It’s Time to Sell

Case Study Project Description

An owner had spent ten years building a manufacturing company. He is struggling with growth and really liked the technical side of the business but wanted someone else to run the rest of the company and take it to the next level of growth.

Project Problem

How do you find the right partner and bring them in as an owner? Do you bring in investors? Do you hire professional management who manages you, the owner? Do you go public? Do you get bank financing for growth capital and equity financing from a new investor/partner?

Solution

The issues described are complicated for any business owner. As an owner, there is freedom to make decisions they way they want, and the trade off is keeping the status quo alive. Change is required. To bring in a professional manager means to let go of control as an owner but possibly enjoy larger shareholder returns brought by an able bodied team who wants to do what the owner doesn’t. By bringing in a shareholder partner, there are all kinds of chemistry and fit issues that money doesn’t necessarily cure. What works for one person in each of these scenarios might not work for other people.

Reviewing all the options with this owner, we explored the merits of each option including going public with a larger group of people. In each case finding someone who wanted to be in that business, had the financial capabilities and was good fit with the current owner proved difficult. Business plans were built, valuations done, opportunities presented but the right fit did not materialize. Standing aside for change is difficult when you’ve run the show the way you want for years.

Result

In the end, the owner decided to retain more middle managers who could build the market out, rather than trying to sell the company.

Lame Duck or Worthwhile Investment?

Project Description

This old-line manufacturer was acquired from it’s original parent company with several other consumer-based companies. The acquirer was in business to business products and wanted to re-sell the company as soon a possible.

Project Problem

When a large company gets acquired, this signals to the management team in the acquired company that change is about to occur. Many managers take this as an opportunity to leave. For this manufacturer, the entire top level of management left all at the same time. There was no one left at the helm and the acquiring company worked fast to second one of their executives to become the new president. But who was going to move into management operations? The new president went out to talk to the remaining employees and hand picked four middle managers promoting them to the top spots in the company. Their top selling sales person became the VP of Sales. The controller became the Group Manager. The manufacturing manager became VP of operations and a young woman in the marketing department who had a lot of creative ideas became the VP of Marketing.

In a company used to getting promotions based on seniority, the new president’s choices left a lot of disgruntled long time employees fuming on the sidelines. Was the company ready to be sold?

Solution

We were asked to come in and turn these new recruits into a leadership team who had to become responsible for chopping costs, shrinking the product line, staying competitive and forging a growth pipeline. The reward for doing all that? The team was told they would either be saved from the chopping block and kept as a unit for the conglomerate or spun out once again.

The team had no ability to work collaboratively. In this culture, the sales person had never visited the manufacturing floor. The people who made the product he sold did not know him. The marketing department had never gone to talk to the distributors who sold their product to understand the huge variety of target markets they worked with. The manufacturers had not talked to the distributors to see what types of products were in demand. The controller had never led a team or run a meeting. Collectively, they did not know how to make the decisions expected of them. The pressure was intense, the time frame short.

We worked individually and as a group with each, showing them how to change their attitudes and approaches toward building relationships across functional lines, with each other and with the market place. We challenged their thinking and entrenched methods of doing things in the same way and getting poor results. We focused on how to have the kinds of conversations that create rapport and results. Over a year period, this group of people dealt with downsizing, competitive threats, internal strife and the constant uncertainty about their future and found it in themselves to collaborate on all issues.

The manufacturing VP visited distributors. The VP of Sales got to know the guys on the factory floor. The marketing VP learned how to work with multiple target markets. The controller faced his limitations and steered the group through the quagmire of issues anyway.

Result

Within 18 months the team had achieved their goals. The conglomerate was impressed. They had turned the company around and now were prime candidates to be sold. This irony was not lost on the team. With the great results they were now an attractive business and yet faced an uncertain future yet again. The company was acquired quickly and the conglomerate achieved their return on investment. And in the end, history repeated itself: only one member of the leadership team stayed on with the new owner.

If we want $8 million for our company when we sell it, what do we have to do now to get that price?

Case Study Project Description

Two partners had built a sizeable operation catering to the booming construction market. Sales were double digit and growth was outpacing their ability to manage resources. There was a tight labor market and experienced people were in short supply.

Project Problem

The partners were nearing an age when they had to start thinking about succession planning. And frankly, the stress of keeping it all together without the right people was taking a toll on their health and their working relationship. What would it take to sell they wondered?

