Even with a new owner, Elmes Packaging Inc. is going to stay the course and look for steady growth.
Richard Hierman sold the Mississauga, Ontario-based thermoformer to an investor group led by Eero Laakso in a deal that closed in February.
Laakso is taking control of the company, but Hierman will continue with the firm in the months ahead to provide for a smooth transition for customers and suppliers, the men said in a Feb. 27 interview.
Hierman had owned Elmes since 2007, and was not looking to sell when approached by Quadrivium Advisors of Toronto last year. Quadrivium, a mergers and acquisitions advisory firm, had recruited Laakso as a potential investor and then set out to find an appropriate company to buy, Laakso explained.
Quadrivium also becomes as a minority owner of the firm through the deal, which includes a group of other investors. Laakso previously worked for equipment maker Husky Injection Molding Systems Ltd. and more recently was helping with business development for mold maker StackTeck Systems Ltd.
This is his first direct work in the thermoforming sector.
"I know the plastics industry and I've followed some of the companies that are in packaging in both injection molding and thermoforming. I know it's an attractive industry," Laakso said.
"I've been looking for an opportunity for some time," he said.
While Hierman was not looking to sell his company, he knew that would happen at some point. He took over Elmes, with annual sales of C$320,000 (US$234,300) a dozen years ago. That number has increased to C$4.6 million (US$3.5 million) for the company, which runs three automated thermoforming lines and four semi-automated shuttle lines.
"It was always in my long-term plan to divest myself of the business at some point. It wasn't quite in my plan to do it now. In speaking with Eero and his team, it just seemed to make sense to me as we discussed this more and more," Hierman said.
Elmes is a small company, with eight full-time employees. Contract workers double that total during busy times.
With the company's family atmosphere, the former owner said it was important to work with a buyer interested in running the company and retaining employees all while seeking steady growth.
For Hierman, he wanted his legacy at the firm to show that he cares for his workers and their futures.
"It's a good cultural fit how I and my team want to run the company and how Richard has done in the past," Laakso said. "From an employee's point of view, the team that is here, I don't think it's going to be a big change. That's an advantage."
Hierman admitted that he's a bit emotional about deciding to sell the firm, but that he's comfortable with his decision.
"Eero and the rest of his group are very professional people. I was impressed with their thoroughness. They were pretty intent on carrying on the business and growing it like I had. That appealed to me," he said.
Elmes uses PET, PVC and high-impact polystyrene to make packaging for the automotive, pet food, food and beauty and skin care markets. The company also makes some thermoforms used for merchandising.
"Automotive is the largest application," Laakso said. "These are for high-value-added products that need to be packaged very carefully and they are typically shipped long distances," Laakso said. "It's not sensitive to the packaging costs because the cost of the items are significant."
While Hierman owned the company for a dozen years, the firm was founded in 1975 by Frank Elmes as a contract manufacturer.
"The packaging industry is attractive to me given that it's something that is less cyclical than some other industries. It's a large industry, it's quite fragmented. So there are possibilities for growth both organically and possibly through small acquisitions," Laakso said.
"Typically, packaging companies have reasonable financial results. It's also attractive in the M&A community. They are sought after companies to acquire," he said.
