Who: MC Sign Co.
What: Mentor manufacturer sold to new PE firm; bought NY company that strengthens vendor database
Why it matters: Tim Eippert has built a dynamic business model that is set up to grow in a big way
Tim Eippert is a man on a mission. Backed by the deep pockets of Bahrain’s Arcapita, the president and CEO of MC Sign Co. plans to triple revenue to $300 million over the next three to five years.
“Literally every single day I’m focused on networking with others, trying to find new deals and letting people know our strategy,” Eippert says. “We don’t try to hide the strategy and that’s why we get a lot of incoming deals. You’d be doing yourself and your company a huge disservice if you weren’t ready for that and didn’t have the mentality of always looking and always being prepared.”
Eippert has been a busy man lately. In January, his company was sold by Caltius Equity Partnersto Arcapita in a deal valued at more than $100 million. Later that same month, MC Sign announced the acquisition of Integra Service Group of Schenectady, New York.
“It’s an exciting time for us,” he says. “Our core business is super strong and growing really well and we have a solid acquisition plan in place. If there is a good deal in today’s competitive environment, you better be ready to close the deal quickly and move on before someone else finds it.”
Eippert spoke with Smart Business Dealmakers about MC Sign’s acquisition strategy and how the deal with Arcapita paved the way to acquire Integra — and hopefully many more acquisitions.
Ready to make a move
MC Sign’s 260 employees process more than 40,000 work orders a year through more than 5,000 field service partners. The company has steadily grown its lighting services business, which completes interior and exterior lighting installations. It is currently capitalizing on the high-growth LED retrofit/conversion market in the U.S.
“We have four key segments of our business: Signs, lighting, electrical and interior,” Eippert says. “When we’re looking for acquisitions, we’re looking in those segments. We’re starting with asset-light companies that look and act like us.”
Integra does on-demand electrical repair projects nationally and has an electrical contractor vendor database already in place.
“It hit two of the very top priorities we had,” Eippert says.
The sale of MC Sign from Caltius to Arcapita was a key step in enabling the Integraacquisition, as well as future deals that Eippert hopes to make.
“We sold to Caltius in September 2015,” Eippert says. “My managing director at Caltius came to me in February 2017, so a year and a half into it, and posed a question to me. They were at the end of their third fund, so they were going out to fundraise a fourth fund. We had a really aggressive stated acquisition goal within the company. Since they were at the end of the fund, they didn’t have the acquisition capital available in that fund to really supercharge our acquisition piece. He said, ‘Do you want to hire an investment banker and go test the market?’ I said, ‘Sure, why not?’ It was very collaborative.”
Working with private equity
Eippert says there are plenty of his peers in the C-Suite who are leery of working with PE firms.
“Every single time I tell somebody I’m owned by private equity, their first reaction is they clench and go, ‘Oh,’” Eippert says. “The news media makes private equity sound bad.
“My experience has been different. Every single experience I’ve had with private equity in middle market America is exactly the opposite of the perception of big bad private equity.”
Eippert says PE firms are typically looking for two things: A solid business that can continue to grow and maintain a good growth trajectory. And a really good management team.
“The last thing they want to do is come in and start causing problems and upset the apple cart,” Eippert says. “It will put their investment at risk.”
Typically, a company owned by a PE firm will cycle through to a new partner every four to six years, Eippert says. MC Sign’s first PE deal with Sverica Capital Management lasted longer because the deal was made in 2008, right before the financial crisis.
“We sustained and maintained right through the financial crisis really well,” Eippert says.
The fact that Caltius wanted to sell after just a year and a half might have raised concerns if the firm had not been upfront with Eippert about its status.
“They needed to fund raise and we wanted to acquire,” Eippert says. “It was really good for us. We went out and tested the market and the market was awesome.”
Managing the sale process
While the market was flush with firms that had an interest in buying MC Sign, there was a ton of work that had to be done internally in order to facilitate a deal.
“The most intense part of the sale process is responding to the massive number of questions that you’re getting from multiple people looking at your business,” Eippert says. “They all ask them in a different way.”
“The worst thing that can happen is during that process, your core business slips a little bit or you decline on the core business side. It’s almost impossible not to take your eye off the ball during that process because it’s so intense and there is so much additional information that you need to respond to on a daily basis. It’s literally a second job when you’re selling a business.”
Eippert leaned heavily on advisers who have been through sales in the past and could help MC Sign maintain its focus on both the deal process and the business.
“There is still a lot of responsibility on our side to give them the information that they can present to the firm asking the questions,” Eippert says. “But when you surround yourself with people who can help you through the process, you learn a lot each time you do it.”
Finding the right partner
When MC Sign went on the market, Eippert got more than 30 offers and participated in 10 management meetings.
“That’s how we found Arcapita,” Eippert says. “During the management meetings, we wanted a partner. We have a very dynamic and steadily growing organic piece of the business, which they want. It’s what they are buying. But we also have a very good strategic vision around acquisitions. We wanted a partner that shared that vision with us. Arcapita does.”
There is a saying that Eippert has repeated many times in the offices of MC Sign.
“If I didn’t have to tell you that I sold to private equity, you wouldn’t know,” Eippert says. “All of the leaders are the same, the goals are the same, the strategic planning and vision is the same and the growth trajectory is the same. It’s really just a back room financial transaction which then gives you help and support, financial stability and intellectual capital to grow your business.”
Building the relationship
All that being said, Eippert says there is a transition period any time you transition to new PE ownership.
“It’s the cadence of communication, the cadence of reporting, the cadence of what types of meetings they like to have,” Eippert says. “Each firm is different. You really have to feel that out. That’s part of building a strong foundation in the very beginning of the relationship. We’re very sensitive to making sure we react and respond how they expect us to, within parameters. We don’t want to go on a wild goose chase preparing reports that don’t help us manage the business.”
As he looks forward, Eippert says he’s excited about the opportunity not only to acquire new businesses, but also to bring new talent into his organization.
“We’ll be continuing to hire internally for organic growth and then evaluating and adding good quality people through potential acquisitions,” he says. “If I make them successful, I’m going to make the management team and everybody who has invested successful and it will be a great outcome.”
How to reach: MC Sign Co., www.mcsign.com