Sid DeBoer, founder of Lithia Motors Inc., recalled with a laugh that his car-dealer negotiating instincts kicked in at the last minute and he almost pulled the plug on, or at least delayed, taking the company public. Almost.
"In the final analysis, I wasn't going to pass up that opportunity," he said.
That was in 1996. By then, DeBoer had been angling to take his company public for almost a decade. The sticking point was that a big investor was willing to come on board for $11 per share, and DeBoer had built his plans around $14, he said.
"We had everything figured out at $14. Hey, I'm a negotiating guy. I've been negotiating all my life -- and I wanted that $14," DeBoer said. But the benefits of public ownership were too good to pass up, he said.
No. 1 was access to public funding for expansion, but from the beginning, DeBoer said he was also attracted to the idea of creating a more "permanent," professionally run corporation.
Another key advantage was heading off potential disputes among his heirs, he said. "Children don't have to fight over determining the value of the company," when a dealership group goes public, DeBoer said. His son, Bryan DeBoer, named COO in 2007, became Lithia's CEO in May 2012.
Finally, going public also gave Lithia greater resources, including shares, to compensate and retain managers, DeBoer said. "I can offer better compensation, a better benefits package, than a lot of private companies."
DeBoer said publicly traded groups considered it a big vote of confidence when investment guru Warren Buffett, CEO of Berkshire Hathaway Inc., led the buyout of Van Tuyl Group, of Phoenix, then the nation's largest privately held auto retail group.
"It's a huge industry," Buffett said last year at a conference in New York co-sponsored by NADA and J.D. Power and Associates. He said, "It can be, if run properly, a very good business."