Victor Posner (September 18, 1918 – February 11, 2002) was an American businessman. He was known as one of the highest paid business executives of his generation. He was a pioneer of the leveraged buyout.
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Of Russian descent, he was born in Baltimore, Maryland, one of nine children of grocers Morris and Mary Posner. Though he left school at age 13, he claimed to have earned his first million dollars by the age of 21 by investing in real estate, although financial records do not bear this out. Taking advantage of the post-World War II demand for housing in America, in 1948, he began to develop land and build houses in the Baltimore area and by 1952 was building more than 1,100 dwellings per year. In 1954 he moved to Miami Beach, Florida where he continued to invest in real estate and publicly traded companies. He became the head of numerous companies over his career, including Security Management Corporation (owner of rental property in Maryland and Florida), DWG Corporation (Arby's and Royal Crown), NVF Company, Sharon Steel Corporation, Pennsylvania Engineering Corporation, Salem Corporation, APL Corporation, Evans Products, Graniteville, and Southeastern Public Service Company.[1]
He was said by Forbes magazine to "have the arrogance of a banana republic dictator" and by the New York Times to be the "dean of the corporate takeover".[2] The Economist said, after he died, "he was a pioneer of the hostile takeover of a public company. He was dismissive of the convention previously observed that a takeover should have the agreement of the existing board. He would spot a company whose assets he judged were undervalued, gain control and milk it. Some bits would be sold off, others would be closed. Previously unconsidered treasures, such as the employees' pension fund, would be raided and reinvested in Mr Posner's other companies."[3] Posner was a maverick player in the world of corporate finance. Many of his dealings were alleged to be illegal and he was closely watched by the Securities and Exchange Commission from the mid-1980s on.
He is perhaps best known for his hostile takeover of Sharon Steel Corporation in 1969, one of the earliest such takeovers in the United States. Sharon Steel had a coke plant in Fairmont, West Virginia, a steel plant in Sharon, Pennsylvania, and a coal mine in Rachel, Pennsylvania. His purchase was motivated by the company's low valuation, level cash flow, and low debt. It was intended to become a source of cash for additional investments to capitalize on the rising price of coal during the energy crisis of the early 1970s. His investment would be the forerunner of the leveraged buyout and junk bonds business of the 1980s. Meanwhile, the Fairmont coke plant was one of the worst polluters in the Monongahela Valley and Posner stopped investing in it. It closed in 1979.[4]
The late 1980s were the start of his downfall:[5]
Posner died of pneumonia after suffering declining health for several years.
Posner had two children from his first marriage — twins Steven and Gail — and two children from his second marriage — Tracy and Lance. He was not married at the time of his death. His girlfriend, a former actress Brenda Nestor Castellano, was also a business partner.
In 1995, Steven sued his father over alleged mismanagement of his company, Security Management Corporation, claiming that the elder Posner was paying himself too much money and had wrongly removed Steven as a company director.[7] They settled the suit by flipping a coin over the share of more than $200 million worth of property.[8] Steven was killed in a high-speed boat crash near Miami, Florida on 29 November 2010.[9] Gail died on 19 March 2010 in Miami Beach, Florida.[10]
Shortly before he died, Posner prepared a new will that removed his children and grandchildren as heirs to his estate, which was valued somewhere between $200 million and $1 billion. Instead, Brenda Nestor was named as the main beneficiary. Posner's children and his adult grandchildren sued on grounds that he was not competent when he made the changes.[11] The legal entanglements continued into 2004. Nestor operates Victor Posner Enterprises, a property development company in Florida.
Honors include the Victor Posner Center for Communicative Disorders, University of Miami Ear Institute (named in his honor) and an Honorary Doctor of Laws Degree, University of Miami.[1] In 1988, three million dollars in charitable donations were ordered as part of a sentence for tax evasion. He was also required to work 5000 hours of community service time.[12]
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