Irv the Boat Maker

While it’s profitable and debt-free today, there were years when Genmar lost a lot of money. Boat building has been anything but a quick-buck business. The long-haul commitment it has required makes Jacobs’s transition from fast-strike raider to long-term investor and nurturer appear so stark that one imagines an epiphany of some sort, a 180-degree shift in his philosophy of business.

Not so. “I was always running businesses,” Jacobs says. Even during the ’80s, he means, when his reputation was otherwise. Jacobs bought bankrupt boat builder Larson Industries of Little Falls in 1977. “I’ve been in the boat business for 30 years. I’ve also run Watkins, Inc., [the Winona-based specialty-foods company, which he bought in 1978] for about 30 years.” What’s more, Plymouth-based Jacobs Trading Company, which resells salvaged merchandise and products returned by customers to vendors including Wal-Mart and Target, is essentially an offshoot of the junk business he helped his father run as a boy.

“The part I’m doing today, I was always doing,” Jacobs says. “It may seem different, but the difference is just that I’m not doing some of the other stuff.”

Ex-Raider

As for the “other stuff,” the end of Jacobs’s hostile-takeover spree had little to do with a change of philosophy, either. His retirement from raiding in 1989 coincided with the collapse of the $250 billion junk-bond market that had funded the decade’s leveraged-buyout frenzy.

He makes no apologies for those days. “There were times when I made millions of dollars in a single transaction, but I always put my money up to make those millions,” he says. “Every time I made money, my money was at risk.” Unlike many public-company CEOs—in the 1980s and today—whose stratospheric compensation packages bear no relation to their performance, Jacobs says, “I was never rewarded just for being there.”

“It isn’t as if there came a day when we said ‘Let’s quit [raiding],’” recalls Daniel Lindsay, a Minneapolis attorney who went to work for Jacobs in 1975 and has been a right-hand man ever since. “The opportunity to make acquisitions lessened. More people were in the [takeover] business, so the prices went up. Management started putting in poison pills and anti-takeover provisions.” And, of course, the access to junk-bond financing dried up. “You need that, or something like it, to pull this stuff off,” says Lindsay, now executive vice president of Jacobs Management Corporation and a director of all its operating companies.

Does he miss the excitement? “Sure, sometimes,” Lindsay says. “It was more intense. It got your attention on a daily basis. A big difference has to do with the time frame. There wasn’t a lot of long-term planning involved back then. You didn’t have a 10-year business plan in front of you.” If the right takeover situation came up, Lindsay says, “we might do it again today.”

Jacobs doesn’t rule that out, exactly, but he denies any interest in reliving the ’80s. “I wouldn’t do it again,” he says. “I was a lot younger, obviously. Not that it was good or bad, but it created a lot of chaos for working people. I don’t think I’d have the stomach for that type of environment today.”

And even if he had the desire, he adds, today’s environment would make successful raiding far more difficult. “In the ’80s, I could look at a balance sheet, audits, and shareholder reports, and without ever seeing the company, I could pretty much put a value on a lot of businesses that were very complex if you had to look at them . . . . And there were a few red lights or hot buttons you could look for to identify undervalued assets,” he says, citing corporate real estate, in particular.

“Today, there’s so much pressure on public companies to create quarter-by-quarter earnings that I don’t trust their numbers,” he says. “I’m not saying they do anything illegal, but their numbers don’t make sense to me. And I’ve lost a lot of confidence in Wall Street analysts. There’s no way they could figure out what they say they’ve figured out . . . . So I couldn’t just look at a balance sheet anymore. You’d really have to do a lot of due diligence.”

He won’t disclose Genmar’s profits, and his response to questions about its revenues illustrate why he’s skeptical about projections from companies and analysts. Genmar’s 2005 revenues of $1 billion “will be up about 10 percent this year, I would guess,” Jacobs says. “Let me tell you something: Anybody capable of predicting their earnings to the penny per share, a year or two out, I have questions about. If you’re that good, you’re wasting your time in business. You should be in fortune telling.”

Though Jacobs largely dismisses the notion that he had a change of heart about dismantling companies, he acknowledges that the end of the raiding era coincided with his own growing desire to “build something,” especially something that “would let me work with my children.” Several of his five children or their spouses play key roles in his businesses today. Son Mark has been president of Watkins, Inc., since 1997. Son-in-law Howard Grodnick is president of Jacobs Trading Company. Daughter Tricia Blake is chief marketing officer and executive vice president of FLW Outdoors, a magazine-publishing and television-production company that runs fishing tournaments in support of Genmar’s fishing-boat business. Son-in-law Robert Blake is a marketing director for Genmar, and son-in-law Keith Lebowitz is a personality on FLW’s TV shows.

Mellow family businessman though he may be, Jacobs says, “I still get calls from people all the time: ‘Here’s a takeover idea.’ And I would buy businesses to take over—but only in conjunction with our existing businesses.”