Just a few months after their January acquisition by Masco Corp., the Kichler Lighting team is fully immersed in the integration.
“We’re drinking out of multiple firehoses at once,” says Dave Pamer, Kichler’s executive vice president of sales and the company’s internal point person for the transaction.
Pamer leverages a long history of dealmaking experience to help his team navigate the change. Before joining Kichlerin 1994, he worked for Prudential Capital Group, where he helped execute a variety of deals, from private placements to mezzanine deals to leveraged buyouts.
Through his dealmaking career, Pamer has seen both good deals and bad. So far, all the signs from this latest acquisition point to positive results.
“We feel that it’s a good cultural fit, and that’s important in terms of how well the integration will be executed,” he says. “There’s a sense of collaboration and working as a team. They’re respectful and asking for our input, which will contribute to the long-term success of the transaction.”
Smart Business Dealmakers spoke with Pamer to learn how preparation, delegation and communication can facilitate a smooth transaction.
What’s the most important lesson you learned from Kichler’s acquisition?
The more upfront preparation you have, the more you control the conversation. The more you’re able to clearly articulate the elements of a transaction that a buyer would be interested in, the better you can convey and create value for them.
Your recent panel discussion at Aspire emphasized the importance of preparation when selling a business. What was another key takeaway from your session?
During the sale process, you should only be focused on two or three initiatives — versus when you’re not going through a sale, you’re focused on six or seven. It’s critical to execute well on a couple things while you’re going through the distraction, the uncertainty and the emotions of a transaction.
Those initiatives (you should focus on) should be around sustaining growth and earnings because a transaction is a prolonged process — and you don’t want to compromise growth and earnings throughout the process. Otherwise, the transaction becomes a new negotiation.
How do you keep your focus on those initiatives during an acquisition?
The ways you manage it best are:
- Having clear priorities and managing to those priorities.
- Communicating those priorities to the people that you’re dependent upon.
- Delegating to your team by explaining why you need them to do these specific activities or priorities, while you’re doing something else.
Anybody that tells you it can be done extremely well would be misleading you, because something will inevitably fall through the cracks.
Why is it important for leaders to have a dealmaking mindset and be open to potential deals?
Five, 10, 15 years ago, I don’t think you had to be as cognizant of the deal community as you have to be today. The pace of business has changed so much, and I just think it’s better to be proactive than to have to respond to the moment. If you’re responding to the moment, you’re working hard to play catch-up. You compromise your preparation and execution by not being open to dealmaking. That doesn’t mean you have to be for sale, but being part of a network and understanding what’s happening in the marketplace is imperative today.
Talk about a deal that didn’t work out. What did it teach you?
Back in the late ’90s, while we were going through the due diligence process and negotiation, the market changed on us. The market for the products changed — the substrates that went into it, even the size of them changed — and yet, we continued to plow ahead with the acquisition.
The lesson learned is that it’s okay to walk away in the moment. Up until that point, all you’ve incurred is sunk cost. But if you continue to go forward in that transaction, knowing that the market dynamics have changed, now you’re creating losses going forward.
What’s the best advice you’d give other dealmakers?
This also came up in our panel session: Transparency and communication to your key people is not an option; it’s required. They can help drive more value for you in the acquisition if you include them in the process. Share information with them. It will make your life as a business owner easier because the outcome is likely to be more favorable than if you’re not transparent.
In the face of uncertainty and fear by your employees, if you don’t try to keep them close to you and provide reassurance, then your competitors and search firms will take that uncertainty and fear and put it on steroids. You risk losing good people who you still need to drive growth and sustain earnings.
I lost 36 percent of my sales management team in the Masco transaction because competitors and search firms came after my people and created fear and uncertainty.
What would you have done differently?
Maybe I could have done an even better job of reassuring, communicating and sharing — but there’s limits on what you’re able to share, so it’s a real catch-22.
I’ve tried to be open, reassuring and communicative throughout the entire process. I have good relationships with my team, but in the moment, when someone has a bird in the hand versus two in the bush, they’re going to make a judgment of what’s right for them.
How to reach: Kichler Lighting, www.kichler.com