More on LMI: What role did Clairvest play?
MOUNT VERNON, N.Y. – Less than a year ago, Landauer Metropolitan Inc. (LMI) was a regional powerhouse with nearly $140 million in revenues. Now, the company is in bankruptcy with most of its senior management gone. Inside sources place the blame squarely on Clairvest.
“They were terrific partners for 10 years and then they put their hand in,” said one source.
After LMI learned it had been disqualified from competitive bidding, the provider began putting a plan in place. In May, LMI announced plans to merge with Plainview, N.Y.-based Allcare Medical, which accepted 63 contracts.
“The shareholders were for it,” said a source. “It would have been a good marriage.”
But shortly after LMI’s announcement, says one source, Clairvest announced it had negotiated deals with two other HME companies in lieu of the deal with Allcare.
Allcare upped its original offer, which included upfront cash and additional near-term payments, says the source. Clairvest countered, basically asking the company to double everything, says the source.
“They thought they had leverage and that Allcare was vulnerable because it had all those contracts,” said the source. “Ultimately, what they asked for was more than Allcare’s investors were willing to step up with and that’s why it fell apart.”
That left only the other two deals standing—deals which LMI execs didn’t feel they had enough information about to be comfortable with signing on the dotted line, says one source.
“LMI had one of the best integration teams (in the industry) and they weren’t allowed to do (anything),” said the source.
At that point, several key executives, including former CEO Lou Rocco, walked.
“It was complete chaos; there was nobody in charge,” said one source.
Once that happened, the deal Clairvest had struck with the other two HME companies began to unravel, the bank took over and LMI was forced to file for Chapter 11 bankruptcy protection in August.
“This should be a Wharton’s School of Business case study on how to take a $140 million business and bankrupt it in three-and-a-half months,” said a source. “It’s unheard of.”