ABOUT
A Reversal of Fortune
Widely regarded as one of the most meteoric business successes in Romanian history, the story of Gelu Tofan began in the most meager of circumstances. For a man with no formal business education, working two jobs and laboring in the State-owned tire factory under the communist regime meant long days and a constant struggle to provide for his family of four.
But what he lacked in business acumen he made up for in gumption, and with the fall of the Berlin Wall in late 1989, Gelu’s ambition finally met opportunity as post-revolution democracy started to take hold. Raising a small amount of capital by mortgaging the family apartment, Gelu started a tiny operation distributing the tires manufactured by his former employer, Danubiana.
He soon expanded the business to tire retreading, opening 40 warehouse points of sale, one in each of Romania’s counties. Just five short years later, Gelu purchased Danubiana from the State Ownership Fund. Tofan Group then acquired two other Romanian tire factories, Silvania and Victoria, and by 1999 had become a “legal monopoly” owning all Romanian tire manufacturing facilities.
With some 10,000 employees and $250 million in annual turnover (the equivalent of $400 million in today’s dollars), Gelu’s organization had become the 23rd largest tire manufacturer in the world. He then set about quickly expanding into international joint-ventures and expanding into not only the American tire market, but new areas of industry as well. Soon, real estate, transport and logistics, gas stations, satellites and media were all under the Tofan Group portfolio.
By the early 2000s Gelu Tofan had amassed a personal net worth of $500 million and acquired the lavish lifestyle befitting his stature, including numerous homes, cars, boats, works of art and a private jet. But philanthropy was central as well, with Gelu establishing churches, schools, kindergartens, student scholarships and funding the arts, including movies and theater productions.
Deciding to follow his father into business, Adrian Tofan entered Babson College’s Business Management and Entrepreneurship program in 2003, unaware at the time that his first foray into business would be managing the bankruptcy of Danubiana just four years later. It was the first of his father’s failing businesses Adrian was called in to manage, but unfortunately not the last.
The dominos had already begun to fall 2002 when the special purpose entity (SPE) Gelu had established to hold the majority stake in the Rotras tire factory, as well as his transport and logistics company, was stolen with a forged signature. Gelu spent years in daily legal meetings trying to regain control, but ultimately incurred over $100 million in losses due to the theft.
Then in 2006, Gelu was attacked in broad daylight, nearly killed and left paralyzed for over a month. It was at this point that Adrian stepped in to help run the family businesses, quickly realizing the state of affairs were not what they seemed.
Today in 2019, 98% of the family wealth is gone. But it is through this experience that Adrian Tofan came to understand the fragility of wealth acquired through windfall scenarios. Reversals of fate and fortune too easily come, but with hard work, the proper mindset and critical choices wealth can be guarded for generations to come.