Heating, air-conditioning business changes hands
There are equal parts excitement and nervousness in Eric Fahnestock's voice.
The reason for the excitement is simple — Fahnestock has agreed to terms to become the fourth generation owning and operating the family's heating and air-conditioning business, Fahnestock Plumbing, HVAC & Electric.
No terms were disclosed for the deal to acquire 76 percent of the company from his father George's estate.
The nervousness?
"I just borrowed more money, guaranteed bigger notes, than I ever thought I would in my life," he said Monday.
In the end, it came down to the "lifetime commitment" that Eric Fahnestock voiced to the company's employees and customers in the days after his father, George Fahnestock, died in January 2010.
"Ultimately, it came down to whether I want to carry on the legacy that my great-grandfather, my grandfather and my father built," Eric Fahnestock said. "Yeah, that's what I want to do. They made it through tough times and we will, too."
The real estate and business deal, 60 percent financed by Equity Bank and the rest by his father's trust, wraps up more than a year of negotiations over the future of the company. It includes the company headquarters at 3532 Comotara in northeast Wichita.
It's a tough time to buy in, Eric Fahnestock said: The economy is down and the centerpiece of the company's business — new home building — is just beginning to show signs of life.
But in many ways, the decision retraces the steps George Fahnestock took in 1982, when he co-founded Fahnestock Heating and Air Conditioning during a recession, along with Paul Fahnestock and Bob Hill.
"My dad started this company up again in 1982 and he told me the story a million times: He got a seven-year note at 21 percent interest in a horrible economy, and he kept his nose to the grindstone and he made it through," Eric Fahnestock said.
"So I thought to myself, 'Well, at least I don't have 21 percent interest.' We've got a pretty bad economy and I'm borrowing more money than I ever could imagine, but it should be a good thing.
"My employees have been great. The customer base has been very loyal. The outpouring of support for my father and the things he did for this community in his life has been tremendous."
The firm's roots trace back to 1946, when Ed and Ted Fahnestock founded the original company that later was sold as Airtron to Atlantic Richfield. George Fahnestock and his partners restarted the firm in 1982.
Eric Fahnestock joined the company in 1999, becoming president in January 2006 under his father, who was the company's CEO.
During the past 12 years, the company has expanded its offering to include full plumbing and electrical services.
Eric Fahnestock plans no immediate changes in those services, although he's "always looking for opportunities."
"Just trying to get the economy to come back right now, just trying to make sure that we're profitable in all the segments of our businesses," he said.
"Making sure I've got the right people in the right places, trained the way we want them trained, understanding the company culture."
It's a good strategy, albeit unusual since younger generations frequently want to reshape companies, said Don Hackett, an entrepreneurship professor at Wichita State who specializes in succession planning.
"In a down economy, it's wise for him in terms of just getting his feet on the ground and becoming a CEO, stabilizing his position and the company," Hackett said.
"It doesn't happen overnight."
This story was originally published April 5, 2011 at 12:00 AM with the headline "Heating, air-conditioning business changes hands."