The Association for Corporate Growth celebrated its 60th anniversary with a special dinner on Feb. 4, held at the top of Washington DC's famous Hay Adams, featuring a stunning view of the White House. The organization brought middle-market dealmakers together with legislators for the ACG Middle-Market Public Policy Summit at the Grand Hyatt Hotel on Feb. 5. Among the speakers were Sen. Orrin Hatch (R-UT), Rep. Jared Polis (D-CO) and Rep. John Delaney (D-MD). The anniversary provides a good moment to take a look back at the organization's beginning, chronicled in the book Trust: The History of the Association for Corporate Growth 1954-2011. This excerpt, based on the first two chapters, tells of ACG's launch and early development and the seeding of the InterGrowth conference. The book was conceived by Alan Gelband, an honorary member of the ACG Global board of directors, and funded by ACG New York. It was written by Carl Wangman, who served as the chief staff officer for ACG from 1990 to 2005 during a period of rapid growth for the association, and Judith Iacuzzi, who served as ACG marketing director from 1994 to 2005.
Launch and Early Development of ACG
Formation: The Peter Hilton Years
In the early 1950s, a small group of business executives met regularly for lunch in New York City. Theirs was an informal and closed group of senior leaders concerned with how best to grow their companies.
Most of them liked the meetings that way, small and familiar. One member, Peter Hilton, saw it differently. Mr. Hilton had a vision and became the driving force behind a larger, more formalized organization. He suggested the original name, the Association for Corporate Growth and Diversification, Inc., which was incorporated in 1957. It mirrored in part the name of Mr. Hilton's firm, Corporate Diversification, Ltd., of New York.
The official change to the Association for Corporate Growth occurred several years later in 1963, presumably because Mr. Hilton, still active and vibrant, agreed with other leaders-like Murray Sanders of Martin Marietta; Clifford Woods of First National City Bank (Citibank); Tony Hass of General Foods; Neil Bandler and Steve Helpern of Arthur Anderson; John May of William E. Hill; and Carl Hagelin of Marshall & Stevens-that corporate growth was the overarching focus of the organization.
Internal growth was the focus of many meetings in New York. Acquisition as a way to grow is less well documented. But Mr. Hilton was a thought leader who preached about the importance of acquisitions of fully developed products, product lines, and subsidiaries-what he termed "fractional acquisitions"-as the newest and fastest-growing area of corporate growth in the early 1970s.
"These are much easier to effect than a corporate acquisition and can be just as sizable in sales volume and earning potential," said Mr. Hilton at the first InterGrowth speech in 1972. "They rarely involve the government. They rarely involve stockholder approval; they can be acquired for cash or stock or both. They can be acquired with or without real estate; with or without personnel, union obligations, and many of the other encumbrances of the corporate acquisition or even the joint venture... This is one segment of diversification that can no longer be ignored."
Outreach and Chapter Formation
As the New York group took hold, more attendance came from outside the city, including the cities of Toronto, Chicago, Cleveland, and other areas of the Midwest. Over time, the travelers grew weary of the commute and wanted more local meeting places. By the mid-'60's, there were conversations about forming ACG chapters outside New York.
"In 1964, I moved to Chicago to become senior vice president of acquisitions at National Can Corp.," wrote Don Reed, a founding member of ACG Chicago. "I then began a more serious interest in ACG New York meetings. I became quite involved in the formation of a Chicago chapter, the first chapter outside of New York, and was its first president from 1968 to 1969."
Because of logistics and an identity with ACG and its career value, businessmen in other parts of North America started chapters closer to home. Over a period of five years, three chapters took shape-Chicago (1968), Toronto (1971), and Los Angeles (1972). With New York, these chapters laid the foundation for the ACG we know today.
"The Chicago chapter grew quickly, with early leaders including Fred Roberton, Tom Smith, James Ryan, Hugh Wagner, Ken Bony, Bill Howell, John Holmes, and many others that Tom, Fred, and I recruited," according to Mr. Reed.
Warner Rosenthal, who was vice president of corporate development for a division of Beatrice Foods at the time, attended the first meeting of ACG Chicago at the Ambassador East Hotel. Mr. Reed was in charge of the meeting, and Peter Hilton led the discussion, said Mr. Rosenthal.
He described the event as "much more an after-work punch-and-cookies meeting with networking. The focus was on corporate members, but the service folks were the ones who attended." (Interestingly, this concern-maintaining a balance of corporate member and service provider so that all parties' interests are served by the organization-recurs through the next fifty years of the organization.)
The template for the ACG chapter meeting-a forum to exchange ideas, experiences, policies, and procedures, with guest speakers keynoting and offering larger viewpoints-was formed right away.
