Reading Warren Buffett’s most recent book convinced Honora owner Joel Schechter to sell his pearl company to Richline, he tells JCK.
Richline announced it was acquiring Honora on May 30.
“I have been looking over a seven-year period for the right investment partner for Honora,” he says. “The long-term prospects for a family fashion business are not strong. I wanted to attach to a bigger boat.”
“I love what I do,” Schechter continues. “I don’t want to retire. But as I get older, my personal risk tolerance has gone down. My banks have been incredible to us and Honora has been on a really good track over the last decade. But I have watched a lot of people panic and get the rug pulled out from under them. I really wanted someone who had a great financial engine.”
While on vacation, Schechter read Buffett’s latest book, Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012. He learned how the famed billionaire believes in letting individual companies manage themselves. So he called Richline, owned by Buffett's holding company, Berkshire Hathaway, and inquired if there was interest in an acquisition.
When he met with executives from Richline, “there was a natural comfort,” he says. “I think they had immense respect for the brand we built.”
Even though Richline currently deals mostly with majors, Schechter says “they seem very interested in our independent business.”
He says the company’s customers should expect “zero visible difference” going forward.
“This will help us increase the amount of advertising, the amount of raw materials, it will increase the level of our infrastructure,” he says. “They have a lot what we need to get to the next level.”
One unique aspect of this deal is that Honora also owns a retail store in New York City, whereas Richline is comprised of companies that strictly wholesale.
“We have kept the store mostly as a brand beacon,” Schechter says. “I was not sure about the store going forward, whether it’s under the Richline umbrella or Honora umbrella.”