I have experienced a wide range of growth opportunities throughout my career. Whether it is earning share in a market where our company has a strong position, leading a business into a new market or acquiring another business, each task presents its own set of challenges.
In 1999, we had become a successful company focused almost entirely on one industry in North America.
The difficulty we faced was achieving robust growth in a market that we had already penetrated quite well. The bottom line was there was a lack of ongoing growth opportunities in this primary market.
We decided we could offer other industries high-quality products backed by strong technical resources and a culture focused on customer satisfaction. However, we knew the product development infrastructure necessary to enter an adjacent market would take a few years to develop. We would also have to deal with the time needed to achieve acceptance as an entrant to a new market.
So instead of going that route, we chose to use acquisitions to gain access to a new market.
Our M&A journey began with a relatively small, but challenging acquisition that involved convincing a widow to sell her business to Chromaflo. It was an emotional deal because she was letting go of an entity that her husband had created.
Trust and creativity
We learned some big lessons in this deal.
The first lesson was the importance of developing a relationship of trust, which is essential in any transaction. As the owner and I engaged in our discussions, I had to assure her that the legacy her husband built would live on at our company.
The second lesson was getting a better understanding of the importance of creativity, another critical component to dealmaking. We planned to move the existing production from Texas to Ohio, so we needed to validate that the new products could be manufactured on our equipment. The catch: The seller would not share the formulas until the deal was done.
We found a solution by having the company make intermediates that were shipped to Ohio and run on our equipment. The outcome of this trailed production proved successful and allowed us to proceed with a high degree of confidence.
Work through tough times
Neither of these challenges were easy to overcome, but being committed to finding a path forward proved fruitful.
That leads to a third lesson learned: Be committed to the process, especially in difficult moments.
This small acquisition provided us with the initial technologies to effectively enter a new market. Along the way, we added more technologies and grew this new market in North America to represent 40 percent of our revenue by 2010.
Scott Becker is president and CEO of Ashtabula-based Chromaflo Technologies Inc., which has completed 10 acquisitions, including five in the last five years. His future columns will explore how he finds acquisition opportunities, the challenge of negotiating value and the integration template he uses to achieve a successful result.