M&A not always a meeting of the minds

By Frank Esposito
Senior Staff Reporter

Published: March 21, 2013 2:19 pm ET
Updated: March 21, 2013 3:28 pm ET

M&A execs at Forum

Image By: Plastics News photos by thegallerystudio.com EGI's Larry Jutte: “The common thread for success is communication in the deal, the plan and in execution.”

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Topics Mergers & Acquisitions, Events, Plastics News Executive Forum

TAMPA, FLA. — For expansion-minded business owners, finding the right company to buy can be a challenge. But combining the staffs of those firms also takes some work.

Manufacturing and finance veterans Terry Minnick, Rocky Butler and Larry Jutte tackled that topic at the 2013 Plastics News Executive Forum, held from March 3-6 in Tampa.

Minnick is president of Molding Business Services, an advisory firm in Florence, Mass. But prior to MBS, he owned and operated Florence-based injection molder Pro Corp. for 14 years. While at Pro, Minnick was involved in acquiring injection molders Apogee Plastic Technologies Inc. in Daytona Beach, Fla., and Presto Plastics Corp. of Stamford, Conn.

Neither deal went as well as Minnick had hoped. The Apogee deal had its own unique set of challenges.

"If the surf was up, the Apogee guys would go surfing," Minnick recalled. "And we'd go down there wearing suits. It was doomed from the beginning.

"Companies have to be somewhat similar so you can avoid huge cultural differences," he added. "You also need existing management to stay for a time."

Other keys, according to Minnick, are "to hold on to people" and to avoid the "not invented here" syndrome, where companies reject ideas that come from outside firms.

Minnick has worked to help companies overcome those types of obstacles in his career as a consultant. MBS has done 55 transactions to date, including seven last year. Three more deals are expected to close in the first quarter of 2013.

Butler has seen the impact of mergers and acquisitions as chairman and CEO of Rochester, N.Y.-based injection molder Alliance Precision Plastics Corp., and in a previous career stop in the chemicals market.

In early 2012, Alliance Precision bought the assets of injection molder Molding Dynamics Inc. in Spindale, N.C. Alliance now operates two plants in Rochester, as well as the Spindale plant and a joint venture in Mexico. The firm has annual sales of about $35 million and employs 260, not including the Mexican operation.

"You have to communicate often, so the two firms don't see each other as rivals," Butler said. "A good human resources person is key, and it's important for management to stay on. ... You have to keep the best people, no matter where they're from," he added. "And little things can be done."

When looking for acquisitions, Butler said it's also good to avoid firms where existing management includes "a strong presence" — or what Butler described as "a narcissistic SOB."

"You don't have time to deal with the mental damage that person has created," Butler said. "If a deal isn't going to work, you know it almost immediately."

Jutte has a bit of a broader perspective on the effects of M&As, having spent 24 years with auto major Honda Motor Corp. before joining auto components molder and maker Ernie Green Industries Inc. in 2012. Jutte now is president, chief operating officer and part-owner of Beavercreek, Ohio-based EGI, which was founded in 1981 by former pro football player Ernie Green.

"I watched train wrecks when someone bought a supplier to try and get in at Honda," he said. "And now EGI has made nine acquisitions in three years. They weren't huge acquisitions, but they all add to the strategic value of what we're trying to do."

Those deals include EGI's Troy, Mich.-based Florida Production Engineering injection molding unit buying Erie, Pa.-based injection molder Omni Plastics Inc. in early 2012. That deal moved EGI more into health-care and medical markets.

"The common thread for success is communication in the deal, the plan and in execution," Jutte said. "It's not always a perfect cultural fit, but you have to get to know and respect each other.

"Transparency and sharing your vision with the acquired team also are important," he added. "And you always want to meet the people who work on the shop floor."


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M&A not always a meeting of the minds

By Frank Esposito
Senior Staff Reporter

Published: March 21, 2013 2:19 pm ET
Updated: March 21, 2013 3:28 pm ET

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