"CEOs of large companies were invited to meetings and told war stories about mergers and acquisitions," said ACG pioneer Tom Smith, who was affiliated in the early '70s with Ernst & Ernst in Chicago. "Listeners would stand in line saying, 'Buy me,'" said Mr. Smith, who became the first president of ACG Global in 1972. He became a crusader for ACG with Mr. Hilton and others.
"Mr. Smith was an excellent organizer and recruiter," said Phil Nielsen of A.C. Nielsen Company. (Mr. Nielsen became ACG Global president in 1989 and was active in the Chicago chapter earlier like Mr. Smith.)
Recalled Jim Tucker, Spectral Dynamics, Inc., who as his career evolved became a member of ACG Orange County, "I joined ACG Chicago in the mid '70s, at the request of Tom Smith. Tom had arranged the deal for the first company I purchased, which was in Cincinnati. It created a long commute to meetings."
Robert Coffey, who was working for Ernst & Ernst in Toronto, attributes the formation of the first Canadian chapter to the pioneering efforts of Messrs. Smith and Hilton.
"Toronto became the third chapter because Peter Hilton and Tom Smith wanted ACG to be international," said Mr. Coffey.
After a small planning meeting, Mr. Coffey helped corral 125 businessmen and women to the launch of ACG Toronto, where Messrs. Smith and Hilton "pumped up the crowd" to join ACG. Meeting attendance afterward hovered around eighty, said Mr. Coffey, who remained active in his home city but also became interested in the international organization and joined its leadership in the mid-'70s. Mr. Coffey chaired the InterGrowth conference in 1976 and took the reins as ACG Global president in 1978.
The first president of the Los Angeles chapter was John Castellucci, according to the 1972 InterGrowth brochure. Mr. Castellucci, employed by Cardiff Industries, quickly lost interest in ACG, and after his term moved away and "never showed up at an L.A. meeting again," recalled Paul Johnson of Hoover, Johnson & Company, who was president of the chapter in 1976.
John Heath, an executive with Marshall & Stevens, Inc., became the second president. He was followed by Neill Lawton, who had an MBA from Harvard and was manager of the industrial department of Security National Bank. Mr. Lawton's profession helped customers sell family-held businesses and find acquisitions. "Security [National Bank] was an outstanding group in Southern California prior to its acquisition by Bank of America," said Mr. Johnson, who served as Mr. Lawton's membership chairman.
In the late '70s, the chapter was considering dropping out of ACG to become a local association. "ACG did not seem to be worth the dues invested," according to Mr. Johnson. "ACG President Tony Hass [1975-76] came out to see us and convinced us to stay affiliated. It was after I started attending InterGrowth that the value of a national organization became more significant," he added.
By 1976, ACG Los Angeles had close to fifty members, half corporate and half service. Some companies were building conglomerate businesses, and private equity firms were just emerging. "By intent the chapter grew slowly over the following years," said Mr. Johnson. "We worked hard at recruiting corporate executives and admitted only service members who had significant responsibility in their organizations and fit in with our group. We tried to avoid too much competition between service firms or accepting service members who would aggressively buttonhole corporate members for business purposes.
We worked hard at maintaining good programs with educational value. We had a collegial atmosphere and thought our attendance was good," he added.
"During the early years, we had frequent visitors from San Francisco, San Diego, Phoenix, and other markets, some of which established new chapters," continued Mr. Johnson.
Howard Vultee of Merrill Lynch in San Francisco left the ACG Los Angeles chapter to help establish the San Francisco chapter in 1976.
Los Angeles members working or living in Orange County a few years later formed a chapter there in 1984. "We had some reservations about encouraging an Orange County chapter because it would cut into our membership, but we eventually encouraged it. That same year the San Diego chapter was formed," said Mr. Johnson.
He summarized, "Our chapter was small, collegiate, with low-key networking, which we called a social hour, and our Christmas party was held in someone's home."
The sense of intimacy would eventually change with the growth of the ACG InterGrowth conference. For several years conversations back and forth questioned whether it should be an exclusive club event or an explosive, all-encompassing opportunity for members to make deals. Eventually the latter won out. But not at first.
The Seeding of InterGrowth
"With the 1970s the old aversion to lawsuits fell by the wayside," writes Malcom Gladwell in "Outliers." "It became easier to borrow money. Federal regulations were relaxed. Markets became internationalized. Investors became more aggressive, and the result was a boom in the number and size of corporate takeovers."
Enthusiasm for a conference that would bring together four hundred members and their spouses to socialize, learn, and network was confirmed by a member survey dispatched by the leadership in 1971.
The outgrowth a year later, led by Fred Roberton of the Chicago chapter, was a conference called "InterGrowth"-a name "reflecting the interperson, inter-company, inter-chapter and international character of the young organization," according to the conference brochure.
With international relations a focus from the beginning (reflecting a growing interest in off shore markets), ACG leaders chose Mexico City's Camino Royale Hotel-a four-star venue "complementing the standards established by the meeting accommodations of the Pierre (NYC) and Ambassador (Chicago) Hotels"-as the conference site. (Note: An opportunity to stage the event in Portugal fell through because of logistical problems. Mexico City was actually a second choice.)
