Jo Ann Stores Buyout Caps Turnaround For Entrepreneur And Family - Entrepreneurship - Portfolio.com

http://www.portfolio.com/views/blogs/entrepreneurship/2010/12/23/jo-ann-stores-buyout-caps-turnaround-for-entrepreneur-and-family

Four years ago, when Alan Rosskamm was still the CEO of struggling Jo-Ann Stores, he made a decision to step aside and let new management lead the company his family founded in the '40s. Now, he and other investors in the chain of crafts stores are seeing that discipline rewarded with a $1.6 billion buyout offer extended byLeonard Green & Partners.

Jo-Ann Stores, a retailer based in Hudson, Ohio, has until February 14 to consider the offer, as well as any other possible bids that might be submitted. The Green offer, at $61 a share, represented a 34 percent premium to Wednesday's stock price.

The company has been working on a turnaround since 2006, when the operation reported its first same-store sales decline in a decade, and activist investors such as Olstein Funds, of Purchase, New York, urged top brass to shake things up.

Rosskamm, whose family founded the company as an imported cheese shop in Columbus in 1943, had been chairman, president, and CEO of what had evolved into a retail crafts store. But he agreed to hand over the company to new management with broader retail experience.

"As we continue to transform our business…it is clear that we must focus sharply on retail execution and operational excellence. Now is the right time to bring in someone with whom I can partner to accelerate change and secure our future success," Rosskamm said in November 2006.

Rosskamm, now 60, turned over management to Darrell Webb, who had been president of Fred Meyer Stores, a division of the Krogersupermarket chain. With Webb in charge, the company broadened its focus from fabric to a broader range of crafts, simultaneously playing into a powerful trend, as aging baby boomers sought to reconnect with their creative interests.

Jo-Ann prospered, as did its key rival Michael's Stores, and strong financial results poured in, with company shares hitting an all-time high even prior to the buyout offer.

Knowing when to step aside can be a challenge for the owner of a family business. In fact, it's relatively uncommon for a family business to even last more than one generation. Rosskamm—who retained a seat on the board and a large ownership stake—timed his decision just right, and it has paid off in a way that his family members could scarcely have imagined in 1943.