Tim Ozgener
I think it's an important question and people actually, that's a question that a lot of people haven't asked me, but I think it's the right question, Mark. So I give you a lot of credit for asking that because I think it's important. I mean, the first time we weren't looking to sell the business. Number one, we loved it. It was a lot of fun and we were growing it. We had a distributor in London, England, and his company was more oriented towards smaller cigars, machine made cigars, which in our industry we call more like mass market cigars. But he also started distributing premium cigars. So premium cigars means that the cigars are like, you know, long leaf tobacco that has not been broken or chopped up. And you roll the long leaves into these cigars so that when you smoke them, they, they hold an ash longer and they're just, they're more expensive that way, but it's, it's a, it's a more luxurious item. You know, it's almost like a higher end bourbon category or, or Scotch category. So this gentleman, he had sold his business to a company that was European that was also in mass market and they wanted to get into the premium cigar sector and they thought the best way to do it would be to buy a premium cigar brand. And so he was talking to me about it and I said, well, like what kind of brand? And he was like, well, quite frankly, a brand like yours. And I was like, okay, interesting. And then they started talking with us and you know, that's one thing I'll also say as an entrepreneur is if someone wants to talk to you, particularly about selling your business, you're not losing anything by listening.
You could always say no. And then obviously you can learn something from the dialogue. So, you know, he sat down and they made us an offer to buy our business. And then we went to, fortunately we had some financial advisors that came and broke it down to us. Like they say, okay, especially if you're selling to a European entity, do they want to, you know, they want to buy it as a, is it a stock deal or is it an asset deal? And for them, an asset deal is better for tax purposes, but it's worse for you tax purposes. then we're like, okay, no, no, we want a stock deal, not an asset deal. So we learned from that. And then when you did the math and you look down on like, you know, what, what will you end up with after taxes and after whatever deal it is, then you have to assess, it worth it or not? And then we said, no, it's not worth it. And so we turned around and we politely declined the offer. said, look, I'm really honored that you would think so much of our brand to want to acquire it.
Cause it is, whenever somebody wants to buy your business, then that's a big honor that people thought so highly about your, your brand. Then they came back a little over a year later, again, with a better offer, a more serious offer than what they first came with. And at that time we had a lot of legislation that was entering the business. Like we had a 700 % import duty tax increase on cigars. Uh, it used to be three cents per cigar. went up to like, you know, around 42, 43 cents per cigar tax import duty.
FDA was threatening to regulate cigars. Cigarette brands, cigarette companies were wanting to, FDA to regulate premium cigars, thinking that it would put the industry out of business and then they would get more market shares. For all those reasons, we were like, okay, well, maybe this is the right time to sell the business. And plus the partners were me and my father and my sister. And my father thought that all of our equity was in premium cigars.
He had a lawyer and the lawyer would always tell him a story about a guy that was his client who had an opportunity to sell his business. He didn't do it. Something happened to his industry and he always sees him at the bar at Jay Alexander's and lamenting about how he never sold his business. So that really had an impact on my dad. And he was like, well, maybe now is the time, you know? So that's all what went into it. But it was a lot of, my father would always say to me, goes, this is an education you cannot pay money for.
You cannot go to school for this. That's why it's a good question that you asked, you know.