Although the retail business was more capital intensive than General Cinema’s other businesses, Smith saw in Neiman Marcus a unique brand that had been poorly run by its prior owners. Smith was willing to make the occasional large investment to open new Neiman stores because he believed that demonstrating growth potential would allow the company to realize a premium price on exit (in its twenty years of ownership, General Cinema opened just twelve stores; the new buyer would plan to open many times that number). This logic was amply justified by Neiman’s stratospheric exit price.