Their immediate problem seemed to be their frustration at the lack of self responsibility amongst their managers and site staff. Tempers often flared. Perhaps this was leading to the desire to sell?

Solution

We looked at their entire operation from the people issues right through to the way they estimated and sold jobs. Each year, despite increases in revenues and more jobs coming their way, the profit margin was slipping. We showed them how this fluctuating profit margin would affect the sales price. We were able to pinpoint the reasons for the fluctuations and began to set up a key performance indicator system. Reorganizing the company’s roles and responsibilities to get this information reported was critical. The reporting responsibility would be assigned to teams and individuals. A new incentive system would be awarded based on managers’ ability to produce the indicators in a timely manner.

On the people front, we challenged the way the senior managers and owners communicated and taught them tools to start making adjustments in their attitudes, reactions and styles. Managers started to learn how to work to their own strengths and focus on amplifying what they did do well. The reorganization opened up promotion opportunities and suddenly with good role descriptions and incentives, people within the organization were applying. The owners were coached in how to collect useful information and make decisions together while respecting each other’s differences and ways of working. They split up duties so that each played to their strengths.

Result

It will probably take 2-3 years for their profit margins to improve and show year to year consistency and growth and possibly four to seven years to grow the company to the level that would make it worthwhile enough for the price the partners want for it. They have settled into this realization and are already seeing improvement in staff attitudes and the way work gets done, which has brought down the stress levels considerably.

Variances are declining and the focus is on learning to build a better management system so that projects flow through the company in the most cost effective manner. The key performance indicators will soon give the owners the freedom to be away from the office more often as they will have critical decision making data. The management performance system will allow them to build trust and capability through the ranks so that they don’t have to be there all the time. These types of changes are exactly what an investor wants to see.

Cross-Border Integration Irritants: You Change First

Case Study Project Description

A Canadian retailer was bought by an American chain store in their first cross-border acquisition. Several years post acquisition, different policies, procedures and laws, combined with the parent company’s change in management and centralizing of operations, alienated the Canadian management team. The US company did not seem to understand that Canadian accounting was different as was the expectation of an apology when payroll didn’t take the differences in law into account. Tempers flared often and the Canadian team would give the US management lip service.

They were not working well as a team: everyone ran their own department and store and did their own thing. Conflicts also existed between team members as to how to run things, how to grow and how to work with the American parent.

Project Problem

To be seen as a division ready to take on future growth – and not be left behind – the management team needed to learn how to collaborate through change and conflict, deal with the American parent’s way of operating, and influence change with the US parent through communication rather than resistance. The Canadian company retained us to help them with making these changes, knowing that the US parent would not be participating in the process. Was it possible for one side in a conflict to do all the changing and achieve any better result?

Solution

First, the leadership team had to be willing to stop viewing the parent company and its managers as the bad guys. This perspective ensured they felt powerless to get the attention they wanted to develop their own strategies.

Next, the team had to learn how to set their own vision and then sell it up the ladder as a team, not just rely on their leader to do it for them. We facilitated several events and team coaching sessions to set this new way of working in motion so that each member of the team contributed effectively.

After a year of working on the attitudes and methods they had been using to work with the US parent, the day came when the President would be in town along with the Vice President of Development. The Canadian management team met with us concerned that they would be shut down again. We reminded them of their vision to be trusted with an expansion strategy and that they could do this. We worked through their fears and concerns and anger and finally this group of ten managers agreed on their goal in the meeting with the US parent: they would welcome them, listen to them and make their request for the expansion.

Results

The mood changed immediately. As the US leaders walked into the room, the Canadian team rose and shook their hands. Camaraderie ensued and a good feeling filled the air. The Vice President looked around the room and smiled. He started with saying how impressed he was with everyone and their Canadian operations. He noted their change in attitude and what a joy it had become to work with them He wondered allowed what they wanted to do next. “Give me a plan, guys. Let’s do something up here!” Shock ran through the room. They got their goal and they had not had to ask.

After several meetings with the parent company the team was given permission to proceed with an expansion plan. They had not seen themselves as able to get this project off the ground before. Now they are the examples to other divisions about how to expand territories effectively.

With their differences resolved, communication with the parent company became informative and resourceful rather than rebellious and adversarial. Within 18 months, the management team emerged stronger, now the star performer in the store chain and opened their new store location.

