Not knowing what’s next doesn’t scare Anne Pombier. It’s her favorite part of being a dealmaker.
“Every day is different, and most days do not work out as envisioned when the day begins,” says the vice president and head of corporate development at Nordson Corp. “That’s why I love what I do.”
Before joining Nordson, Pombier led or participated in more than 100 transactions ranging from $500,000 to more than $1 billion in size. Now she helps identify and pursue M&A targets that can create value for Nordson globally, pulling from her previous corporate development experience at TRW, Nacco Industries and most recently, Parker Hannifin.
“One of the many challenges is to understand a seller’s motivation to sell and then assess whether your acquisition rationale aligns well with the seller’s motivation,” she says. “If it does, then there is a clear path forward to overcome potential acquisition jitters.”
We spoke with Pombier about her approach to M&A and the role cultural fit plays in value creation.
How is M&A supporting Nordson’s growth strategy?
Over the past 10 years at Nordson, we have completed over 30 transactions, including 23 acquisitions. We have deployed over $2 billion of capital and added over $600 million in revenue at the time of acquisition. At the same time, we added two new product line platforms, medical and polymer processing, within our Advanced Technology and Adhesive Dispensing segments, respectively. We also built out our Advanced Technology test & inspection product line and supplemented our core businesses with strategic acquisitions. As an organization, we work every day to add value for our customers and shareholders. M&A is just one of the strategic levers we use to accomplish this.
Of the deals you’ve completed with Nordson, how much value has been created?
Hopefully, a lot. We work really hard as an organization on the front end of an acquisition to make sure the initiative aligns with our overall growth strategy and that we understand the value drivers for an acquisition. We then try to put the right integration team in place to make sure we are not only capturing that value, but also enhancing the underlying value of the company we have acquired. While that’s not easy, if we get it right — or even directionally correct with course corrections along the way — then we should be able to achieve our long-term objectives underlying the acquisition.
What are some keys to a successful acquisition strategy?
We are looking for acquisitions that align with our strategic growth objectives and culture. Our investment thesis is to buy and hold, invest and grow. Most private sellers are interested in that type of model.
Assuming a company has an objective to grow revenue and profitability year over year, the next step is to assess the best path to achieve those growth aspirations. If you can invest in your company and achieve your growth objectives organically within the required timeline, that is generally the preferred and less risky path. Many times, however, the answer is to supplement what is achievable organically with acquisitive growth to fill a need that the company cannot achieve on its own. So, the first question is, ‘What am I trying to achieve?’ And the second question is, ‘Can I do it internally?’ If not, it’s time to develop an acquisition strategy.
What else is important?
At the same time, you need to do an honest assessment of your organization’s internal capabilities to develop and execute an M&A strategy and supplement those internal resources with external expertise as required. If you are planning to leverage M&A long term as a strategic growth driver, then it makes sense to invest in the internal and external ecosystem required to accomplish that, both on the execution and integration side. If you don’t integrate effectively, then even the best acquisition strategy will be challenged to achieve the strategic objectives desired.
How do you determine fit when evaluating acquisition targets?
Cultural fit is critical to ensure a successful acquisition that continues to add value long after the transaction is completed. This is also one of the most difficult things to assess during a time-limited due diligence period.
Given that dynamic, we try to draw upon all the due diligence participants on our side of the table to assess not only the functional areas they are assigned, but also to provide a view on cultural fit. We try to get to know the culture of an acquisition target by talking with the management team and the layer below that if allowed, understanding how decisions are made and by whom, and by giving the target insight into who we are. Relying on all functional areas, in addition to the expertise HR brings to the table, is key.