Marshall S. Cogan(born 1937) is an American investor and entrepreneur and former financier and trader. Cogan was the founder ofUnited Automotive Group,which he built into one of the largest retailers of cars and trucks in the U.S. As aprivate equityinvestor, Cogan acquired a number of businesses in the 1970s and 1980s. He was also a partner ofCogan, Berlind, Weill & Levittan investment banking and brokerage firm that would be instrumental in the consolidation of the financial services industry in the 1970s.
Marshall S. Cogan | |
|---|---|
| Born | 1937 (age 86–87) |
| Nationality | American |
| Education | Harvard Business School Harvard University Boston Latin School |
| Occupation(s) | Investment banker,Private equity investor |
| Known for | Partner ofCogan, Berlind, Weill & Levitt,Founder ofUnited Automotive Groupand Foamex International |
Early life and education
editBorn to aJewishfamily,[1]Cogan graduated fromHarvard Collegein 1959 and received his MBA fromHarvard Business School.Cogan is also an alumnus and benefactor of theBoston Latin Schoolhaving graduated in 1955.[2]
Career
editEarly career
editCogan started his career atCBSand worked at the investment firm, Orvis & Co., before joining the investment banking and brokerage firm ofCarter, Berlind & Weillas an auto sectorresearch analystin 1964. Cogan was soon a partner in the firm and his name replaced the departingArthur L. Carterin 1968 as the firm was renamed Cogan, Berlind, Weill & Levitt. Among Cogan's partners at CBWL wereSandy Weill,later chairman and CEO ofCitigroup,Arthur Levitt,later the head of theSecurities and Exchange CommissionandRoger Berlinda noted Broadway producer and long-time member of the board ofLehman Brothers.
In August 1973, Marshall Cogan left the firm after disputes with his fellow partners to focus onleveraged buyouts.Cogan's first deal was the takeover ofGeneral Felt Industries(GFI) in 1974 which he completed with fellow investment bankerStephen Swid.Cogan would then merge GFI withKnoll Internationaland use Knoll as aholding companyto acquire a series of businesses.[3]Among Cogan's most notable acquisitions were takeover of theSheller-Globe Corporationand later the purchase of the21 Club.[4]Cogan was unsuccessful in his high profile bids to acquire theBoston Red Sox,Sotheby's[5][6]andL.F. Rothschildin thebuyout boom of the 1980s.[3][7][8]
Foamex and United Auto
editCogan began building what would become Foamex International in the mid-1980s after the departure of his long-time partner Stephen Swid. Swid would go on to acquire the music publishing division ofCBS Records,later known asSBK Records.Meanwhile, Cogan bought Foamex Products, a division ofFirestone Tire & Rubber.[9]Over the next few years, Cogan continued to acquire businesses to merge with Foamex, acquiring three regional producers in 1988.[9]Cogan merged General Felt into Foamex and acquired Great Western Foam Co., a major foam producer on the West Coast.[9]In 1993, Cogan created Foamex International bringing together his various businesses and took the company public in December 1993. During the mid-1990s, Foamex grew to become the largest manufacturer and marketer of flexible polyurethane foam and foam products in North America.[9]
In 1990, Cogan founded United Automotive Group, today known asPenske Automotive Group.[10]Under Cogan, United Auto was a leading acquirer, consolidator and operator of automobile and truck dealership franchises. Cogan merged his company withRoger Penske's business in May 1999 after Cogan ran into financial difficulties and the company name was changed from United Automotive to Penske Automotive in 2007.[11]
Bankruptcy of Trace International
editIn July 1999, Cogan's holding company, Trace International Holdings filed forbankruptcy protection.Cogan had used Trace International to hold his controlling interests in two publicly listed companies, Foamex International and United Automotive Group. Trace had pledged its stock in the two companies as collateral for certain loans.[12]After declines in the value of Foamex and United Auto Group in 1998 and 1999, Trace became insolvent as the value of its assets fell below the debt it owed. In 2003, Cogan and several directors of Trace would be accused of having drained cash from Trace International. Cogan was found by second circuit court of Delaware not guilty of all charges on June 25, 2005.[13][14][15]
