The Martinshof Story - Page 14

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45. A voice over the telephone!

Our lawn at Martinshof It was a sunny morning in May (1982) and I was raking leaves from the walking trail in our wood. My father used to do this too when he had to think about something or deal with some stress.

"Mr. Furstner ! Telephone !" I heard in the distance and jogged back to the office. A little out off breath I picked up the phone and said "Hello?"

"This is Stil from Desiree speaking" I heard a voice at the other end.   "Mr. Furstner I have heard rumours in the industry that you are interested in selling your business. If this is not the case, then please ignore my call and I have not said a word. But if the rumour is true, we would like to talk."

There are moments in life that you have to make an instant split second decision, and this was one of them. Desiree had been after our customers ever since my father died and pinched several of them. Was this a trick to suss out what my plans were so that they could use it against me ?   But Stil's voice had sounded pleasant and sincere, and I believe that telling the truth is ultimately always the best action. So I replied "Yes Mr. Stil, you have heard right, I am interested in selling Martinshof."

The crucial decision made, Jan Stil and I quickly worked out how to go about it, and I must say that throughout our dealings with each other, mutual trust and honesty lay at the basis of everything we said and did, which in the end created a very nice bond between the two of us.

Niessing rings with diamonds We quickly decided that our negotiations should take place in total secrecy, Stil would visit me at the secluded Martinshof usually after working hours.
Stil also would instruct his sales representatives on the road that no further attacks should be made at Martinshof customers. All jewelers selling Martinshof rings would be out off bounds for Desiree staff during our negotiations.

At an initial meeting with Stil a few days later, I aggreed to let him go through our stock in detail to give him some idea of how much unsaleable material (heavy rings) we currently held in stock.   This took place during several late afternoons and was completed by the end of May.   The stage was now set for serious negotians, scheduled to commence on June 1, 1982.

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46. Mr. Jansen Snr. (founder of JPC) enters the scene.

On the morning of June 1 I walked downstairs, switched on the printer and ran off our financial results for the previous month. I breathed a sigh of relief! We had finally done it, our first month of breaking even. The financial hemorrhaging of the past 10-12 months had stopped, the cost cutting we had put in place was working.
It was marvelous for this to happen right now, as it meant that I had at least some positive ground to stand on while negotiating with JPC. It was one of my best moments during my short reign at Martinshof.

Shortly after, Jan Stil and Mr. Jansen Snr. arrived at Martinshof.
Mr. Jansen was the founder of Jansen Post & Cox (JPC), the largest jewelry wholesaler in the country which included several branches including Desiree and Diamonde.
Jansen had started his business in 1946, immediately after WW2, traveling on bicycle with a small suit case of watches (as he later told me), getting himself ferried across the Rhine, Maas and Waal (all the bridges had been blown up during the war) in a rowing dingy by willing farmers, to do business in the Dutch Southern provinces
Jansen became the undisputed Godfather of the Dutch jewelry industry. He was now officially retired, but had taken on the special assignment as chief negotiator on the Martinshof take-over. He was a large imposing man, you would certainly not want to be on the wrong side of him.

The terrace at Martinshof, 'office' for 

all our negotiations Jansen greeted my mother with great courtesy and charm, which she obviously appreciated. I took Jansen and Stil to our sunny terrace, my informal "office" during all our negotiations, where my mother served us coffee.

Mr. Furstner, these are difficult times to do business in at present." Jansen commenced, We get a number of companies groveling at our doors, wanting to sell their business to us, and some we do buy."
He paused for a moment, then went on :
"But with you the situation is different. Martinshof is not an ordinary business. It is the Rolls Royce of the Dutch jewelry industry. Because of the quality of your business and the great respect I have always felt for your father WE come to YOU."

True Godfather talk indeed. But it were no empty words, they were sincerely spoken and (as events clearly showed) also very sincerely meant! We ended up with what was under the circumstances a fair and honourable deal.

Some six months later, after our negotiations had been completed and signed, Jansen also insisted that my sister Wivica and I were with him on first name basis. A rare privilege extended to only a handful of people in the industry. So it was "Joop" and "Michael" after that, and we exchanged regular Christmas letters until the year he died. (But that was at this point in time of course a long way off yet.)

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47. JPC's attraction to Martinshof

Michael Furstner, 1982 At this first meeting on the 1st of June, Mr. Jansen pointed out the two reasons they were interested in Martinshof.
Firstly Martinshof covered the top end of the jewelry market. All JPC branches were doing business with the lower and middle segments of the market, but the top customers in the country had always eluded them for many years. Martinshof would finally cover this gap.