Thirty-one members (7 percent of the membership), thirteen non-members, and thirty-two spouses and guests attended the first InterGrowth. Importantly, the organizers set a high bar by tapping influential business and political leaders as speechmakers. Peter Hilton offered an important talk on the value of acquiring spinoff companies, and Donald Rumsfeld, director of the U.S. Office of Economic Development for President Richard Nixon, spoke. The U.S. ambassador to Mexico, Robert McBride, turned up as a special guest. "I remember a private tour of the embassy for several of us," reminisced Donald Reed, with The Reed Group of Florida and ACG president 1976-1977. (A note in ACG archives states that Mr. Rumsfeld, who later became the US Secretary of Defense, did not accept reimbursement for the $24-per-night fee for two nights at InterGrowth, but instead paid the tab from his own pocket.)
Building on the success of this meeting, ACG leaders determined quickly that InterGrowth would continue annually in select four-and five-star venues on alternating coasts of the United States. Planners were cautious about choosing another off shore site. "We recognized that the idea of off shore meetings caused some corporate shock," said Mr. Reed.
"Several corporations felt it was bad practice for their officers to attend expensive off shore meetings when other staff could not do so as well."
They made an exception almost right away. "We did move it off shore several years later at the Southampton Princess in Bermuda," Mr. Reed added, but that would be the last overseas venture until EuroGrowth took place in London decades later.
Bob Coffey, with Ernst & Ernst and a founder of ACG Toronto, became chairman of the conference in Bermuda in 1975, the fourth InterGrowth. The trend to sign up "name speakers" continued. Victor Korn of Korn Ferry and Buzz McCormick took the podium. Volunteers were heavily involved. Mr. Coffey commented that he was able to run the conference by engaging his secretary from his office in Toronto to organize registration, presumably because the ACG management firm at the time, headed by Carroll Greathouse of Connecticut, did not have responsibility for full conference oversight. It would be several years before InterGrowth was managed by a professional staff, and volunteers like Mr. Coffey gave significant time and attention to make InterGrowth succeed.
From the first, InterGrowth's overriding objective was "to broaden the horizons of the executives engaged in internal, external, domestic and multi-national corporate growth," according to publicity brochures.
It remained a three-day event with an evening reception kickoff for more than twenty-five years. Attendees-referenced as "husbands" in 1972-received binders with speeches and activity charts. Spouses- referenced as "wives" early on-enjoyed separate programming.
InterGrowth chairmen (and eventually-women) were selected for vision and leadership skills. Many later became ACG presidents. A variety of factors affected how the chair approached his or her job, but generally there was consensus about the theme from board members, who in turn would offer their support to ensure an exceptional event.
ACG Global Awards
At InterGrowth in 1975 in Bermuda, ACG assigned its first industry award named for ACG founder Peter Hilton. Mr. Hilton had died of complications from a bee-sting incident that occurred while he was gardening. As ACG's second president after Tom Smith, Mr. Hilton was respected as a creator, catalyst, author, and businessman. He was described by Mr. Smith as someone concerned "with all aspects of corporate growth-from product innovations to acquisitions, divestitures, and corporate diversification programs-throughout his life."
The criteria for the award, given in 1975 to Franklin Mint Company and awarded for thirty-four years subsequently, were straightforward-"an organization that has demonstrated outstanding growth performance with sales of $500 million or more."
(Note: In 1992, the Hilton Award was renamed The Founder's Award, and in 1996 renamed the Outstanding Corporate Growth Award. It was disbanded at the global level in 2009 but continues to be awarded locally by many ACG chapters. Its criteria remain essentially the same.)
Eventually, after the first few awards were determined by ACG Global leaders, chapters got involved. At least in the '80s and perhaps before, nominations for the ACG Hilton Award bubbled up from the chapters, many of which began their own awards programs and submitted local winners for the global competition. It was an involved process, one that Warner Rosenthal of Beatrice Foods, for example, took seriously over many years for the Chicago chapter.
"The awards program at the chapter level was great," said Mr. Rosenthal. "It gave us the opportunity to evaluate local companies. We spent time comparing them statistically. Each committee member did his homework thoroughly and brought back information to the awards committee, which made the final selection. The drawback at the national level, when it selected from candidates supplied by many chapters, was that the president or CEO of the winning company was required to speak at InterGrowth. That could hamper the process."
Like the awards process, ACG chapters and membership were growing and adding to ACG's building reputation as a quality organization focused on middle-market mergers & acquisitions. By 1979, the association claimed twelve chapters and nearly sixteen hundred members. Things were revving up.
Order the book at www.bitly.com/ACGTRUST ($9.95 for e-book, $18.95 for softcover, $28.95 for hardcover).