Maximizing the Value Post Acquisition

Case Study Project Description

An industrial product supplier purchased a much smaller entrepreneurial distributor of products. It seemed like a good deal at the time. Due diligence revealed they had a few cash flow problems but the buyer had the resources to remedy that. They had a fine team of fabricators and had identified a package solution the market seemed to like so they were not just selling one off products. The deal was done.

Project Problem

The smaller company had moved into a new facility before the acquisition. The buyer didn’t need that space and immediately decided to split the company in two, sending the fabricators to the central facility and sellers and managers to a satellite office. Suddenly, two people quit. The smaller company had been vertically integrated so the sales people were also the product expediters. Now with their fabricators 30 miles away, they couldn’t tell if their sales orders were being processed. Anxiety rose, sales declined and more people quit. Management had not put in a new process to help the new people adjust to the system. The manufacturing plant had not arranged for an expediter on their end to communicate with the sales people. Information fell through the cracks. To top it off, the top three sales people were all close to retirement age. Who would they pass along their knowledge to?

Solution

Management knew there were cracks in their acquisition integration system. Marketing, sales, product definition, product management and people integration were left to chance. We were invited to assist Kibo Ventures to help them come up with a better template and method of integration as well as resolve the problems of the current acquisition.

We interviewed all concerned and started to see where the road blocks were in the entire operation from sales through to installation. Communication was blocked across many departments and conversations about process improvement did not happen due to chronic interpersonal issues. The sentiment was that people should ‘just get with the program’ or ‘duke it out’ to make things work. A feeling of bleakness and resistance to change was in the mindsets of new and old employees alike.

We developed a new organizational chart and strategy for how the company could become a lot more customer focused and resolve some of the interdepartmental issues. New roles were created to take responsibility for areas that had previously fallen through the cracks including succession planning, knowledge transfer, training, sales support, product management and market development.

Result

Included in this package of services was a pre and post integration due diligence road map. The map defined the areas where questions needed to be asked to make a good investment decision and then identify the questions and strategies needed to integrate a new acquisition in such a way as to maximize rather than erode the value. The map points to the areas where value erosion has the biggest potential and where to explore the impacts of pending decisions so that contingencies and alternatives could be developed. The company is now implementing several of the role changes and has halted acquisitions for the time being so that they will have a better foundation for the next company to be acquired.

How Do You Combine All the Products?

Case Study Project Description

A large innovator in the water business had been expanding through acquisitions on their product distribution side of the business. Now they wanted to increase their systems side with other acquisitions. But what should they buy and how should it be integrated?

Project Problem

Selling systems is a lot different than selling products. Products are short cycle items. People know what they need and they go and buy it. Systems solve bigger problems, come with a bigger price tag and have to be approved and selected by a variety of influencers. You can’t sell a system in the same way you would sell a product. Systems need a consultative selling approach that focuses on solving a problem for the customer. The problem is generally complex, involves several regulations, has installation issues, and takes time to build. The group that selects it is not necessarily the group that installs it, uses it or eventually owns it.

Solution

If you are in the market to add-on to the solutions side of the business, where do you put your focus in your acquisition selection? At the target market and only buy other system companies that sell to the same target market? At the technology and only buy complementary add-ons for that type of technology? Or perhaps at the ultimate end user of the technology? Our view is that the end user is the most important part of this equation. They have complex needs and those companies that can provide them an end to end solution that removes many of their perceived ‘hassles’ will get the contract.

Our solution was to train the management team in how to think like the customer to really understand their point of view, their pain, the hassles they experience and the work they have to do to successfully get a water system working to their satisfaction. Then we helped them survey the market place to determine: what competitors did; market trends; regulatory issues; and other uncontrollable variables that affect the sale of a water system.

Next they worked through all of this data and compared it to what they already offered and how they delivered it. They identified their internal process problems and installations to find ‘gaps’ that could cause customer frustration. Then they focused on the kind of systems that would best augment their current products to create a complete solution and identified the criterion most important in an acquisition.

How to Increase Distribution in a Fragmented Market

Case Study Project Description

A manufacturer and designer of wastewater treatment systems for small municipal sites and property developments. The company had emerged from a series of difficult situations and now wanted to expand their marketing efforts. They had one distributor left who was effective at getting this proprietary system sold and several others that had not had a sale.

