It was reported today, January 25 that Dov Charney, founder of clothing company American Apparel, was thwarted in his efforts to purchase the company and regain the title of CEO. Charney was ousted as CEO of American Apparel in 2014 amid allegations of misconduct. And there is a lesson in Charney’s unsuccessful American Apparel bid for entrepreneurs.
Not one to sit on the sidelines, Charney wanted to once again head up the company he founded. Backed by investors who claimed to have a $320 million takeover plan, his bid was rejected by U.S. Bankruptcy Judge Brendan Shannon in Wilmington, DE.
The lesson from Charney’s unsuccessful American Apparel bid
Charney’s unsuccessful American Apparel bid illustrates the biggest entrepreneurial lesson out there: when you get knocked down, keep getting up. He attempted to reclaim his former company. When his bid was rejected, he made known his intention to start a new venture that will compete directly with American Apparel. He and his investors cite the poor management of the company that led to its downturn and eventual bankruptcy filing after he was ousted. He knows he can do better than what American Apparel did after he left.
And Charney is not alone; every day, entrepreneurs start businesses that compete with either the companies they’ve left in the dust or their former startups. It’s not uncommon for someone to hang out a shingle with a new name and start going after customers and clients – that’s why companies have non-compete agreements. It is not known whether or not Charney had signed such a document. However, if he’s preparing to launch a company that competes directly with American Apparel, he probably has not.
In the meantime, Charney’s financial supporters are keeping an eye on the American Apparel brand. If there’s an opportunity to scoop it up, they may do so, according to Chad Hagan of Hagan Capital Group.