Edward Flaherty has received more than his fair share of proposals from CEOs hoping to lure his entrepreneurial experience to their boards. Dr. Ken Heithoff, founder of the Center for Diagnostic Imaging, which provided outpatient diagnostic and therapeutic radiology services, was among those who courted him.
“John [Penn, Center for Diagnostic Imaging’s CEO at the time] had told me how successful Ed was, how entrepreneurial he was, and that he was a man of very high integrity. I really wanted him on the board,” Heithoff recalls. “But I’ve got to admit—I was a bit shocked by his initial approach to it. He said, ‘I’ll come on the board—it’s an interesting proposition. I can help you, but my time is valuable, and if it doesn’t turn out to be interesting or a productive situation, I won’t stay long.’”
That was in 1991. “Fourteen years later, we had to basically peel him off the board,” says Heithoff, who sold his company in January 2005 to Toronto-based Onex Corporation. The transaction was valued at roughly $225 million. At the time of the sale, the Center for Diagnostic Imaging operated 31 imaging centers in nine U.S. markets, and had annual revenues of more than $125 million.
“That outside board was absolutely critical to the growth of the business. There is no way I would have been able to do it without them,” Heithoff says. “As a physician, I was pretty naïve about business, so someone like Ed was invaluable to me. From that first meeting with him, I came to know the things about him that would be valuable to most any board. Not only does he have absolute integrity, but for him, integrity means that he speaks his mind clearly, precisely, and bluntly to let me and everyone else know how he viewed whatever issue we were discussing.”
A Montana native and 1967 graduate of the University of Wyoming, Flaherty, 62, launched the Rapid Oil Change chain in 1976, opening 83 locations before he sold it a decade later to Valvoline. He and a business partner also built 185 Applebee’s restaurants throughout the United States, which they’ve since sold. Flaherty is currently president of Eden Prairie–based Lariat Companies, which provides legal, real estate, and administrative services to the various companies in which he owns stock.
Meanwhile, Flaherty serves on the board for E. A. Sween Company, which owns the Deli Express brand of convenience store foods. He’s served on the Red Wing Shoe Company board since 2001, and now sits on the board of Minneapolis architectural firm Walsh Bishop Associates.
“I’ve been very selective with my choices—I’ve tried to choose a profile of a company that I thought would fit my skills and experience,” Flaherty says. “That profile turned out to be larger private, mostly family-owned companies. The way I look at sitting on the boards of these kinds of companies, you’re having a real impact on the lives of those people. You’re working to keep that organization healthy, and in so doing, you’re ensuring those employees’ futures, and the futures of their families. It’s a big responsibility.”
Flaherty also serves on the boards of Friends of Ascension, a north Minneapolis charter school; Patchwork Quilt, an after-school and summertime program for students in Minneapolis’s Hawthorne neighborhood; and Common Hope, a St. Paul organization that provides social and medical services to communities in Guatemala.