William F. Farley

William F. Farley (born October 10, 1942) is the sole owner of Farley Industries, a private equity firm based in Chicago. For 15 years (1985–1999), Farley was chairman and CEO of Fruit of the Loom. Currently, he is the CEO and majority owner of Zrii LLC, a health and beauty company based in Salt Lake City.

Biography

Early life and education

Farley was born the elder of two children to a working-class Irish Catholic family on October 10, 1942 in Pawtucket, Rhode Island.^[1] He was the son of John Farley, a postal worker and part-time musician, and Barbara Farley, a receptionist.^[2] Farley attended grade school at St. Leo's School in Pawtucket, and later became a recruited high school athlete and student at St. Raphael Academy,^[2] his father's high school. Farley graduated from St. Raphael's in 1960.^[3]

Farley attended Bowdoin College in Brunswick, Maine, from 1960–1964, where he majored in government and earned an academic scholarship. At Bowdoin, he was a varsity athlete in football, swimming, and baseball.^[4] He received a Juris Doctorate from Boston College in 1969.

Professional career

Early years

After graduating from Bowdoin in 1964, Farley traveled across the U.S. and Mexico for six months, eventually settling in Los Angeles.^[1] In Los Angeles., Farley sold Collier's Encyclopedia door to door.^[2] Within two years he was the company's leading salesman, and was appointed head of training for the national sales force.^[5] Farley entered the Boston College Law School in 1966, earning a J.D. in 1969.

NL Industries and Lehman Brothers

After law school, Farley moved to New York City, where he took a job in the mergers and acquisitions division of NL Industries, a manufacturing company with a number of subsidiaries. At NL Industries, Farley did analysis on potential acquisition targets, and rose to director of long range planning and acquisitions. During this time, he pursued an M.B.A. at New York University.^[2] In 1972, Farley was transferred to Chicago, where he functioned as the regional manager of NL Industries' metals division.^[4]

In 1973, Farley left NL Industries and took a position as an associate in the corporate finance division of Lehman Brothers in Chicago.

Farley Industries

In 1976 NL Industries contacted Farley at Lehman Brothers) to see if he knew of a potential buyer for Anaheim Citrus Products Co., a small subsidiary that produced pectin, a thickening agent used in foods and other products. In October 1976, at age 33, he executed his first leveraged buyout for $1.9 million. To facilitate the buyout, Farley founded Farley Industries, a private holdings company in the Sears Tower in Chicago.^[6] After six months, Farley had raised the funds for the buyout, including his life savings of $25,000, plus $1.7 million in loans and notes borrowed against the company assets.^[7]

Within two years after the buyout, Anaheim Citrus had doubled its sales. In 1977, Farley purchased Baumfolder Corporation, a struggling manufacturing company, using funds from equipment sales at Anaheim Citrus. Farley quit Lehman and moved to Ohio to oversee the Baumfolder turnaround.^[1][2] He later sold Baumfolder to its employees for $10 million.^[8]

In 1982, Farley purchased NL Metals, the same group he used to run at NL. The purchase price was $118 million, making NL Metals the first in a line of significantly larger acquisitions that Farley would make over the next decade.^[5]

Farley Industries soon encompassed numerous companies within the manufacturing, mining, and apparel industries. The largest acquisition was Northwest Industries, for $1.4 billion in July 1985.^[8] Farley Industries had 50,000 employees and nearly $4 billion in annual sales by the late 1980s.

In 1991 Farley Industries entered bankruptcy and was dismantled.^[9][10]

West Point Pepperell

In 1988, Farley completed a hostile takeover of West Point Pepperell, Inc., a textile company that had been family-owned in West Point, Georgia, and surrounding communities for more than 100 years. Farley paid $1.5 billion for the company, eclipsing the mark of $1.4 billion he had paid a year prior for Northwest Industries. Farley financed his purchase of 95.3 percent of the company through bank debt and high-yield junk bonds. The hostile takeover did not sit well with employees and community citizens, especially as Farley's promises to "modernize and expand" the company never came to fruition.^[11] Less than four years later, the company filed bankruptcy, and Farley resigned to focus his efforts on Fruit of the Loom. ^[12] Fruit of the Loom would ultimately declare bankruptcy in 1999; Farley walked away from that company as well.

Fruit of the Loom

Though Farley eventually sold most businesses within the Farley/Northwest Holding Corp. conglomerate, he kept Fruit of the Loom Inc.^[13][14] In March 1987, Farley completed a successful $565 million public offering of Fruit of the Loom shares.^[15]

Farley served as president and CEO of Fruit of the Loom from 1985 to 2000. During that time, Fruit of the Loom's revenue grew from $500 million to almost $2.5 billion. At its peak, Farley Industries employed over 30,000 employees worldwide.^[2] During his tenure as president and CEO of Fruit of the Loom, revenues rose nearly fivefold, from $500 million to almost $2.5 billion. At its peak, in 1997, Fruit of the Loom was trading at roughly $44 per share. The press teased Farley about the company's unconventional advertisements, featuring Farley.^[16]

Even while the company's revenue was rising sharply, its debt proved increasingly unwieldy amid the shifting economy. In 1999 Fruit of the Loom posted a net loss of $576 million and the company filed for bankruptcy. Farley left Fruit of the Loom that same year. In 2002, Fruit of the Loom was purchased by Berkshire Hathaway.^[17] The Fruit of the Loom bankruptcy was Farley's third in 11 years, preceded by the failures under his leadership of Farley Industries and West Point Pepperell.

