Smith

"As ABC developed scale advantages, Smith realized he could purchase new franchises at seemingly high multiples of the seller’s cash flow and immediately reduce the effective price through expense reduction, tax savvy, and marketing expertise. Acting on this insight, Smith aggressively acquired other franchises, including American Pepsi in 1973, Pepsi Cola Bottling Company in 1977, and the Washington, DC, franchise in 1977."

"In buying ABC, Smith acquired a legitimate platform company—one that other companies could be added to easily and efficiently."

"As time went on, Smith’s approach to acquisitions evolved. From the early 1980s on, Smith and his team focused on the occasional, large opportunistic acquisition and on a series of minority investments in public companies that he believed to be undervalued. These investments were attempts at diversification through a strategy of what Smith termed investment with involvement, the idea being to make a sizable minority investment, take a seat on the board, and work with management to improve operations and increase value."

"When I met with Smith in his office, he showed me the 1962 annual report, his first as CEO, in which he refers repeatedly to cash earnings (defined as net earnings plus depreciation) as the key metric in evaluating company performance, not net income."

"Together, this group of executives led the company into an eclectic succession of new businesses. In each, they proved themselves to be exceptional operators with industry-leading margins and exceptional returns. Smith succeeded in creating an environment where this talented group of executives was given exceptional autonomy and felt like owners. As Smith, with a gleam in his eye, summarized it to me, “We all just had so much fun.” As Woody Ives said of his personal stock ownership, “I just wish I’d never sold a share.”11"

"Perot discovered that the directors had not voted against the corporation’s chairman since the 1930s. Before long, he was ridiculing the board as Smith’s “pet rock.”"

"On Smith's advice, Munk put in a bid. When it turned out to be close to but lower than Exxon’s, who came in at about $60 million, Munk withdrew. But then Exxon backed off and departed. Munk lowballed with a bid of US$31 million with a sweetener: Texaco would get half of any proceeds should gold go over US$385 an ounce, topping out at US$9 million. Texaco took Munk’s offer. The next step was to finance the deal. Munk’s recent feat of paying off the Royal’s $100-million Camflo debt gave him new credibility. The Continental Bank Company gave Munk an equity loan of US$31 million. With the funds already in hand, Barrick closed the Mercur deal in June 1985."

"The reality check is that I call my colleagues. That used to be Gilmour, now it’s also Birchall, always, for the last thirty years. It’s also Greg Wilkins, and others whose judgement we trust. Certainly when it comes to Barrick it’s Smith. Then I pitch them and then usually they go along. But after all, their destiny is tied up with their decision so they are just as involved as I am. Then we have another meeting and we have a fifth meeting and eventually we come up with a platform and a position. We listen to each other and talk, and then boom, we go. That's how it works."

"Smith’s book, Internal Perfection,"

"*In fact, days after this board meeting, Winograd confided to Greenberg that he personally had no problem with AIG’s financials or with him or Smith. Winograd blamed PwC’s national office for the ultimatum. Samuel A. DiPiazza, who was PwC’s chairman at the time, declined Cunningham’s request for an interview for this book."

"“Which company developed the method?” he wondered. “Smith, HP Smith, that’s what it’s called,” replied the obliging plant manager who did not understand why the Swede was so interested in plastic-coated kraft paper. However, he was slightly surprised when the Swede suddenly apologized and explained that the visit had taken longer than he had thought and therefore he had to leave immediately."

"On 4 June, Heatley wrote to Smith again, this time about the ESPN contract, but the theme was the same and he directly spelled out his concerns and the need for urgent action: ‘I don’t want to harp on about programming issues but the main problem we face is that most sports contracts (rugby, cricket, league, netball etc.) are multi-year deals and even if we decide to get aggressive now, it would be years before we have any significant impact.’[6](private://read/01jectdbce729daxqkxt7cbe8r/#mn29) The company had to lay the foundation for these exclusive deals now rather than keeping the strategy in reserve for when sales stalled, he urged. If Sky was going to get 20,000 subscribers in the next few years, it needed exclusive coverage that people wanted to see, in particular, sport with local teams. But it would be complex and expensive to arrange, so the Americans had to be convinced that it was the right strategy and then commit the time and money to achieving it."

"Downey, who personally liked both men and professionally needed them to work harmoniously, tried to be a conciliator. He suggested that Smith and Heatley get together to try to agree on how to manage the boundary between director interest and CEO prerogative. ‘This requires you to back off a bit and Nate to come forward a bit,’ Downey told Heatley. Downey said he had suggested that Smith could try using ‘a humorous trigger word’ when he felt Heatley was pushing the boundaries, and perhaps Heatley could do the same when he thought Smith was not being sufficiently forthcoming. ‘I said to Nate, and now say to you, that none of these devices can work without mutual goodwill,’ Downey wrote. ‘With goodwill, any reasonable arrangement between or among people can be made to work; without it, even the most logical structure and process will fail.’"