Robin Industries president and CEO Mark Fischer admits it's a little daunting running an M&A process with a team that’s light on transactional experience.
“People are a little nervous about it just because there's so many unknowns when you haven't done this before,” Fischer says.
Part of its search process means identifying competitors, knowing the market, developing a relationship with potential acquisition targets and trying to get in before private equity is involved.
“Frankly, once PE is involved or once they've hired an investment bank and a book is put together, it's probably going to be a much higher multiple than a relationship sell where someone is more apt to sell to you because they like how you do business, they like the culture of your company, et cetera,” Fischer says. “And that's more difficult to deal with when you're one of 20 potential people looking at an acquisition.”
Millcraft Paper Co. CFO David Hegeman says it may be the case that his company is not the buyer that can pay the highest price for a target company. So to get deals done, he talks with the company’s customers and suppliers about what Millcraft wants to achieve.
“If we get our suppliers to refer us into situations where there's no succession plan or obviously they want to sustain their sales channel, our customers will give us ideas based on what will help us be a better service provider to them,” Hegeman says.
Also working in Millcraft’s favor is its history. As a 100-year-old company, with the intent to stay in place for another 100 years, its able to leverage its longevity and stability in negotiations with owners. Hegeman says they’ve also identified people within the company — he calls them entrepreneurs — who have a passion for something and want to build a business.
“We're more willing to invest in that idea/concept, give it some legs, have that person create some knowledge and contacts, and then build an acquisition onto that to accelerate growth,” he says.
An example of that happened with a mobile canning, which got legs because there were people who were passionate about packaging for the brewery business and could take that to the next level.
“We've added on business lines because of the talent that we have inside the company,” Hegeman says. “Being able to leverage the people and talents that are surrounding you and the extended network you have has been invaluable and has helped us a great deal.”
Fischer and Hegeman, along with RSM US LLP Principal Brian Adkinson and Truist Bank SVP and Middle Market Banker Andrew Rutherford spoke at the recent Cleveland Smart Business Dealmaekrs Conference about building an acquisition playbook. Hit play on the video above to catch the full conversation.