Stephen Adams Honored with 2006 Arbuckle Award

MBA '62 alumnus shares his belief in value of business to society.

February 01, 2006

His business empire includes billboards, wine, banks, and a broad set of products and services for recreational vehicle users. The entire group of Adams Companies would rank 150 on the Forbes list of privately held firms if it were a single company, Stephen Adams told guests at the dinner honoring him as the 2006 Arbuckle Award recipient.

Like the man at the helm, Adams’ companies keep an extremely low profile. The privately held firms have “no need to beat the drum for Wall Street or whisper the earnings expectations for the next quarter. “¦By and large, I have enjoyed and preferred to be below the radar screen and out of the public spotlight,” said Adams, MBA ‘62, who was honored Feb. 15 as the 36th recipient of the top award presented by the Stanford GSB Alumni Association to an outstanding member of the Stanford GSB community.

Steady growth and long-term relationships are the key to success of his companies, said Adams. He bought his first outdoor advertising firm in 1983; started building the Affinity Group in 1989; purchased Affinity Bank in 1995, Adams Wine Group in 1996, and Freedom Roads RV dealerships in 2003.

“In other words: If it’s good, stick with it,” he advised.

Adams introduced the top leadership of several of his firms, including President Mike Schneider of the Affinity Group, who has been with the firm for 25 years, and Mike McGuire, who has been president of Affinity Bank for the 10 years it has been part of the Adams Companies.

Decrying business figures involved in ethical scandals, Adams argued that they have put self-interest first. Even among highly ethical leaders, Adams said, most increase their social consciousness at the point in their career when they undergo a transition from seeking business success to focusing more on “using what has been accumulated for the right purposes,” such as supporting charitable causes.

“Helping others not so fortunate as we is a just and noble cause, and now and into the future we will continue to find places and people” to support with charitable gifts, he said.

Adams expressed his strong belief in the basic value of business to society and outlined how he chooses firms to include in his holdings. He pointed to the shiny red apple placed at each setting at the formal dinner. “If you took this apple and carved it into four pieces - leaving the core as the fifth piece - you would have a presentation of my thinking about the basic business principles,” Adams told the guests.

First, he said, the business should be in an industry with a fair degree of activity from buyers and sellers, allowing value to be established clearly.

Second, Adams called for investing in easily identifiable profit centers, “without a lot of allocated or unallocated overhead and indirect costs.”

“Third, the investment should be able to attract a lineup of lenders. One lender doing a one-off financing is not enough. The multiple lenders will provide a fluid and liquid market for the investment when the time comes to buy or exit.

“Fourth, the opportunity should have many of the characteristics of a franchise; namely, protected territory, inelastic demand, unlevel playing field, and difficult barriers to entry. It should be more than a commodity but something that has true and continuing franchise value.

“And finally, I come to the most important part of the Adams Apple-the core; namely, the people part of the equation. There should be a vast source of qualified men or women from which to recruit. It can’t be dependent on one person or a single entity. It needs a team and bench strength with more than one person running it. Usually the best management will be available and willing to move, given the right incentives and compensation plan.”

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