Tim Eippert and Kurt Ripkey had been down this road before.
They had tried to negotiate a deal to join MC Group and Icon, two leading companies in the signage industry. While it didn’t work out in 2008, 2012 or 2015, Eippert, CEO at MC Group, was cautiously optimistic that this time would be different.
“We’ve worked on customers that have taken us five, six or seven years for us to land,” Eippert says. “I really take the same attitude when looking at dealmaking. What we don’t want to do is grow just to grow. We’re not trying to force a bad deal. Sometimes it just isn’t the right time.”
The dynamic began to change in 2017 when Atlanta-based private equity firm Arcapita bought MC Group.
“Nothing scares them,” Eippert says of Arcapita. “They’re really aggressive and a great partner, and they were very supportive of this deal. They don’t put limits on anything, which enabled us to get this done.”
Smart Business Dealmakers spoke with Eippert about the keys to maximizing the full potential of this deal.
Identify growth opportunities
Eippert’s philosophy on dealmaking was largely shaped by a conversation he had with the managing director at Sverica, a private equity firm that owned MC Group from 2008 to 2015.
“He said, ‘Whatever deal you look at, make sure one plus one equals three, four or five. It can’t equal two, or it’s not worth it,’” Eippert says. “You don’t grow just to double. Kurt and I are really focused on how we grow the current business, how we cross-sell and how we’re able to layer in new services and product offerings to our existing customers.”
As Eippert and Ripkey did their due diligence on a potential deal, they were pleasantly surprised to learn that MC Group and Icon had very little customer overlap.
“There were a couple companies we looked at that had upward of 50 percent customer overlap, which is dangerous,” Eippert says. “If you acquire and partner with a company like that, you could possibly lose that customer volume. In the case of MC Group and Icon, out of over 525 customers, we only had 26 overlapping customers. And only two of them did more than $1 million in sales.”
While Icon has built a strong presence in the health care sector, MC Group has done well in hospitality. Other areas also revealed opportunities to complement each other’s business offerings.
“We have a very significant national lighting repair retrofit business for our customers,” Eippert says. “We also do LED upgrades and all kinds of lighting, and Icon didn’t do any of that. Every time you put it on paper and looked at it, the pros on this transaction always outweighed the cons.”
Don’t skimp on integration
The opportunity was clear. And after previous failures, Eippert and Ripkey were able to get a deal done. The next step to making all the effort over the past 11 years worthwhile was flawless integration and execution.
“One of the mistakes we’ve made in previous deals is we didn’t give integration the time and attention it deserved,” Eippert says. “It was painful. People get scared when things like this happen. They don’t understand how we’re going to put two big companies together. So we’re really focused on the integration side and making sure that we focus on the culture.”
Icon’s former CFO John Callan is leading the effort to integrate more than 700 employees under one name by heading up a 10-person integration team made up of five employees from each side.
“They all have different areas of expertise throughout the company,” Eippert says. “We’re going to drop down into both organizations even further and include as many people as we can. Integration is the No. 1 thing that we absolutely can’t screw up in this deal. What’s integration look like internally with all the systems people? What does growth look like externally?
"We’re really taking a divide-and-conquer attitude. I’m really good on the sales marketing side and so is Kurt, so we’re focused over there. We’ve also got experts on the team focused on the operations and more technical pieces of the business. Come back in a year and I’ll let you know how all this worked.”
Build on the momentum
In this merger of privately held companies, Eippert expects revenue to top $280 million and continue to grow.
“When I started the business 25 years ago, it was just a sign company,” Eippert says. “Today, the sign portion of the business is only half of our revenue. So we’re really well diversified across our energy services platform, in the lighting and electrical space. We have the largest on-call repair and maintenance business in the country. We’re a force to be dealt with now at the size that we are.”
Eippert plans to take the next 60 to 90 days to focus on integration. Then it’s back to more dealmaking.
“By no means are we stopping our acquisitions,” he says. “Just naturally, because of the size of this deal, we’ll slow it down a little bit. But it will allow us to be way more selective as we look at what makes sense in the future. We have a weekly acquisition call and well over 50 to 100 names on our list. We’ve got a top 10. We’re just looking for who might be a good partner.”