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-- from the Prologue
The first in-depth portrait of the life and times of the trailblazing financier Thomas Mellon Evans -- the man who pursued wealth and ...
-- from the Prologue
The first in-depth portrait of the life and times of the trailblazing financier Thomas Mellon Evans -- the man who pursued wealth and power in the 1950s with a brash ruthlessness that forever changed the face of corporate America.
Long before Michael Milken was using junk bonds to finance corporate takeovers, Thomas Mellon Evans used debt, cash, and the tax code to obtain control of more than eighty American companies. Long before investors began to lobby for "shareholder's rights," Evans was demanding that public companies be run only for their shareholders -- not for their employees, their executives, or their surrounding communities. To some, Evans's merciless style presaged much that is wrong with corporate life today. To others, he intuitively knew what was needed to keep America competitive in the wake of a global war.
In The White Sharks of Wall Street, New York Times investigative reporter Diana Henriques provides the first biography of this pivotal figure in American business history. She also portrays the other pioneering corporate raiders of the postwar period, such as Robert Young and Louis Wolfson, and shows how these men learned from one another and advanced one another's takeover tactics. She relates in dramatic detail a number of important early takeover fights -- Wolfson's challenge to Montgomery Ward, Young's move on the New York Central Railroad, the fight for Follansbee Steel -- and shows how they foreshadowed the desperate battle waged by Tom Evans's son, Ned Evans, to keep the British raider Robert Maxwell away from his Macmillan publishing empire during the 1980s. Henriques also reaches beyond the business arena to tally the tragic personal cost of Evans's pursuit of success and to show how the family dynasty shattered when his sons were driven by his own stubbornness and pride to become his rivals. In the end, the battling patriarch faced his youngest son in a poignant battle for control at the Crane Company, the once-famous Chicago plumbing and valve company that Tom Evans had himself seized in a brilliant takeover coup twenty-five years earlier.
The White Sharks of Wall Street is a fascinating portrait of an extraordinary man, whose career blazed across the sky and then sank into obscurity -- but not before he had provided the template for how American business would operate for the next four decades.
The Time: An evening in the early eighties.
The Place: A soaring hall in a famous Manhattan museum, set for dinner.
The Occasion: A private party hosted by Drexel Burnham Lambert, just emerging as the leading financier of the proliferating battles for control of America's largest corporations. Around the tables are men whose ambitions will chill the hearts of company executives, local mayors, labor leaders, and boardroom directors for years to come.
But at one table sits a man none of the celebrity-spotters recognize. He is Robert Sheldon Evans, an executive at the Crane Company, a polyglot industrial corporation whose last big headlines on Wall Street had come in the mid-seventies, when it made a bid to buy a stake in Anaconda Copper.
One of Evans's curious tablemates finally asks the question others at the table are clearly pondering. Why is he here? Where does he fit into this choreography of power?
"Oh," answers the low-key man from Crane, "I'm standing in for my dad, Tom Evans."
The questioner still looks blank. Who is this Tom Evans?
A brief coolness, then: "Well, I guess you could say, he started all this." His hand swept in the room full of strivers and acquirers, raiders and would-be raiders.
In the business world of the late fifties -- that hazy fax-free and pre-laptop era when a round-trip to the Coast took days and takeover battles took months -- Thomas Mellon Evans was a widely recognized figure. A Daddy Warbucks lookalike, he was so familiar that business writers could use his name unexplained, just as the names of investment wizard Warren Buffett and entrepreneur Donald Trump would be used decades later. He was a controversial figure as well -- a New Jersey congressman would later brand him "the white shark" and Forbes magazine called him "the man in the wolf suit." Long before Drexel's Michael Milken became a household name in the eighties by facilitating the use of junk bonds to finance hostile corporate takeovers, Tom Evans had used debt, cash, and the tax code to seize control of more than eighty American companies, small and large. Long before giant pension funds and other institutional investors began to lobby for "shareholder rights," Tom Evans was demanding that public companies operate only for their shareholders -- not for their employees or their executives, not for their surrounding communities, but for the people who owned their stock. His view seemed selfish and harsh in the pallid institutional community of that day, but he preached it fiercely and effectively.
By 1959, Tom Evans already had become the leading practitioner of a strange new form of corporate ruthlessness, one that squeezed "fat" out of profitable corporations in the relentless pursuit of greater profit. By 1968, the Wall Street Journal had declared Tom Evans "something of a legend for his tough methods of operating the company once he wins control. He demands prompt profit performance from both assets and men; if he doesn't get it, he sells the assets or fires the men."
