Kevin O’Leary on Losing Battles, Winning Wars
This article was originally published on ETFTrends.com.
Kevin O’Leary, in an interview with Inc. Magazine, recalls a time in which even though he lost a negotiation over the sale of his storage company StorageNow, he still considers the long-term result as a business victory.
In 2003, O’Leary co-founded StorageNow, a developer of climate-controlled storage facilities, which grew to operate in 11 cities.
“All of a sudden, the REIT (real estate investment trust) market started to notice climate-controlled storage, and they started acquiring lots and lots of facilities.”
That’s when competitor In Storage REIT proposed buying out StorageNow and all of its facilities, placing O’Leary in a difficult position.
“One of two things is going to happen. You boys are going to buy the REIT, or the REIT is going to buy you. But there’s no other outcome,” said a business partner to O’Leary at the time.
To win the “battle,” O’Leary said that meant having to buy out In Storage REIT and acquiring all of its locations, which would entrap StorageNow in considerable debt. Losing to the competition, however, meant selling the company but “[making] ten-times on our money.”
Further negotiation with their competitor was unsuccessful and led to an ultimatum for StorageNow: either they acquiesced and sold to In Storage, or they declined and quickly lost to the competition brought by a much larger company.
In March 2007, In Storage REIT acquired Storage Now for $110 million, which O’Leary considers a victory in the long-run. “You can’t win every battle, but you can the war. When you cash out and make ten times on your money, you get to redeploy that capital into new business, which is exactly what I did.”
For more news and strategy, visit our current affairs category.
POPULAR ARTICLES FROM ETFTRENDS.COM