Project Problem

The company had not had much of a marketing program in place. Their focus was on technical execution and project management rather than marketing and sales. In their industry, competition is ferocious and there are numerous gate keepers and influencers affecting the selection and sale of a system. Standing out from the crowd is challenging without a brand name and reference installations to demonstrate capability and effectiveness. Then the company won a coveted industry award as a result of their customers and competitors nomination. With this opportunity as a spring board, now seemed like the right time to leverage the publicity to find better reps.

Solution

It is always a difficult decision for a company in that business to decide between having their own direct sales force or using manufacturers’ representatives. Wastewater treatment systems are long sales cycle products that require consultative sales rather than order taking. There is a lot of ‘missionary work’ involved in gaining awareness amongst all the influencers. Target marketing can reduce the time to sale by focusing on developers versus municipal sales which can take a lot more effort. However, finding developers is challenging. We helped the company through this decision. In the end, the decision was fairly easy: it would take years for the networks to be built in the US market if the company hired their sales force. Reps would ostensibly have these networks already built.

We set up a recruitment program to find the right reps and develop a territory system and rep support program. We developed a criteria to identify the types of reps we wanted and then arranged to interview them at an international trade show that most attended. Understanding the system technically was the first challenge in the interview and then telling us how they would support the system came next. It became fairly obvious who could take this product on successfully.

Results

Nine new reps were selected. A public relations support program was designed and put in place. The reps received some training and technical manuals. The company won some other awards and this publicity was also leveraged. The biggest challenge the reps faced was getting the first installation in their jurisdiction to prove to authorities the system worked. This process is still under way and can take years. In the meantime, the markets where the system is already installed are continuing to enjoy reference sales.

We’re Growing Faster than Our People Are

Case Study Project Problem

A large sub contractor had the largest market share in their region. They won lots of jobs, were the first pick of many general contractors and were often voted the best place to work amongst journeymen and project managers. Yet, inside the company, the owners were tap dancing as fast as they could. With a shortage of trained people and more and more opportunities coming their way, the management team was working over time, getting increasingly frustrated at their people’s inability to take responsibility to lead and manage. Crises management created a powder keg of issues and tempers were short.

The good news was that revenue growth was through the roof. But were the owners getting any more out of the bottom line besides mental, physical and emotional stress? Was it worth it?

Solution

The first step that we took is to analyze their financial situation. They were unable to get the kind of reports from their financial software that would reveal where they were losing money so we pieced together a trail of documentation to be able to track the variances from year to year. What we discovered was that the gross margin variance was getting larger each year: what they estimated they would earn on each job differed from the actual accounting at the close of the job.

This financial fact pointed to a problem in the systems and processes that their people followed. We found that each person had a somewhat different understanding of reporting and some used software and some didn’t. The fact that the systems were not followed magnified problems and people often blamed one another for not following or using different systems. This created a culture where people would not be motivated to take responsibility for their actions.

By identifying the root of the problem on both the operational and cultural fronts, we worked with the owners and managers on both issues, instituting key performance indicators, performance bonuses tied to producing the indicator information and focused on helping get all systems onto a single software platform. Senior managers and owners all were coached on running effective meetings, their attitudes, methods of dealing with problems, managing clients, holding others accountable, delegation, leadership, decision making, having productive discussions and working with each other’s strengths rather than pointing out their weaknesses.

Result

With a variance reduction goal motivating the owners and the opportunity to clear up many of the systemic problems that have frustrated everyone, the future seems brighter. The company is able to hold more productive meetings resolving issues face to face that would in the past, have resulted in project problems that cause the variances.

Is there a Growth Path for a 20 Year Old Product?

Case Study Project Description

HR Payroll software programs abound. After industry consolidation, most of the small companies had either been bought by the larger firms or gone out of business. This software company had one great product, service and maintenance revenue and a crack software development and technical support team. But their focus had been on research and development for years, and servicing existing clients, not sales. With a new web interface completed and a ground breaking but difficult to understand second product, was there still a future for the HR Payroll system? There were a lot of pluses and a lot of challenges. Was it time for this company to fold? Was there an opportunity to be acquired? Or could growth still be an option?

