Kelvin Squires invested a great deal of time — as well as an estimated $270,000 worth of expenses — in his effort to buy Center Line Electric Inc. He had played a lead role in engineering, procuring and delivering billions of dollars of revenue every year for Ford Motor Co., gaining valuable knowledge about how things get done in business.
Now, he was confident the time was right to do his own thing.
As much as he wanted to own his own company, however, he wasn’t going to take a bad deal to make it happen. He was willing to walk away, and when the team at Center Line wasn’t willing to budge on points that Squires felt were essential to his interests, he did just that.
“When I went home and told my wife that I had walked away, her eyes got as big as saucers and she said, ‘You did what?’” Squires says. “But I told her, ‘Don’t worry. I’ll find another company. I’ve learned so much through this transaction that I’ll be more efficient the next time around.’”
Instead, Squires and Center Line restarted negotiations a few months later, ironed out their differences and closed the deal.
“No one wants to pay that kind of money to walk away with nothing,” Squires says. “But I was willing to do that. I was willing to walk if I couldn’t get the right deal for me.”
For Squires, the path to business ownership was filled with education. A mechanical engineer by trade, he has an MBA in finance and two master’s degrees, one in accounting and the other in information systems. He spent more than 30 years in the automotive industry, first at Chrysler, then at Ford, making things go.
“Any of the engine plants, transmission plants that were doing work, I was head of engineering for it,” Squires says. “I put up plants in China, India, Brazil and Mexico, as well as all the programs in the U.S. I used to have something like 76 major programs going at one time, so I spent about $1.2 billion of Ford’s money every year.”
Squires felt that all of that experience put him in a great position to own a business, and he zeroed in on the electrical industry.
“The margins tend to be higher,” he says. “It’s got a certain expertise you can bill for, and people will respect it. So I went after electrical companies.”
He found a mechanical piping company that was intriguing, but things didn’t work out. Then he discovered Center Line Electric.
“The owner was a great guy, a master electrician who grew the business organically,” Squires says. “His thing was, ‘Hey, I can put electrical together.’ But when you talk about running a business, looking at the margins, looking at efficiencies, continuous improvement — that wasn’t his forte.”
The owner, Clyde Jones, also didn’t have a clear exit strategy. His hope was that his son would one day take the company.
“I didn’t fear that,” Squires says. “I said, ‘Clyde, do you mind if I call you every six months and just kind of stay in contact?’ So I started doing that and we would talk about the business.”
Do your homework
Eventually, Jones realized that selling Center Line to his son was not a feasible option. While disappointed, he had grown fond of Squires and set out to negotiate a deal.
As Squires was building a relationship with Jones, he was also building his own dealmaking IQ. He interviewed multiple M&A lawyers and accounting firms to assemble a team that could help him put together a good deal.
“Because I have a background in finance, I understand the numbers pretty well,” Squires says. “It never replaces having the right team of talent around you, however. As much information as I had, I had never bought an $80 million business before. I had to talk to five banks. I had to have a presentation that I put together in terms of the forecast for what I was going to do with the company. I had to attract banks that thought I could do it. So you’re selling yourself in a lot of regards.”
In 2016, Squires and Jones eventually agreed on a deal in which Squires bought 75 percent of Center Line Electric.
“I had to get creative with the financing,” Squires says. “I put in more than $1 million of my own capital and got a substantial bank loan. I still had a gap, so I got the seller to take a personal note that I paid interest on. It seems real smart, but the reality is I was short of buying him out. He was open to it because he kept 25 percent. I took his equity and I grew his equity.”
Through the first year after the deal, Jones stayed on while Squires ran the company — and ran it well.
“I kept him on because I wanted to learn from him,” Squires says. “I ran the company from day one and he didn’t come in anymore after year one. He was looking at the numbers and said, ‘I can stay home. This guy is making me money.’”
On Sept. 18, Squires bought the remaining 25 percent of the business. Three years ago, Center Line was a $79 million business. Now it’s well over $100 million in annual revenue and continuing to grow.
The key for Squires was that, as much as he wanted the deal, he never let his emotions get in the way of making a smart deal.
“It was trying to be present in the moment, but also trying to have a perspective looking from above,” Squires says. “Here’s where we are at in this deal, here’s the money I spent, and I think we’re heading this way. But if it doesn’t work, what am I learning from it so that I’m going to be capable to go get something done if this one doesn’t work out?”