Billionaire rales brothers ready for a new act in split of danaher corp. – the washington post electricity worksheets for 4th grade


“The Rales brothers have made a fortune at finding those diamonds in the rough, those high school truants who end up doing very well when you pay a little attention,” said Michael Farr, president of Farr, Miller & Washington LLC, a District investment firm that owns Danaher stock on behalf of its clients.

Mitchell is local. His 25,000-square-foot Glenstone museum, now undergoing an expansion after receiving permission from Montgomery County to get a sewer line installed, houses one of the foremost post-World War II art collections in the world, with works by Calder, Matisse and Rothko. Mitchell has been a regular at the annual Fight Night event, Washington’s politically incorrect spectacle (women in slinky gowns fetching drinks for the mostly male clientele) that raises money for low-income children.

The business side is far less glamorous. Danaher’s arc traces back to their father’s roots in real estate and the brothers’ talents for financial engineering, especially by Steven, who has a law degree from American University and is believed to be the financial maven. Mitchell takes care of the operational sides of the businesses.

“They paid $92 million, all but $2 million borrowed,” the Forbes piece said. “That’s leverage for you: Few ordinary businessmen could sleep nights under such leverage, but, remember, the Raleses are more like real estate speculators than industrialists.”

The same piece included a reference to Scott Fetzer, an Ohio-based mini-conglomerate that the Raleses were intending to purchase until investor Warren Buffett swooped in at the 11th hour, grabbing the company because, the magazine implied, Fetzer trusted Buffett’s source of money more.

Preaching Kaizen, they became experts at going out and finding underperforming businesses and doubling their profit margins. Some investors just held on and rode the returns. The late Joe Robert, a local businessman and philanthropist who brought Fight Night to Washington, told a Post reporter that he had most of his holdings in Danaher stock. Other noted investors, including the Sequoia Fund, have been longtime holders of Danaher.

“It’s a black box of sorts, like Goldman Sachs,” said Keith Davis, an analyst for Farr. “You don’t know how they are generating the profits and money, but they have been able to do so consistently and for so long that you kind of have to take a leap of faith that they are going to continue.”

True to form, the Danaher split was accompanied by the announcement of yet another acquisition, this one its biggest yet: the $13.6 billion purchase of Pall Inc., a Long Island-based manufacturer of water filtration equipment for businesses and water utilities.

The new Danaher as well as Pall generated $16.5 billion in revenue in 2014, according to Danaher’s release accompanying the announcement. Danaher looks to improve upon that growth rate going forward, with DBS driving $300 million worth of “cost synergies” from the combined company over the next several years, which will go right to the bottom line.

“Danaher will be a more-focused science and technology growth company united by common business models with attractive characteristics,” said Danaher chief executive Tom Joyce in an analyst call earlier this month. “The company will have leading positions in favorable markets, which we believe will help support mid single digit organic growth.”

“We view the breakup as a modest positive, but not game changing,” analyst Steve Tusa with JPMorgan said in a note issued after the split was announced. “It will create more focused enterprises, allowing each to reinvigorate growth via [mergers and acquisitions].”