Project Problem

ERP solutions for human resources, payroll and performance are dominated by the large ERP vendors. In this business, the old adage that ‘those that choose to buy IBM don’t go wrong’ seemed to dominate the purchasing decisions. How could this stable and proven software company get into new markets without being PeopleSoft or IBM? Further, the company had pursued many unrelated markets so reference clients were dotted across the spectrum of industries and geographies. There seemed to be no natural fit into any one target market despite the superb reputation they enjoyed for service amongst their great reference clients. The CEO and the COO were concerned about focusing on only one or two markets unsure as to whether they would yield any results.

Solution

The solution to this problem was to teach them about marketing, market research and market development so that they would understand how to build their own plan. We worked together on the process of uncovering what this product did that other products couldn’t do. It can be hard to look at your own product and spot what others see as the ‘thing that solves the real problem’. By interviewing existing clients, looking at competitors, understanding challenges in various industries, we finally found three distinct claims that everyone ignored that actually had the greatest value for a certain group of prospects.

Additionally after 20 years in business, the product had some very robust functionality and it did not price out after implementation nearly as high as its brand name competitors. When this research was done, then we had to find those organizations that had these problems where the company actually had reference clients and build out a database.

When a company doesn’t have a well known brand name and there is a lot of competition which results in noise in the distribution channel, advertising is a waste of time. Public relations is the best tool. An integrated marketing strategy using PR, Web 2.0, direct email and immediate ‘taste tests’ direct experience is vital. Together we shaped a marketing message, case studies, press releases, a web 2.0 strategy, measurement, KPIs and a lead generation system that tied together to become their call to action. We then coached the senior team in how to work with and use the message, how to build capacity to manage the growth and how to constantly evolve and improve the messaging system so that it would attract motivated buyers within two different and fragmented target markets.

Result

The time-intensive research and market focused discipline combined with a dedication to web 2.0 and public relations approach rather than expensive advertising started to pay dividends. In the first year, they achieved 400% growth in their sales calls and started winning business from much larger competitors. Because of this company’s dedication to service and responsiveness over the years, their few reference clients were willing to become champions for the company. One even voted the software client the most valued vendor amongst numerous other government vendors. Most importantly, we proved that there is a future and that revenue and gross margin growth are possible, even when it looks impossible.

Greening a New Product in an Old Line Business

Case Study Project Description

Port Townsend is a smaller paper mill that was in the process of converting to completely recycled feedstock (in order to remain competitive), to make Kraft Paper and other value added products in. Their goal was to find higher value applications for the paper they made to get out of the commodity business and to become much more environmentally responsible. They were looking for ways to find new product opportunities that would position them as the first mill to use 100% recycled content material for paper.

Project Problem

The biggest challenge was to find product applications that had secure market niches, little competition and large volume potential since paper mills make product by the ton. We suggested going to technology sources like Battelle National Labs and developing some industry discussions with potential strategic partners who could participate with Port Townsend in developing new products.

Solution

Battelle Labs has a mandate from the US Department of Energy to focus on what the pulp and paper industry should become in the future. They take two approaches to help companies like Port Townsend Paper:

Discover what products are possible given the state of certain technology and processes that they have identified in their research

Present market-driven ideas for products that they have determined will solve a problem or be in demand in the future.

In return, they want to be able to share the market information that we and Port Townsend Paper brought to the process with other clients and other Battelle research areas. Their goal was to create new products that solve current problems affecting many environmental, economic and social issues.

Battelle arranged a meeting with nine different scientists at the lab. We generated nine different product opportunities, all of which would require research funding from Port Townsend for work to be done. Many of the options were for agricultural markets. Port Townsend decided to do some research on potential market opportunities for such products before they funded any technical research

We put Port Townsend Paper in touch with another client, Global Warming Research & Development Corp. (GWR&D) to see if Kraft Paper could be used as a soil builder and moisture retention system for planting trees in the desert. Another meeting with Battelle was scheduled which included GWR&D to discuss the theory and get more information on desertification problems. The results of the meeting proved that the paper would be a good application for this use.

Results

We explored the competitive market for molded pulp packaging. We found the non-toxic adhesive products they can license for developing a new paper masking product for selling through Home Depot. Port Townsend signed an agreement with GWR&D to supply paper for their test trials of their watering technology for use in solving desertification problems. We helped them do trials on gift wrapping and molded pulp packaging. Eventually they were able to produce packaging, high end shopping bags and recycled-kraft paper and today are an environmentally sophisticated paper producer reclaiming millions of tons of paper from the waste stream.

« Previous Page — Next Page »