Trace was a holding company through which Mr. Cogan held his principal investment assets. It was owned 70% by Mr. Cogan and 30% by three investors who were friends of Mr. Cogan. In 1999, Trace ran into serious financial difficulties because a major bank withdrew a $1 billion commitment to finance a restructuring of Trace and its holdings due to events, which had nothing to do with Trace or Mr. Cogan that led to a serious disruption in US financing markets. These financial difficulties caused Trace to file in 1999 for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. At that time, Trace’s principal assets were shares of Foamex International and United Auto Group, both of which were publicly traded U.S. corporations, and shares of CHF Industries. Eventually, a Trustee was appointed for Trace, and he sued Mr. Cogan and the other former directors of Trace. His theory was that Mr. Cogan had treated Trace as a personal holding company (which it was), and had improperly taken money out of Trace in the form of unduly high salary, salaries to his wife and payments to his daughter, loans to Mr. Cogan, his wife and others that had not been repaid and other expenditures for what the Trustee characterized as primarily personal purposes. Significantly, the other shareholders of Trace did not complain. However, the Trustee said that Trace had been in “the zone of insolvency,” (which Mr. Cogan and the other directors vehemently disputed) and that because of that Mr. Cogan and the Trace Board had owed fiduciary duties to Trace’s creditors. In 2003, the U.S. District Court for the Southern District of New York, in a very lengthy opinion, agreed with most of the Trustee’s contentions. For example, it found that Mr. Cogan had received salary over a six-year period totaling $39.6 million, which it said was $6.9 million more than executives with similar responsibilities would have received at other companies. The court also rejected claims by Mr. Cogan that he was entitled to substantial offsets against his obligation to repay the loans he had received from Trace. In 2005, the decision of the District Court was reversed on appeal on the basis that the judge had improperly failed to submit the case to a jury. However, by then, Mr. Cogan had settled the case as to himself. Putting aside the correctness of the factual determinations made by the District Court, including the hotly disputed question of when Trace had entered the zone of insolvency, in 2007, the Supreme Court of Delaware, the laws of which governed the obligations of the directors of Trace, ruled that the fact that a company may be near insolvency (i.e., in a “zone of insolvency” ) does not cause the directors of a Delaware corporation to have obligations to creditors. Therefore, the basic legal premise on which the court found Mr. Cogan and others to be liable to Trace or its trustee (other than with regard to borrowed money, for which Mr. Cogan clearly was liable to Trace) turned out not to exist.
In 2006, Cogan was named to the board ofEner1,a company that manufactureslithium-ion batteriesforplug-in hybridvehicles.
Other affiliations
editCogan has also served as Chairman and Director of Color Tile, Inc.,Knoll InternationalandSheller-Globe Corporation.
References
edit- ^Langley, Monica (2004).Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World...and Then Nearly Lost It All.Wall Street Journal Book. Simon and Schuster. p.41.ISBN9780743247269.
'You're a Jew. I'm a Jew,' Cogan told Golsen.
- ^Grateful Alumnus Gives Boston Latin $1 Million.Boston Globe, September 11, 1989
- ^abKnoll Sells General Felt.New York Times, September 10, 1988
- ^Adding up the New '21'.New York Magazine, Jun 1, 1987
- ^"White Knight"-Timemagazine - Monday, Jun. 27, 1983
- ^Rohleder, Anna. "Time Line: The Rise Of Christie's And Sotheby's"-Forbesmagazine.com
- ^Ten Survivors of the Wall Street Crash.New York Magazine, Jan 27, 1975
- ^Knoll Group Company History.Funding Universe
- ^abcdFoamex International Company History.Funding Universe
- ^United Auto Group Company History.Funding Universe
- ^All Penske All the Time.New York Times, April 8, 2007
- ^Trace International Files for Bankruptcy.New York Times, July 23, 1999
- ^Private Concern, Public Consequences.New York Times, June 15, 2003
- ^A Company Mismanaged: Officials Get Day in Court.New York Times, July 9, 2005
- ^Fiduciary Duty in the Zone of Insolvency.CFO, August 25, 2005
- He's Down but Not Out.New York Times, July 11, 1999