BrandPartners Group, Inc.

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BrandPartners Group, Inc.

777 3rd Avenue, 30th Floor
New York, New York 10017
U.S.A.
Telephone: (212) 446-0200
Fax: (212) 421-2933
Web site: http://www.bptr.com

Public Company
Incorporated: 1984 as Performance Services Group
Employees: 131
Sales: $38.9 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: BPTR
NAIC: 541611 Administrative Management and General Management Consulting Services

With its headquarters in New York City, BrandPartners Group, Inc. currently owns one operating subsidiary, New Hampshire-based Willey Brothers, Inc., Willey works primarily with commercial banks and other financial services companies, its business divided among three complimentary segments: branch planning and design, merchandising, and creative services. The company helps financial institutions to present a consistent branding message and comfortable retail environment so that customers are more likely to investigate all the products and services the client has to offer. Willey, in essence, applies the lessons learned in recent years by general retailers to the banking industry, ever mindful that their purpose is to drive up revenues for the client. In its 20 years of existence, Willey has served 1,600 financial services companies. Major customers include H&R Block, TD Waterhouse, AmSouth Bank, Citizens Financial, FleetBoston Financial, Sun Trust Banks, Union Planters Corporation, and Wells Fargo & Company.

BrandPartners Established in 1984

The lineage of BrandParters dates back to the 1984 incorporation of Performance Services Group, Inc., founded in New York by William F. Finley, who promptly became the president, chief executive officer, and chairman of the board. Finley graduated from Miami University of Ohio with a degree in psychology and sociology, then earned an MBA from New York University. From 1969 to 1971, he worked at Chase Manhattan Bank in the Corporate and Management Development Department. He subsequently served as Personnel-Training Director at Irving Trust Company until 1978, followed by a six-year stint with Marine Midland Bank, where he was an executive for a consulting services group. Finley struck out on his own in 1984 with Financial Services, offering banks proprietary sales and marketing products, strategic planning and product consulting services, and financial software products.

In June 1986, Financial Services changed its name to Financial Performance Corporation, and in June 1986 Finley took the company public. The business struggled, however, and in July 1989 its common stock was delisted. By February 1990, the company lapsed into insolvency and operations were suspended until January 1993, when new capital was raised through private debt and equity issuances. A year later Financial Performance changed tact and began to pursue a strategy of doing business through subsidiaries to offer complementary services to the financial services industry. In October 1994, Finley’s wife, Susan Michaelson, along with Hillary Kelbick, formed Michaelson Kelbick Partners Inc. (MKP) to provide merger communications and marketing services. In November 1994, Financial Performance formed another subsidiary with Robert S. Trump called FPC Information Corporation, which marketed Financial Performance’s software products. A third entity was established in January 1995 with Richard Loos and Sean Brennan called Aspen Capital Management, LLC, which was intended to serve as the international sponsor of cash management funds.

In the three years after resuming operations, Financial Performance lost money. In fiscal 1996, the company generated less than $9 million in revenues, posting a net loss of $235,000, followed by a worse performance a year later when sales fell to $7.8 million and the net loss grew to $545,000. Moreover, Financial Performance was overly dependent on two MKP customers, who provided more than 70 percent of the parent corporation’s total revenues. One of the customers accounted for 56 percent of total revenues. By now Aspen had also closed, after Brennan and Loos failed to attract any investors to the fund.

Jeffrey Silverman Buys Interest in 1999

Financial Performance took a significant change in direction in November 1999 when Jeffrey S. Silverman and Ronald Nash bought out Trump’s stake in the company and were named directors. In January 2000, Silverman became CEO and chairman, and Nash was named president, thus establishing an association with Silverman that would last less than two years but have a lingering effect due to his shocking suicide that rocked New York’s high society. What had once appeared to be a portrait of a highly successful man, the story of Jeffrey Silverman turned into a cautionary tale, with BrandPartners (replacing the Financial Performance name in 2001) serving as the backdrop for the final act.

Silverman was born in 1945 into a life of wealth. His father was a corporate raider who could afford to send him to nursery school in a limousine. Although graduating from a less-than-prestigious college, Long Island University, where he earned a degree in finance, Silverman became at age 21 the youngest member of the New York Stock Exchange. After working on Wall Street for the next five years, in 1975 he became managing general partner of an investment partnership, a position he would hold until 1981, while also founding a cable television company and serving as president. The operation grew from a subscriber base of 1,200 to 33,000 by the time the business was sold in 1980. However, Silverman’s greatest success in his career was his association with Ply Gem Industries, a maker of specialty wood products.

Ply Gem was founded during World War II by Bernard Hewitt, who started out by buying plywood crates for 25 cents and then dismantling them to resell the wood. Silverman, who joined the company in November 1981, was influential in Ply Gem’s move to diversify its business. According to a former president of the company, Albert Hersh, Silverman insisted on arriving every day in a rented limousine. Hersh also recalled that Silverman asked him not to tell his wealthy friend Ron Perelman how little he was being paid, $85,000 a year. It was apparent to Hersh that his colleague was living well beyond his means. Silverman had grown up in a wealthy family and his second wife, Joy Wolosoff, was a real estate heiress, yet Silverman never seemed to have enough money to maintain his chosen lifestyle. Anecdotal evidence of his excesses include lavishly tipping a coat check girl despite not having a coat to check and hiring a taxi in Los Angeles to show him the way to his destination while he followed in his Bentley, just so he could avoid the humiliation of arriving in a cab. On the other hand, Silverman was also a generous supporter of charities, often asking that his name not be attached to his donation.