Yet, despite the swath that Tom Evans cut across America's corporate landscape in the fifties and early sixties, most of the people who poured into Wall Street in the eighties to practice "M&A" -- mergers and acquisitions -- had no idea they were standing on anyone's shoulders. They thought they were part of a new age, engaged in something history had never seen before. They were wrong. Everywhere they strode, Tom Evans had been there ahead of them.
Although Tom Evans came to power in the blandly conformist Eisenhower years, few of the brash raiders of the eighties could match him for daring, cunning, or sheer exuberance. In a gray-flannel culture, Evans was a dapper maverick; in an age of polite corporate statesmanship, Evans spoke his mind, fiercely and fearlessly.
He was larger than life in his era -- and he was not alone. Say "corporate raiders" to most baby-boomer Americans, and they will think of the colorful men whom Mike Milken bankrolled in the Drexel Decade. But the term, probably first coined for the robber barons of the nineteenth century, was commonly applied to the takeover artists of Tom Evans's generation -- impatient, heart-scarred young men from the margins of American culture who were challenging their cautious mentors for a place at the top of American business. Besides Evans of Pittsburgh, they included Robert R. Young of Texas, Charles Green of New York, Lou Wolfson of Florida, Art Landa of Washington, D.C., and Leopold Silberstein of Berlin by way of London and the Far East -- all once at least as famous as Evans, if not more so, and now all just as obscure.
Tom Evans's story was shaped partly by these remarkable men, for they were all more than coincidental fellow travelers through history. They followed one another's footsteps in a complicated dance, copying and sometimes improving on one another's tactics, publicly defending their common philosophy and business strategy. Among themselves, they were alternately allies and enemies as the occasion demanded, but always, in the public's mind, they were a unified force, viewed with fear and suspicion. Each, in his private life and public warfare, contributed to the controversial image that they all ultimately shared. One cannot understand the early postwar takeover era unless the strands of these men's lives are woven into the fabric of Tom Evans's story, just as their stories were woven together by the fascinated business writers who first recounted their exploits and made them famous.
Their challenges to the corporate Establishment, depicted in newspaper and magazine articles and even woven into Hollywood movie plots, made such a strong impression on the business community of their day that it seems almost inconceivable that they could have been so completely forgotten by the early eighties. Their exploits, after all, filled file upon file of clippings in the New York Times archives alone. They had been profiled by Fortune, featured in photo spreads in Life and Look, subjected to lengthy front-page scrutiny by the Wall Street Journal, vilified in Congress, quizzed on Meet the Press, and derided in Barron's. What had happened? How could Wall Street have entirely lost its memory of these remarkable boat-rocking men?
Their undeserved obscurity today is perhaps rooted in the cycles of the twentieth century's business literature. The golden-hued business world of the twenties attracted writers like honey attracts flies; there are a half-dozen excellent books, and probably dozens of mediocre ones, about the events that climaxed with the Great Crash of 1929. Indeed, one of the best books on that subject was published nearly a half-century after the fact, relying on the abundance of material produced in that era by dozens of fascinated scribblers. But during the Depression years, the writer's eye shifted firmly to Washington -- and there it stayed, with a few brief exceptions, all through the forties, the fifties and the sixties. The New Deal, World War II, McCarthyism, the Cold War, the civil rights movement, the space race, and rock and roll all pulled the nation's literary and journalistic attention away from the prosperous and seemingly bland and unruffled world of Wall Street and corporate boardrooms. Only a handful of popular business books illuminate the first two postwar decades on Wall Street. The speculative market of the sixties attracted a few elegant mainstream writers. But then the dismal, colorless stock market of the seventies descended, and thousands of Wall Street veterans retired or found other lines of work, taking their memories with them. Soon, the grim attractions of Watergate and the Arab oil crises stole the spotlight once again. Thus, Thomas Mellon Evans and an entire generation of fascinating business figures from the two postwar decades have been largely neglected simply because the nation's attention was turned so firmly elsewhere. Piecing together the story of the early corporate raiders is like assembling a mosaic on some new archaelogical site; no doubt, key figures have been lost in the dust or smashed beyond recognition. One does the best that one can, however, in hopes that the incomplete outline will nevertheless be intriguing enough to attract fresh digging.
One could argue whether Tom Evans was, in fact, the "first corporate raider" of the postwar era or just one of the small band of pioneers who rushed onstage together as the great bull market of the fifties got rolling. But arguments about who went first -- the most plausible cases can be made for Robert R. Young and Charles Green -- miss the heart of what made Evans a lodestone figure in the evolution of American business.