There were two side issues to this aspect. Firstly it was essential that the Niessing dealership which Martinshof held would come with the business. Secondly, Jansen and Stil were worried that once Martinshof was taken over by JPC, the top customers would no longer wish to do business with Martinshof as the Furstner name was no longer part of it. It was therefore hoped that I (as Furstner) would remain with the company, at least for a short time to cover the transition period.

Jansen's second reason for wanting to buy Martinshof was more of a general nature.
Like Martinshof, Desiree had been forced to absorb many of the old heavy rings stock of their customers.
Martinshof could sell this to the Dutch mint and receive some (much welcome) cash for the melted down gold value.
But unlike Martinshof, which was running a loss, Desiree had a profit on their books, so any cashing in of their gold would drop straight down to their profit line and be taxed accordingly.

The Gold price Keeping the gold however had some potential risk also!
Because of the heavily fluctuating gold price the Dutch Tax system gave companies involved in the jewelry trade the option to record their stock not in Dutch guilders, but in kilograms weight of gold on their books. This way a company's stock value would not fluctuate heavily up or down from one year to the next. This was called the IJzeren voorraad ("Iron stock"). As long as a company's stock in gold weight remained more or less constant there was nothing to worry about.

But the IJzeren voorraad of the JPC group had increased considerably recently. Jansen was therefore worried that the Tax office would wake up to this and consider part of their gold still as profit and tax it accordingly.

By buying up additional companies, JPC was able to put some of their excess in IJzeren voorraad gold to productive use, and by doing so alleviate the danger of it been taxed as profit.
Significantly, immediately after all deals with Martinshof and our manufacturers were in place (in January 1983), JPC sent 5kg of gold to both Niessing and Or Est as "loans" (The loan to Niessing was later increased to 10kg I believe). This was a brilliant business move, as it helped to remove the potential tax threat and at the same time put JPC in a much better position to negotiate prices with our manufacturers than we had ever been able to in the past.

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48. The take-over negotiations

Our first meeting on Juni 1 ended in an amicable manner.
The second meeting held a couple of weeks later, which included accountants and financial experts on both sides (accountant van Dien and bank manager Jansen on my side), was far less pleasant. There was a tense, unpleasant atmosphere in our lounge room (it was raining outside), too many people trying to score points and disagree with one another, and I did not like it at all.

The lounge room at Martinshof This was not going to happen on our final meeting a week or so later when JPC would make their offer. I was determined to get that back on track to the layed back casual and friendly mood which always was my own style.
So I phoned both van Dien and my bank manager and told them I did not want them on the final meeting.
But Mr. Furstner, is that wise?" they both asked. But I replied that I did not want a repeat of the previous meeting's atmosphere. Anyway, if I needed some expert advise I could always phone them during the meeting I said.

I have found that you very often can change a weakness into a strength and that is what I wanted to attempt here.
Jansen and Stil were the two most powerful men in the industry, they could easily chew me up and spit me out for breakfast, but I knew they would never do that to a mere novice like me on his own.
In retrospect I believe they never had such plans at all of course, they simply wanted to do a fair deal. But I did not know that at the time, and the future of my mother's circumstances were at stake here.

So I let both gentlemen in and we sat down again on our terrace while my mother busied herself offering us coffee. "Where are the others?" asked Jansen, "Are they late?"   "What others?" I replied "My mother is the sole owner of our company. She has asked me to represent her, so that is all we need."

My mother's home in Gorssel This was a different scenario of what Jansen and Stil had expected and it took them a little time to shift around to that. But we had a very pleasant morning which I remember with fondness. In the end Jansen just named a figure.

Considering the heavy (1,5 million guilder) debt our company was carrying the offer was a fair one. Jansen also hinted that if I was prepared to stay with Martinshof for a while longer after the take-over, there might be a little extra.

A week later I agreed to that, which gave my mother in addition to the cash sale a small company pension for life. This would enable her to buy a new house in Gorssel and ensure a reasonably comfortable living for the rest of her life. Furthermore, the dearest wish of my father had been fulfilled : Martinshof would remain in tact, complete with all its personnel.

But nothing had been signed yet. First one more important job was there to be done, and it was mine. To carry Niessing along with our deal.


Copyright © 2010 Michael Furstner