Silverman was caught up in a tabloid scandal in the 1980s when his wife, Joy, became involved in a disastrous romantic affair with New York Court of Appeals chief justice Sol Wachtler, a man who seemed destined to become governor of the state or perhaps a member of the Supreme Court. After she broke off the relationship, she began to receive anonymous greeting cards threatening to make public compromising pictures of her and a new lover. She also received phone calls, using a voice-distorting device, threatening to kidnap the Silver-man’s daughter. She turned to the FBI to trace the calls, and only after Wachtler was arrested did she learn that he had been behind the campaign of harassment. The former judge ultimately pleaded insanity and served 15 months in federal prison. In the meantime, Joy Silverman’s dirty laundry was being aired on the front pages of the New York tabloids, which found irresistible the tawdry affairs of a Park Avenue socialite.

Silverman divorced Joy and was able to marry again into the upper echelon of Manhattan society, wedding a woman 17 years younger, Lisa Tarnopol, daughter of Bear Stearns wealthy vice-chairman Mickey Tarnopol. In the meantime, Silverman was enjoying success at Ply Gem. After buying a stake in the business in 1982, he became CEO in 1983 and chairman in 1986. The company went from having a market capitalization of $7.5 million to more than $500 million by 1997. He was now the company’s primary shareholder, so that when he sold Ply Gem to Nortek, Inc. in 1997 he profited to the tune of $100 million. However, even this windfall failed to maintain Silverman’s exorbitant lifestyle, and he was forced to turn to his father-in-law for occasional financial help, an act which he apparently found humiliating After his tenure with Ply Gem, Silverman chose BrandPartners as his next hurrah. His name attracted attention and investments, much of which came from friends, but the company failed to match his success at Ply Gem. In 2000, the company acquired iMapData.com, a Washington, D.C.-based electronic database information and proprietary Web site development company. This was to be the first of a number of equity investments in Internet-related businesses, part of an effort to become a venture capital incubator for emerging businesses. BrandPartners paid more than $13 million for iMap, but two years later, following the meltdown of the Internet sector, the company sold its stake in the business for just $2 million.

Company Perspectives

BrandPartners Group is the parent corporation of successful, profitable companies that provide a broad range of non-advertising brand building communication services to domestic and international companies.

Willey Brothers Acquired in 2001

A better purchase for BrandPartners, as part of a plan to acquire companies that provided brand building services to international companies, would be the 2001 $35.6 million acquisition of Willey Brothers, founded in Rochester, New Hampshire, in 1983 by brothers Thomas P. Willey and James M. Willey. Both men stayed on to run the business, agreeing to the deal because it provided access to capital needed to grow the business to the next level. The immediate goal was to establish strategic alliances in order to expand on a national basis. The future looked promising for Willey in light of a recent explosion in the number of branch outlets opened by commercial banks. Despite the hype that consumers would turn to Internet banking services in vast numbers, it had become apparent to bankers that their customers still wanted to visit a bank for more complex services. Willey, with its long experience in helping to redesign banks to improve sales, was well positioned to take advantage of these developments.

At the same time that BrandPartners acquired Willey, it disposed of its 8 percent interest in its MKP subsidiary, thus severing ties to the Finley era. Several months later, in September 2001, the firm supplemented the Willey business through another acquisition, the cash and stock purchase of the Strategic Market Intelligence Division of The Commonwealth Group. The deal brought with it software assets that would allow Willey to better serve clients by making available an extensive database of detailed information about people and businesses throughout the country. This information could then be used to help determine the growth rates of a local market, as well as to break down the competition and available opportunities in the market.

In August 2002, BrandPartners reported its quarterly results, which had been adversely impacted by the struggling economy. At the same time, Willey signed a number of contracts with new and existing customers. Although not soaring, BrandPartners was not in difficult straights, but its chair and CEO was feeling the pinch on a personal level. Several weeks later, in September 2002, Silverman left a farewell message on his wife’s cell phone and told her where the police would find his body. He then drove to a secluded road on Long Island Sound in Greenwich, Connecticut, and killed himself with a single gunshot wound to the chest. His death was a surprise to everyone who knew him. Attendant at his funeral was a who’s-who of New York politics, finance, and society, including former mayor Rudolph Giuliani, current mayor Michael Bloomberg, Governor George Pataki, former governor Hugh Carey, Donald Trump, and Ron Perelman. Over the next few weeks, details emerged that revealed how much Silverman kept up the appearance of great wealth even as he fell deeper in debt. It also came to light that while at Brand Partners he paid himself $265,000 in unauthorized compensation and drew over $130,000 in unauthorized personal expenses.

Silverman was replaced as CEO and chairman of Brand Partners by Edward T. Stolarski. With 13 years of experience at GE Capital, he had originally come to Brand Partners as an executive vice-president and a director responsible primarily for analyzing and structuring potential acquisitions. Soon after Stolarski took over for Silverman, Brand Partners sold off its interest in iMap, leaving the firm with Willey as its sole operating subsidiary. The company sought to consolidate its finances and take other steps to build upon the Willey business, both through internal growth and strategic acquisitions in the branding and communication services industry. How long it would require to escape the connection to its erstwhile CEO and chair was very much an open question.

Principal Subsidiaries

Willey Brothers, Inc.

Principal Competitors

Deloitte Consulting; HLM Design, Inc.; J.P. Morgan Chase & Co.

Key Dates

1984:: Performance Services Group is founded.
1986:: The company changes its name to Financial Performance Corporation and is taken public.
1990:: Operations are suspended until 1993.
2000:: Jeffrey Silverman becomes CEO and chairman.
2001:: Willey Brothers is acquired.
2002:: Silverman commits suicide.