Saturday, July 10, 2004
Book Report
By Lewis B. Cullman John Wiley & Sons, $29.95, 234 pages
Reviewed by Sharon Reier
Rags to riches books are a time-honored American genre, one that reinforces the national identity as a land of opportunity.
Riches to riches books are another matter entirely. Such memoirs generally require a claim to some substantial public-service accomplishment, or a publicized family drama.
Lewis Cullman's "Can't Take It With You: The Art of Making and Giving Money" lies somewhere in the outer reaches of this rule. But Cullman, whose family until recently controlled the tobacco company known as Culbro and still has a controlling interest in its successor, General Cigar, has made a habit of pushing rules.
Cullman escaped from a destiny in the family tobacco business and followed his passions: first as an entrepreneurial weatherman who did a stint forecasting weather for the navy and tried to compete with the National Weather Service, then as an innovative financier and investor. Most recently he has become an activist philanthropist who has achieved celebrity status.
The result is a spirited attitude toward life's opportunities, a philosophical attitude towards its disappointments and a surprisingly good read.
While Cullman is currently far more noted for giving money than making it, he starts his tale by taking us back to the 1960s, when he and some associates pulled off what he claims to be the first leveraged buyout. For only $1,000 in cash, Cullman engineered a $62.4 million purchase of the Georgia-based Orkin Exterminating company that wound up in the hands of Rollins Broadcasting, a company one-seventh the size of Orkin. Cullman's own $400 investment returned 2,500 percent, or $1.1 million in shares of Rollins. It was more than 20 years before Kohlberg and Kravis at Kohlberg Kravis Roberts would make the term LBO a household word and, notes Cullman, "carry the leveraged buyout to its illogical extreme," by buying RJR Nabisco for more than $25 billion.
Cullman, it appears, loved the excitement of the deal. "We did it entirely on the fly," he writes, "making it up every inch of the way." The idea was simple: He was applying the ancient principles of leverage to the complex world of modern finance.
But there is a place where principles end and negotiation skills begin. Cullman begins a blow-by-blow description of the characters, their motivations, the surprises, the war stories. And there are details, down to taxation schemes that can make or break a deal.
By the mid-1970s Cullman closed the deal that would make him the richest: buying Keith Clark, a desk calendar company, for $13 million, a business Cullman described as "about as good as it gets." He expanded the business for the next 22 years until he had 90 percent of the market, and with the stock market approaching its peak in 1999, sold it for $550 million to the paper giant Mead.
He says he intended to use the money to fund philanthropic ventures. He and his wife, Dorothy, have already given away $100 million to institutions as diverse as the Museum of Modern Art, the New York Botanical Garden, the American Chess Foundation and the Neurosciences Research Foundation in La Jolla, California. At 85 years old, Cullman's goal is to give away another $100 million.
With his philanthropic credentials shipshape, Cullman is tilting against rules that govern charitable giving by foundations. The U.S. tax code requires foundations to give away 5 percent of their assets each year. Cullman argues that 5 percent is significantly lower than the average historical return on investment of most large foundations. The result: Large foundations tend to get larger and larger. "To eat up their excess they move into sumptuous offices, produce voluminous reports, build large bureaucracies, and still they can't spend it all," Cullman writes. He believes foundations should spend all their money within 50 years.
Other institutions also take a lashing from Cullman. His name, alongside Dorothy's, graces buildings at Yale University, the New York Public Library and elsewhere. "I've come to believe," he writes, that "with great commitment, a little recognition is due." Cullman has had his attorney draw up naming agreements so they will stick. Too many institutions rename halls for a new generation of donors. "If some institution wants to rip up Dorothy's and my name off a wall after we are dead and gone," Cullman writes, "I want it to have a damned good lawyer to break the faith."
Such directness may send shivers down the spines of some in philanthropic circles. But what can one expect from a man who had the backbone to leave the family fortune and make his own?
Copyright © 2004 The International Herald Tribune
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