André Thornton approaches dealmaking as a CEO much as he approached hitting as an Indians slugger in the 1980s: Calm and patient.
“You have to realize that these things have their own process and their own timetable,” says Thornton, the CEO of ASW Global, which merged with his GPI Procurement Services in 2007. “It’s always important that you not deviate from that plan just to make something happen. You put a process in place to not only protect against acting impulsively. You put it in place because it gives you a greater chance of making a good deal.”
ASW is a supply chain management company serving an international client base that has a strong presence in the Pacific Rim with clients shipping out of China. It also does work throughout Europe in France, Germany, Finland and Italy. M&A has helped the company identify possible acquisition targets that can help ASW continue to diversify its service offerings.
“We’re looking for three or four strategic opportunities that may take a couple years to materialize,” he says.
Thornton spoke about how he lays the groundwork for these acquisitions and then takes steps to ensure there is a fit before closing any deal.
What is your strategy when it comes to identifying potential deals?
We’re fortunate to have our executive vice president and CFO, George Hand, who has experience in the M&A arena. It’s his responsibility to manage our M&A environment and filter out those opportunities that look like they might be within the criteria we’ve set forth to help us as a company. We’re also a member of the International Warehouse Logistics Association. Being on the IWLA board provides a good idea of what’s happening in our industry and where there might be future opportunities.
In any process, there are things that you learn as you go along. I’ve learned that you don’t want to make any prejudgments before you get to certain areas of understanding about the company, the people and the culture. You focus on what brought you there and what interests you about the company in the first place. You go through those filters and you keep the process on track. As the company passes through those filters, the excitement begins to build. But initially, you try to stay as sanguine and passive as you possibly can be until that excitement and motivation is warranted.
As you get to that next level of analysis, what are you looking for?
We try to look at a couple things. Are we trying to buy this company to add services? Or are we trying to buy this company to generate additional revenue and additional EBITDA? We need to know why we’re looking at the company and where it fits in. It gets back to defining who we are and the types of services or products we provide to our industry. We need to have a clear understanding of where we want to go and what plays into that journey. If we’re trying to break into an area where we don’t have a lot of expertise, we understand that we have to go out and acquire that expertise. What are the benefits or intangibles that a potential acquisition delivers that would bring that expertise and allow us to impact the marketplace? It has to tie into some sort of strategic objective.
What’s the key to avoiding a bad deal?
When deals start to fall apart, a lot of times it’s because people get away from what they believe the expectations are or what they believe the process is. What we try to do is to make sure we put that process in place and then follow it. We don’t try to put a round ball into a square hole. In the end, there are some things that are paramount that you don’t move away from. These are your pillars. If a deal can be done without impacting those pillars, then that gives you some wiggle room. If you start to impact those pillars, your integrity, your morals, your culture and all of those things that are important to your success, then it’s time to say no and walk away.
How to reach: ASW Global, www.aswglobal.com