Skip to main content
staying private

Les Mandelbaum, president and co-founder of Umbra.JENNIFER ROBERTS/The Globe and Mail

Les Mandelbaum, president and co-founder of contemporary household design firm Umbra, likes his freedom.

Never mind that he was once a bass guitarist in a rock band during the 1970s. Freedom was a prized commodity back in those days of pumpkin-coloured shag carpets. But now, as the principal shareholder and president of several companies – Umbra being the flagship – Mr. Mandelbaum prizes the elbow room to manage as he sees fit.

He and his small group of shareholders and close-to-the-vest managers have turned their private company, Umbra, into a major international force, with more than $100-million in sales, and with innovative products sold in 75 countries – multifaceted picture frames, the much-copied Oh chairs, the collapsible containers, the tulip-shaped garbage bins.

Mr. Mandelbaum is the major shareholder of Umbra and also of another private company, TCH, that preceded it. TCH started by importing protective equipment cases for musicians and then began to manufacture them, then branched out into distributing industrial components. It's now a $25-million-a-year firm that also now operates in the United States, Mr. Mandelbaum says. And in both, the number of shareholders is kept to a minimum, helping the company remain nimble in the marketplace.

"In any company that I have, it's only insiders that have shares," Mr. Mandelbaum says. "There are no outsiders. I've never entertained the thought of outsiders, because I wanted freedom. I wanted to maintain control."

TCH has only two shareholders, Mr. Mandelbaum and a president who has worked there for 15 years, he says.

Umbra has only four shareholders, with Mr. Mandelbaum owning the lion's share of the company, along with co-founder and designer Paul Rowan, and two vice-presidents who manage offices in Buffalo, N.Y., and Hong Kong. The vice-presidents have been part of the company for 25 years.

The simplicity of the company structure has enabled Umbra executives to make lightning-fast decisions to change an approach or seek new markets. Recently, Umbra opened an office in Brazil, to take advantage of emerging markets, as well as to cater to the contemporary spirit of Brazilian homemakers.

"There are faster growth opportunities there," Mr. Mandelbaum says of the decision. Umbra's North American sales have slowed to single digits and Umbra is already well distributed throughout the continent.

Contemporary products – such as the ones Umbra sells – are mainstream in Asia and South America, but the North American market is still skewed toward traditional decor, he says.

The decision to move to Brazil came out of a single meeting. "Just as quickly as we can move, we move," Mr. Mandelbaum says. It's an internal decision, led by him as the majority shareholder. He needs only to get the other shareholders on side, and perhaps ask outside advice from accountants and lawyers. Umbra has a five-member advisory board of outsiders.

The simplicity of Umbra's corporate structure is common, although Glenn Rowe, professor at the Richard Ivey School of Business at the University of Western Ontario, has seen more extremes in private companies, which are free from having to report quarterly earnings to shareholders and regulators, the way public companies must.

Dr. Rowe knows of an entrepreneur in Texas who owned 100 per cent of an oil field supply business and kept his company finances extremely private. "Not even his private secretary had access to his financial statements," Dr. Rowe said. "The only people who saw those financial statements were himself and the accountants and I guess his tax attorney.

"Not even his wife saw them. He would type up his own financial statements. But that's one of the advantages of being a private company. You don't have to let anyone know what you're doing or how you're doing it."

It can be an advantage to keep outsiders from seeing the financials, but Dr. Rowe cautions that it can also be a hindrance when a lack of transparency frustrates prospective buyers, for example.

He cites as an example one corporate battle with a private firm attempting to buy a publicly traded one. One of the blockages was the public company didn't know how well run the private one had been. "They couldn't really get into the annual or quarterly reports to see if this is a firm that we would like to take us over," Dr. Rowe says. "If you are a publicly traded company, who must look after the best interests of the shareholders, or employees or customers, and you don't know the financial strengths of the company, it can be difficult."