A Golden Boy's Woe: "I'm Virtually a Slave"

By Richard Behar/New York

When he burst upon the takeover scene in the early 1980s, Asher Edelman seemed to have a magic touch. Bright, brash and hyperconfident, he reaped more than $40 million in instant profits for himself and his investors by raiding and liquidating two dreary companies: Management Assistance, a computer maker, and Canal-Randolph, a real estate firm. Suddenly superrich, the Bard College graduate, reared on Long Island, N.Y., bought fashionable residences from Sun Valley to Switzerland, a 100-ft. yacht, a personal jet and a modern-art collection today rumored to be worth $100 million.

The battle cry of all raiders is to "maximize shareholder value," but few of them blew the trumpets like Edelman. In 1987 he taught a business course at Columbia University that he aptly dubbed "The Art of War." Edelman offered $100,000 to any student who could find a mismanaged company for the professor to chew up. Columbia nixed the offer, but Edelman's image as a buccaneer flourished. That same year he served as a role model for the fiendishly greedy Gordon Gekko in Wall Street. "I hunched in my seat as I watched that movie," says Edelman. "I've never committed any crimes."

Even so, Edelman, 50, has plenty of reasons to hunch. Since 1986 he has launched hostile raids on ten large corporations and nine of the bids have failed, though Edelman has collected some greenmail for quitting the attacks. He managed to capture one of his prey, the Ponderosa restaurant chain, but resold it without a profit.

When Edelman has tried to operate companies rather than simply auction off their parts, the results have been just as dismal. Example: Datapoint, a San / Antonio-based minicomputer maker. Since Edelman took it over in 1985, the company has gone through three presidents and $135 million in losses. Yet he has reaped millions of dollars in personal fees by aggressively playing the stock market with Datapoint's cash. Another Edelman-controlled firm, Intelogic Trace, a computer-servicing business that was spun off from Datapoint in 1985, has seen its annual profits plummet from $20 million in that year to $179,000 in fiscal 1989.

Edelman got a taste of his own tactics last September, when Manhattan lawyer Martin Ackerman launched a proxy war for Datapoint. Edelman responded by entrenching himself more deeply. In a two-day blitz of stock buying, Edelman boosted his stake from 10% to 40%, largely by purchasing stock with cash from Intelogic Trace. Edelman won, but pride had its price: Datapoint shares have fallen an additional 25% in value.

Because Edelman feels that U.S. attitudes toward raiders have become too hostile, he now prefers to stalk European game. Yet his magic touch is fading. In June, Edelman made a failed bid for Storehouse PLC, a British retailing giant. Since then Storehouse's profits and stock price have plunged, wiping out some 35% of the value of Edelman's stake.

What could Edelman teach students about his current woes? For one thing, stock-market investors and Edelman's corporate prey have become more sophisticated during the 1980s. Just as important, it is far easier to liquidate a company than to operate it. Seeking relief, Edelman said last week that he may finally sell at least two of his collapsing companies, including Datapoint. He told TIME that in future takeovers he will let someone else occupy the executive suite. "It looks like I have this wonderful life," he says painfully. "But I'm virtually a slave to these companies."