Under pressure: no closely held company wants to go where Conbraco has been. This family beat long odds to bring it back.

• Author: Kemp, Mark
• Position: FEATURE - Conbraco Industries Inc. - Company overview

As a boy, Glenn Mosack would trail his father around Conbraco Industries Inc.'s factories, fascinated by the whining tools that machined blocks of metal into valves and left bright shavings that sparkled almost like gold. For the business his grandfather had begun in 1928, the valves were golden. By the time Glenn was in his teens, his dad had turned the Matthews-based company into a manufacturing powerhouse.

Glenn worked there summers during college. "I was just enthralled by the business of manufacturing," he says. Carl Mosack put his son in different departments. "I painted walls one summer. I worked in some of the assembly departments. I worked in the production-control area. My dad started training me early on to see if I would be interested in the business."

He was. Conbraco represented financial security for the family. He, his older brother and a sister became executives. But it was more than that: Mosack blood was in the bronze and brass. His grandfather had moved the company to North Carolina from Detroit in the 1950s. Under his father, who took over as CEO in 1968, it thrived. Conbraco valves turned up everywhere. They regulated water temperature in bathroom sinks, controlled the flow of bleach at huge paper mills and precisely measured chemicals in drug factories.

Then, the business that three generations of the family had built almost shattered. In March 2001, Carl Mosack surrendered to FBI Special Agent Eric Davis in Charlotte, facing charges he had laundered money, lied to banks to get loans and committed fraud, all to cover gambling losses that in one year came to more than $30 million. As his world collapsed--he would spend 15 months in federal custody--the dreams of his children and the legacy of Conbraco crashed with him. He had run the business with an iron fist. His children had to wrest it from his grasp, then hold tight. It almost slipped away from them.

Now, five years later, Conbraco is 44th on Grant Thornton's North Carolina 100, the accounting firm's annual ranking of the top private companies in the state. With three factories in the Carolinas, it employs about 1,200. Sales topped $190 million in 2005. From 1986 to 2001, it was a fixture on the list, reaching 24th five years ago. Though its woes made the kind of headlines no business wants, many private companies would recognize the problems it faced: an aging CEO clinging to power and resistant to change, directors and managers kept in the dark, competitors poised to exploit any weakness and fluctuating economic and market conditions.

"Succession--both ownership and leadership--can be a major issue for any private company, let alone a family-controlled private company," says Alan Day, the Grant Thornton partner in charge of the ranking. "As private businesses mature and ownership structures become more complex with time, companies are faced with significant decisions regarding future alternatives. Alternatives they may consider include generational transfer, transition to professional management or sale of the company."

Those alternatives weren't top of mind when Carl Mosack's kids confronted him about his gambling addiction. He threatened to fire Glenn, the ringleader. Glenn's lawyer said his choices were limited: He could leave, or he and the board could depose his old man. They pushed him out, but the family later would lose control of Conbraco. Not until this past April did the immediate family--led by Glenn; his brother, Cal, executive vice president of sales; and sister Carole Mosack Lee, vice president of marketing--regain control. It cost them and their partners $46 million, money they had to scrape and borrow to find.

The promise of a new century seemed to stop at the front door of the black-glass Conbraco headquarters. Glenn, now 42, and his siblings had known for years their dad liked to gamble. No big deal. "We figured what he did with his own money was his business." But between the summers of 1999 and 2000, their father had lost $36 million and won $5 million, mostly betting on sports events. To cover the losses, he borrowed $21 million from his company and $10 million from Bank of America and other lenders. He told bankers he was buying more Conbraco stock. They believed him. But FBI agents had been tracking his bets for months, not only with local bookies but with mob-related outfits in Florida and the Caribbean.

While he was running the company, board members got financial reports only once a year. Glenn first saw evidence of his father's out-of-control spending in April 2000 when Conbraco's longtime controller, Everett Lowery, showed him the 1999 annual report and other records, including the loan documents. The numbers worsened, and in late August, Glenn, Cal and Carole confronted their father in his office. Glenn recalls the meeting as "brutal." His father seethed. If you don't like how I run the company, he said, get out.

When Glenn was in grade school, he was asked to write a profile of his hero. He had chosen his father. Now, it was clear his idol was not even willing to admit he had a problem. Says Cal: "We tried to talk to him sensibly about what he was doing to himself and to the company and to the employees and their families. But he just kept accusing us of trying to ruin his life. We couldn't believe the level of denial."

On Aug. 28, Glenn, then vice president of operations, called an emergency meeting of Conbraco directors. They voted to...