When the two later met, Buffett asked Barnett Jr. to name a price, customary in Berkshire acquisitions, but then the two haggled over it, unusual for Berkshire acquisitions.33 Barnett Jr. had consulted with an accountant from Deloitte to identify what they considered a comparable Berkshire acquisition.34 On that basis, Barnett Jr. lobbed what he knew was a high asking price, $334 million payable in Berkshire stock.35 As a rule of thumb, jewelry retailers are worth about half their annual gross sales plus inventory, putting Helzberg’s fair market value at $141 million plus inventory. Buffett countered at less than half Barnett Jr.’s asking price. The two finally settled on $167 million.
Barnett Jr. received much higher offers for the company.36 But the Berkshire deal was worth more than its face value because it also assured keeping the business intact, maintaining headquarters in Kansas City, and retaining personnel—all important to the Helzberg family.37
If you can imagine the relief Barnett Helzberg Jr. felt after landing his third-generation jewelry chain a permanent home with Berkshire, consider the mindset of fourth-generation family members dealing with the legacy of their business, as was the case with Ben Bridge Jeweler, Inc. Samuel Silverman began the business in 1912 in downtown Seattle. In 1922, he invited his son-in-law, Ben Bridge, to join the operation as a partner. In 1927, when Silverman retired, he sold his interest in the business to Bridge, who renamed it eponymously.
Bridge adopted two defining traits that have been handed down through the family company. The first is a policy, strictly followed and applied to both family and non-family members, of only promoting from within the firm.38 Such an esteemed practice provided a discernible benefit to the company: low employee turnover.
The second is a policy of conservatism in expansion, never overextending the company’s financial resources. The company always maintained a slow rate of growth in numbers of stores. Mr. Bridge instilled such budget consciousness as the result of personal lessons learned during the Great Depression. He was nearly forced to declare bankruptcy, an embarrassing agony he swore his company would not face a second time. As his grandson Ed Bridge remarked years later: “He never wanted to owe anybody again.”39
Ben’s sons, Herb and Robert (“Bob”), carried on these traditions of integrity and budget consciousness as they slowly nurtured the business beyond its Seattle origins. Bob managed the second shop, in Bremerton, Washington. During the 1950s, it struggled, however, and never had the exciting feel of the Seattle flagship, which his brother and father ran. Herb, meanwhile, quarreled with his father about how to run the Seattle shop, leading him to threaten to take a job in Denver at Zales, a competitor. Ben Bridge called a family meeting.40
“Boys,” the old man told his sons, as he laid his store keys on the table, “I’m out.”41 In the interest of keeping the family business together, Ben Bridge explained to Herb and Bob, he was leaving it. “He wanted the family business to be a unity venture,” his grandson Ed reflected long afterward.42 Such aspirations are common in family businesses, but it is rarely easy for the patriarch to surrender the reins, making this gesture a tribute to Ben Bridge.
The Bridge brothers got the message and united to run the family business. Faithful to their father’s teachings, they pursued expansion cautiously. One early opportunity they took was running the jewelry departments for all J. C. Penney stores in the Seattle area. After developing skills in chain-store management in a shopping mall environment, the brothers gained confidence about their ability to expand Ben Bridge. By 1978, they had made Ben Bridge into a six-store chain.
It was then that their children, cousins Ed and Jon, stepped up to leadership positions. They had spent their youths working in the stores, sweeping floors and polishing silver. In 1978, after college, Ed went on the sales floor. Within a few months, however, the company’s long-time chief financial officer (CFO) announced his retirement. Ed was tapped to replace him at just twenty-two years of age. Ed was promoted again three years later to become head merchandiser, while cousin Jon, fresh out of the military after his own stint on the sales floor, became CFO.
Thus began the careers of Ed and Jon, who would continue to carefully shepherd the slow growth of the family business. They opened stores in Portland, Oregon, in 1980, and in San Mateo, California, in 1982. By 1990 Ben Bridge Jeweler had thirty-nine stores, twenty of them in California, a much more rapid rate of growth than their elders had logged, though still slow by industry standards.
In 1990, Ed and Jon formally assumed managerial leadership of the fourth-generation family business and carried on the company’s traditions faithfully—and prosperously. Store sales volumes grew, profits rose, and expansion followed more easily than the company’s patriarchs could have imagined. By the end of the 1990s, Ben Bridge Jeweler had sixty-two stores in eleven states.43