Rushway Brothers Lumber and Building Supplies Ltd.

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RUSHWAY BROTHERS LUMBER AND BUILDING SUPPLIES LTD.

David C. Shaw prepared this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 1992, Ivey Management Services Version: (A) 2011-03-24

Charlotte Bradley smiled as she reviewed the June 1992 monthly and year to date financial statement she had received that day. “Now,” she said, “I’m ready to sell the business. My time in the hot seat is over.” As she closed the file, she wondered what the business was worth, how she should go about selling it, and whom she should call first to set the wheels in motion. For the moment she was willing just to savor the good feelings associated with the thought that her term as president, chief executive officer and sole shareholder, as well as order taker, purchasing agent and sometimes shipper, might almost be over and that she had performed well in the various roles. HISTORY OF THE BUSINESS

Rushway Brothers Lumber and Building Supplies Ltd. (RLBS) was established by George Rushway in 1922 in Ilderton, Ontario as an extension of his lumber mill near Denfield, Ontario. At first the business sold only lumber, but when his two sons, Gordon and Douglas, joined the business in 1945 and 1951 respectively, the variety of products grew rapidly. In addition to serving the retail market for home improvement enthusiasts, the business served the wholesale contractor market for single family dwellings and other buildings. Douglas Rushway started a construction business as part of RLBS, specializing in barns, agricultural warehouses and other such buildings to be constructed within 50 kilometers of Ilderton. The business achieved a reputation for quality products, good service and fine workmanship. The business was reorganized in 1959 after the death of George Rushway with each of the brothers owning 50 per cent of the common stock. In 1985, after 40 years in the business and upon reaching 60 years of age, Gordon Rushway, Charlotte’s father, decided to retire from the business on an active basis and just consult and perform special tasks. He kept his 50 per cent share in the business and participated in the dividends to common shareholders. Douglas Rushway took over the running of the business in 1985 and ran it single-handedly for three years, delegating the day-to-day work to supervisors. Finally in 1988, he appointed Jack Fairlee as manager of the construction operation and Paul Gaudet as manager of the retail and wholesale products business.

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Neither person had experience in managing an entire operation, but both had extensive experience with these business segments. However, they had not dealt with financial matters such as budgets, ordering, payroll and employee matters before and the learning process was difficult at times. In January 1989, Douglas Rushway had a heart attack and was forced to leave the business. The family immediately hired the former manager of the London branch for a national chain of business centres, Charles Conway, to serve as a general manager of RLBS. The hope at that time was that Conway, with Fairlee and Gaudet, would buy the business. The hiring of Conway was thought to be a lucky break for the family, because it was clear that there wasn’t any...
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