The big tent - Joseph Brennan's conglomerate

Nation's Business, March, 1988 by Glen Macnow

The Big Tent

A calculator, black and white and dented all over, sits on Joseph F. Brennan's desk. One of the original microchip adding machines built by Sharp two decades ago, it broke a few years back, but Brennan can't bring himself to toss it away.

"This is a marvelous invention," he says, lifting the machine to admire it, as one might a pre-Columbian vase. "It cost me $300 when that was a lot of money. Today, of course, you get them free with magazine subscriptions. But this ugly thing is special to me."

The calculator allowed Brennan, a utilities rate consultant, to quickly cipher numbers and formulate rate returns. It transformed him from an expert on the witness stand into an apparent genius on the witness stand. "Before these things, if you were before a public service commission being cross-examined by a sharp lawyer, he could ask all kinds of hypothetical rate questions, and it was hard to debate him with just a pencil. But with this, I could instantly do the numbers. It changed my business."

And it helped change Brennan's life. Twenty-one years ago, Brennan quit a comfortable job as treasurer of 90 utility firms in a holding-company setup, sank his $2,000 savings into renting an office and buying that calculator and opened a consulting business in downtown Philadelphia.

The business has since relocated to the Philadelphia suburb of Moorestown, N.J. And it has grown. Oh, how it has grown.

Today, the firm Brennan started in a 9-by-12-foot office has evolved into AUS, Inc., a conglomerate whose elements have little in common except that each turns a profit. The 55-year-old Brennan's mini-empire includes:

A school for airline pilots and mechanics near Myrtle Beach, S.C., with a branch scheduled to open this month in Las Cruces, N.M. It seems no one keeps figures on such things, but Brennan believes his is the largest private flight-training school in the nation.

A chain of 22 weekly newspapers in and around Philadelphia with a combined circulation above 200,000. Brennan concedes he doesn't always read his papers--but he enthusiastically studies their financial reports. "It's neighborhood journalism--youth leagues, births and deaths, marriages," he says.

A chemical division, Nemesis Chemical International, Inc., located outside Dallas. The company manufactures hexamine, a formaldehyde by-product used in everything from cosmetics to rocket fuel, paints to explosives.

The AUS Consulting Group, with offices in seven states and expertise in the utilities industry, as well as market research and news polling.

All told, this curious conglomerate comprises 15 subsidiary companies organized into four operating groups. There are two printing plants in Pennsylvania, which handle Brennan's newspapers and take in outside work like the Penn State football programs. There are building-maintenance firms in New Jersey and Pennsylvania, which will clean up after hours and also treat your lawn if that needs to be done.

It all sounds incongruous to Brennan, too. "What they have in common is that they have little in common," he says. "And that's the essence of true diversification. If a consulting firm acquires another consulting firm, that's not diversification. But if you take a capital-intensive business like aviation and couple it with businesses like consulting and publishing, which are not capital-intensive, then you're spreading your eggs around. They can't all break at once."

The goal, he says, was to establish a business that would weather the highs and lows of the volatile consulting industry. That way he would not be hiring when times were good and firing when times were bad. "I wanted to get a strong team of good people and keep them working. In that regard, I've succeeded."

And the plan that he followed to reach that goal?

"There was no plan," he says. "Things just sort of evolved."

Today, AUS has 500 full-time and 500 part-time employees, annual sales of about $35 million and an annual sales growth rate approaching 30 percent. Brennan and his wife, Jean, own the entire company, although he feels pressure to go public--to create liquidity for his estate, to be able to reward employees with stock options, and to "fuel the growth machine, so that we won't have to pass up new opportunities."

Brennan grew up in Yeadon, a blue-collar suburb of Philadelphia. He attended seven years of night school at Temple University, while working for Gulf Oil during the day, to earn a degree in business administration. He went to work for the American Water Works Company, the 90-utility holding company, and, at 35, found himself treasurer of the entire operation.

He also found himself "saying yes when I wanted to say no. I was modestly successful, I had 13 years in a 15-year vested pension plan, and I was being told that I was next in line to become president. But I found it stifling, because there were all sorts of things I felt the utilities should be doing --diversification, expansion--that they didn't want to do."