- Donald Friese plans to remain as CEO of C.R. Laurence
- Used $86 million of the proceeds to pay bonus to employees
Donald Friese isn’t what you expect from a newly minted Los Angeles billionaire. He’s not a casually dressed entertainment mogul, a sharp-suited dealmaker or a computer programmer in a hoodie. Friese, who favors a tie and sports jacket, is a company man who’s worked for more than five decades at the same supplier to the glass and glazing industry.
The 75-year-old Friese joined C.R. Laurence Co. as a warehouse worker in 1961 armed only with army discharge papers and $125. Slowly building his ownership stake through the years, he rose to become the sole owner of the business before selling it in August 2015 for $1.3 billion in cash to building materials group CRH Plc.
"No one knew Don outside of the industry," said Lloyd Greif, the Los Angeles investment banker whose firm Greif & Co. represented C.R. Laurence in the sale. "People were blown away when the transaction got announced and they realized they had this billionaire in their midst."
Friese prefers it that way. He’s lived in the same home for 27 years and still shows up to work six days a week at the company’s blue and white headquarters in the Vernon neighborhood, an industrial throwback three miles south of the city’s Downtown. Rather than lavish his three children with beach homes or expensive cars, Friese is investing the proceeds cautiously, mainly in bonds and equities, as he and his lieutenants set up a family office structure to manage and build the fortune for future generations.
"It’s a lot of money. You’ve got to be careful. What if you gave your kids $300 million, you think they’d be motivated to go to work?" Friese said. "When you work hard to earn it, you don’t want to do foolish things and lose it. I would hope it could last for 50 years or more. Probably some day we’ll make private equity investments, we’ll maybe buy companies and run the companies."
Friese’s after-tax proceeds from the deal and the company’s real estate holdings he retained give him a net worth of more than $1 billion, according to the Bloomberg Billionaires Index. That makes him one of Los Angeles’s richest residents, joining the likes of movie director Steven Spielberg, art collector Eli Broad and trader Tony Ressler.
He remains chief executive officer of the business that supplies and manufactures more than 60,000 products, such as frames, hinges and handles, which are used to hold glass doors, windows and other features in place. He says his bulging bank balance won’t affect the way he runs the company, which forecast revenue of $570 million in 2015.
"CRH is also buying the management team," said Robert Eason, a building materials analyst at Goodbody Stockbrokers. "I don’t think you’ll see much change at C.R. Laurence. The construction market is a local business and the relationships these guys have will be an important asset to leverage."
Indeed, so far not much has changed for C.R. Laurence’s employees apart from a bonus check they received when the sale completed. Friese used $86 million of the proceeds to reward about 1,400 workers who’d been at the company for more than a year.
By starting at dawn six days a week, Friese and his lieutenants adhere to the habits of the billionaire’s late business partner Bernard Harris, who acquired C.R. Laurence in 1963. Friese bought a 10 percent stake in the business in 1968, increased that to half in 1982 and then bought out his partner 15 years later as Harris neared retirement.
The billionaire, who grew up in an orphanage and foster homes in Pennsylvania before joining the army straight from high school, credits his rise to his tough upbringing, admitting that he’s a hard taskmaster.
"You have to earn it, you have to work, you have to be part of the team. A lot of people don’t want to do that," Friese said. "It isn’t so much you let people go, people themselves leave. They don’t want the stress, pressure, the expectations that we have."
Almost two decades after taking sole control, Friese found himself looking for a buyer as he considered his own advancing age and how best to position C.R. Laurence for future years. The business’s profitability and growth prospects sparked widespread interest and CRH had to dig deep to beat off a variety of bidders that included several private equity firms.
"We paid a rich price for this," Albert Manifold, chief executive officer of Dublin-based CRH, said on an earnings call to analysts on Aug. 27. "It’s 11 times EBITDA. We like to sell business with that. We don’t like to buy businesses with that."
Still, the deal looks attractive for both sides, according to analyst Eason, because of the potential revenue synergies from integrating C.R. Laurence into CRH’s glass building envelope business and the prospect of expanding the brand globally.
For his part, Friese insists he has no plans to retire.
"I’ve found a job I love and I want to get better at it -- C.R. Laurence," Friese said. "As long as I can walk and as long as I can talk I’ll be here."