ATLANTA — Financials are not the only measure when considering a potential merger or acquisition in the plastics market, or really an acquisition in any business.
Existing management of a potential takeover candidate can help determine whether a deal goes through, or potential investors decide to walk away, according to a trio of money men who spoke at The Packaging Conference in Atlanta.
“From my perspective and the investments that we make, if we find an impediment to change, it is generally management,” said Geoffrey L. Faux, managing partner with Caymus Equity Partners LLC of Atlanta. “We really cannot acquire a business if we don't have a management team to partner with.
“Developing a relationship with a management team is part of the experience of being a financial investor, but also can be a challenge.
“The types of businesses that we invest in, they are typically businesses that are five, 10, 20 years old. Management has been there for a while, tend to get set in their ways. And sometimes it's hard to get management to change if we challenge them in certain ways,” he said.
“Other times, we see management who is trying to do too much,” Faux said, and is unwilling to bring in additional help, such as financial, sales or manufacturing leaders, to help manage the business.
Brett A. Snyder is president of Nicolet Capital Partners LLC of Chicago. He sees two situations that commonly are impediments to change from management: an unwillingness to both take risks and to establish priorities on initiatives to improve their businesses.
“Often, there's a lot of good ideas that both senior management and people in the organization have. There's usually no shortage of ideas, sometimes we can debate whether they are good or not. But there usually are good ideas,” Snyder said.
“What we see a lot is people, for whatever reason, hedging their bets, being unwilling to do the work to analyze different opportunities and then make a decision on a manageable number of initiatives that you can then actually execute,” he said. “You can't execute 10 or 15 things. That's just not realistic.
“Those are the two areas that we've seen holding a lot of companies back,” Snyder said.
Jack Knott is CEO of investment firm Arion Partners LLC of New York City and former CEO of Coveris, a plastics packaging company.