Junk bond failures

While Farley's success in the 1980's had made him wealthy, his junk-bond processes failed miserably in the 1990's, ultimately leading to bankruptcy for several companies he had attempted to take over. ^[18]

Zrii, LLC

In May 2008, Farley launched a brand-new multi-level marketing health and beauty company based out of Salt Lake City, Utah. The company, Zrii, LLC, had more than 4,000 independent distributors attend its launch at the Salt Lake City Convention Center.

Zrii, a Sanskrit word which means "light, luster, splendor, and prosperity", was endorsed by lifestyle guru Deepak Chopra and the Chopra Center for Wellbeing. The basis of its namesake product was a juice extracted from the amalaki fruit, which is grown exclusively in India at the base of the Himalayas.^[19]

In February 2009, 35 employees staged a walkout of Zrii headquarters and demanded that Farley resign.. The employees had formed their own company and attempted to make an offer to take over Zrii, but Farley refused to step down. He sued the top managers, claiming that their goal was to force him out in order to purchase the company for a reduced cost; the lawsuit further claimed that the employees had deliberately raided and sabotaged company computers before the walk-out.

In December 2009, Farley won $400,000 in a settlement agreement with LifeVantage Corporation, where many of his former employees were hired.^[20] LifeVantage admitted no interference with Zrii's operations in the settlement agreement.

Management style

Farley spent over $3 million a year on programs at his subsidiaries that encouraged physical fitness, good nutrition, and smoking cessation.^[4] He traveled to work sites and solicited employees' opinions about the quality of their food and facilities, making improvements if his workers weren't satisfied.^[21] Farley installed baseball fields, tracks, and other fitness facilities at plants and factories.^[1]

Farley was also known for his relentless work ethic, and his schedule often demanded brutal hours; he occasionally held meetings with managers late at night if there was no available time during the day.^[8]

Farley also preferred to keep his companies small and efficiently organized: He is known for insisting that company hierarchies be trimmed down to reduce the number of layers between the lowest-level workers and top-level executives.^[22]

Philanthropic activity

A firm believer in education, Farley has contributed millions of dollars to his alma maters. His largest single contribution was a $3.5 million gift to Bowdoin College in 1984,^[2] which resulted in Farley Field House, an indoor athletic facility with a track, indoor tennis courts, and spectator areas.^[23][24] He also founded scholarship programs for students at Boston College Law School,^[22] and made a $1.5 million donation to endow the William F. Farley Chair at the law school. In May 1996, Farley made a $1 million donation to his high school, St. Raphael Academy, which went toward science and computer resources, tuition assistance, and the athletic department.^[25] In 1998 and in honor of Farley's contributions to the school, the West Annex Building at St. Raphael was renamed Barbara Farley Hall, in honor of Farley's mother.^[3]

Farley has made numerous contributions over the years to the American Heart Association, and he's been a donor to and board member of various civic and cultural organizations in his adopted hometown of Chicago, Illinois (including the Goodman Theater, the Lyric Opera House, and the Chicago Council on Foreign Relations).^[5][23] He has also sat on the board of directors for the Horatio Alger Association.^[15]

Awards and honors

• 1984: Farley is recognized as Outstanding Business Graduate of the Year by the Boston College Law School Alumni Association.^[15]
• 1986: Farley receives the Horatio Alger Association of Distinguished Americans award. The award is given to "community leaders who demonstrate individual initiative and a commitment to excellence, as exemplified by remarkable achievements accomplished through honesty, hard work, self-reliance and perseverance over adversity."^[26]
• 1988: Farley is inducted into the Rhode Island Heritage Hall of Fame,^[27] and is honored by the Boys & Girls Club of America as a Business/Community Honoree of the Year.
• 1997: Honored by the Ireland-U.S. Council for Commerce and Industry for outstanding achievement for his work in economics, business, and commercial activity. He also is named one of Irish-America magazine's top 100 businessmen,^[15] and receives the White House's Presidential Award for Entrepreneurial Excellence.^[28]
• 2008: Farley is honored with a Freedom Award from America's Freedom Festival at Provo.^[29]

Personal life

Farley was a high school athlete at St. Raphael Academy in Pawtucket, Rhode Island, and played three varsity sports (football, swimming, and baseball) at Bowdoin. He provided financial support to the athletic departments at St. Raphael and Bowdoin.

In the 1980s, Farley became a minority owner of the Chicago White Sox.^[4]

Farley was an active member in the Young Presidents Organization; he is currently a member of the World Presidents Organization. He has also been a member of the Chicago Club and the University Associates of Northwestern University for years.^[15]

Farley lives in Chicago with his wife, Shelley, a cabaret singer who has performed Michael Feinstein, George Burns, and President Bill Clinton.^[30] Farley has three sons; the youngest, Liam, lives in Chicago with him. His two older sons, Hayes MacArthur and Scott, live in Los Angeles.

References