employees, he said. Under the ESOP, employees will own 100% of Southerland.

Studies show that employee-owned companies have a significant advantage over comparable traditionally owned businesses in sales per employee, Corbin said.

ESOPs are the exception in the bedding industry. Top 10 bedding producer Kingsdown is an ESOP company, and bedding major Simmons once had an ESOP. In the broader home furnishings industry, McCreary Modern and Fraenkel Furniture Inds. have employee ownership, and Hooker Furniture once had an ESOP but discontinued it.

Southerland, based in Nashville, operates a factory there and also has plants in Oklahoma City and Phoenix. It serves customers nationally. Southerland has more than 274,000 square feet of combined production and distribution space.

Those three facilities are "ideally suited for the company's plans for future growth and distribution," the company said.

Under the new leadership structure, Southerland will continue to develop its own brands as well as offer private-label brands for regional bedding retailers, the company said.

Southerland's current CEO and chairman, Herman Southerland, is retiring. Marty and Trey Southerland, his sons, will remain with the company.