In 2005, Mandy Cabot was set to sell Dansko, known for its closed-back wooden clogs, to Timberland for $150 million. She and her Danish husband, Peter Kjellerup, had built the company from scratch starting in 1990, importing clogs from Denmark and marketing them to customers in the U.S. who appreciated the shoes' comfort, durable construction and distinctive style.
But as the company flourished, she and Kjellerup started worrying about their lack of a succession plan. "If we were to be hit by the proverbial bus, Dansko would be in mortal peril," she says. On an attorney's advice, they started to explore selling the company to their employees through an employee stock ownership plan (ESOP). Meantime they were getting offers from companies wanting to buy Dansko, including, most notably, Timberland.
Although she preferred the idea of employee ownership, Cabot felt compelled to seriously consider Timberland's offer. "I had a crisis of confidence," she says. "I bought the old wives' tale that the traits that get you up to a point as an entrepreneur would start to fail you as you grew. Timberland had everything Dansko needed and then some, including sophisticated financial modeling, international sales and great R&D."
But as her lawyers worked on the deal over the next ten months, she struggled with her decision to sell. "I thought, what on earth am I going to do with that kind of money?" she says. "We'd have to build hospitals and schools. We were sworn to secrecy while our lawyers ran interference."
But then word of the deal leaked out, which brought Cabot to a breaking point. One day in August 2005, as she was leaving the company's headquarters in West Grove, Pennsylvania, to head to a trade show in Las Vegas where she had been planning to make the Timberland announcement, she says, "our retailers were in an uproar, our phones at Dansko were flooded and the company was in total meltdown." That stopped her in her tracks. "I saw the impact the deal was going to have on everyone whose lives our business had touched, and I couldn't go through with it." Her employees were devastated by the prospect. "For me to even consider selling the company was appalling to them."
After pulling out of the Timberland deal, Cabot forged ahead with new projects. The company built a new LEED-certified headquarters building, recovered from a falling-out with its Danish manufacturer and started sourcing shoes from Brazil, Italy and China. When growth picked up in 2012, she sold 100% of Dansko's shares to the ESOP.
Cabot has no regrets about turning down the Timberland deal. Dansko's headcount is 152, annual revenue is more than $120 million and the company remains profitable. "Peter and I are patient investors, and we never started the company for the money," she says. "Our employees are the heart, soul, blood, sweat and tears of the company."