He was a bridge of history -- a man whose style, shaped by the business elite of his childhood, deeply frightened and angered most of his own contemporaries but appealed powerfully to the sons and grandsons of his generation. While most of his fellow mavericks focused on takeovers and had little interest in management, Evans went beyond his corporate raids -- sometimes along rough and shadowy pathways -- to reshape the way his companies did business with their workers, their vendors, their shareholders, their communities, even their senior executives. He called himself a "corporate rejuvenator," but he could almost be called the man who invented downsizing, one of the earliest promoters of the "lean and mean" business model. Back when most chief executives longed to appear statesmanlike, he relished his image of ruthlessness. When others sought to build up huge salaries and luxurious corporate empires, he often worked without a salary and pressed only toward the bottom line. And at a time when scattered shareholdings and passive institutional investors left most chief executives free of any serious concern about rewarding shareholders, Tom Evans seemed to care about only one thing: pushing up the value of his stockholders' investments. He waged corporate warfare with a brilliance and zest that few had yet mustered and built a "conglomerate" in the late forties before the media had even coined the term.
This was Tom Evans in the late forties and early fifties -- and his approach to empire-building soon was so widespread that pundits found new names for him and the handful of men like him: Boardroom pirates. Proxyteers. Corporate raiders.
But unlike the more widely known mavericks of that era, Tom Evans endured. He stayed in the game well into the seventies, and the lessons that a younger generation of business leaders and advisers learned from his example echoed all across the corporate landscape.
His brusque and autocratic management style, once condemned by managers who were embracing "sensitivity training" and improving their "people skills," would ultimately be widely copied. In 1976, the midpoint of the "Me Decade," Business Week took stock of the Evans phenomenon, in an assessment that resonated two decades later. "Critics claim that Evans has worked extreme hardships on his managements, employees and the communities in which his companies operate," the magazine observed. "But one banker argues: 'It takes a strong man without too nice a conscience to build an empire. He's tough but he's honest. In this age of permissiveness, maybe he's a throwback, but a lot of stockholders out there could do a lot worse than have Tom Evans mind their money.'"
And in the world of Wall Street, he was a conduit between the business values of his mentors, the industrial barons of Mellon-era Pittsburgh, and those of his protégés, the young investment bankers and securities lawyers who trained on the deals of the seventies and dominated the decade of the eighties. He championed the rights of the shareholder when almost no one else was. Decades later, a nation of shareholders inherited the power he fought for -- and profited immensely from the wealth their shareholdings produced.
To be sure, that power often had an ugly face -- just as Tom Evans's squinty Santa Claus grin could vanish into an icy glare or a fiery tantrum. His life story is almost a summing up of all the ways that business can bruise society. The shareholder-first philosophy elbowed aside other important interests. Workers were abruptly fired or left ill or without pensions. Customers were cheated by illegal price-fixing schemes; suppliers were arm-twisted into improper reciprocal trade deals. Communities were polluted in the name of prosperity and then abandoned for the sake of profits. The Evans story reveals not only the ascendant power of the shareholder, but also the evolution of America's attitude toward the consequences of that power.
As the nineties ended, a prosperous and slightly smug America looked back on two decades that had been shaped by the values championed by Tom Evans and his fellow mavericks of the fifties. In the takeover-driven eighties, factories were closed, whole communities suffered, managers were stretched thin and then let go after years of service -- all to generate a healthy return to newly alert and increasingly demanding stockholders. In the nineties, with the stock market soaring to a previously unimaginable altitude, corporate managers all across the country were learning to work for men like Tom Evans, tough men working for tough shareholders. And nations around the globe were wondering if they could possibly harness the magnificent wealth-producing power of the American capitalist model without enduring the harsh choices that men like Tom Evans symbolize.
It almost seems that Thomas Mellon Evans was a man so far ahead of his contemporaries that he had moved into the shadows before the full force of his business style had dawned on the rest of Corporate America. At every step of his career, he was barging in where few would follow -- at first. But follow they did, at last. And their journey changed the face of American business, and American life.
Prologue: The Second Time Around
1. Stranger in Paradise
2. A Pocketful of Dreams
3. A Million-Dollar Baby
4. The New Men
5. St. Louis Blues
6. Young at Heart
7. Somebody Else Is Taking My Place
8. Grapes of Wrath
9. There'll Be Some Changes Made
10. The One-Man Show
11. You Can't Go Home Again
12. I'll Be Around
13. Fathers and Sons
Epilogue: King Shareholder
A Partial Family Tree