It’s Time to Sell
August 14, 2008
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?
August 14, 2008
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.
A 90 Year Old Manufacturer is Purchased and Downsized – Is There a Future ?
August 14, 2008
Case Study Project Description
The company had built its reputation on appliances, cookware and consumer durable goods. When a conglomerate bought them out, the senior leadership team left. The remaining managers were expected to determine how to pare down the product line and increase profits.
Project Problem
The remaining managers had never had to work through a downsizing exercise. They had been selected from middle management and put in a difficult situation to turnaround the company. Distributors relied on the huge variety in the product line to differentiate themselves in the market. When they heard their favorite products were going to be eliminated, they were told to step up sales or lose the line. The team needed help and guidance in how to execute this strategy without alienating their distributors and each other.
Solution
The team need to learn how to collaborate before they could discuss the new strategy. Times were difficult, tempers short, and this group had never worked together before. Not only did they not know how to have difficult conversations, each person was representing their functional area as ‘not needing to change’ but other functional areas ‘would have to change’ to meet the new requirements. Sales did not visit the Manufacturing floor, Marketing did not work in alignment with Sales, and Accounting did not track Gross Margin for any of the departments.
We worked simultaneously on clearing unfinished business between the individuals, acknowledging the difficulty of the situation and getting them to phase that all aspects of their company functions had to change including their own, in order to gain them the profitability they needed. Using their own experience of how difficult change can be helped them to understand their Distributors’ mind set and how to work through the inevitable show downs that were coming.
Result
Paring the product line down from 200 line items to 30 with the best gross margin took six months. Working through all the distributor conflicts, took another six months. The team would learn to work with our Smart Team tools to help them strategize which products and what approaches they would take to work with the distributors. Instead of leaving the difficult conversations to the Sales VP, because “that was his job” the team worked together to support the VP’s work and they visited distributors in teams. When the manufacturing floor struggled with the line change, the Sales VP would go with the Manufacturing VP and communicate the market needs as well as acknowledge the struggles on the factory floor.
Within two years of the acquisition, the company had become profitable enough that the conglomerate chose to sell them again for a profit. The team felt proud of their accomplishment, meeting the time line of their investor and the needs of the market place.
Manufacturing Case Studies
August 13, 2008
Manufacturers face unique challenges in this economy. Outsourcing is popular but difficult to manage. Transportation costs are constantly increasing. Workers are not as interested in careers in these old-line types of businesses. However, manufacturers are the backbone of our economy.
Our client companies needed smart efficient and fast growth strategies. Our approach is to ensure there are no disconnects between what the customer expects as communicated to the sales team and what they ultimately receive during installation and post sale follow up. There are a lot of steps in the process with opportunities for the ball to be dropped and the message to change. How does working on these internal issues forge growth in profits?
Read on. Here is a partial selection of the kinds of companies we helped grow. Need help getting growth from your manufacturing operation? Call 604-306-7707 to explore your options.
Manufacturing Case Studies