Partnering with a private equity group can drive tremendous growth for manufacturing and automation businesses thanks to the virtually immediate injection of funding and expertise that comes with these partnerships. It’s a major opportunity that many business decision-makers have leveraged to drive growth, but still remains underutilized by some. If you’re on the fence about partnering with a private equity group or just now starting to consider this option, take a look at these reasons why you need to partner with the right private equity group.

Private equity (PE) groups allow for rapid scale

Organic growth is excellent but scaling up a business quickly often requires funding and significant overhead, especially in manufacturing and automation. Partnering with a private equity group allows growth-primed companies to lean on their private equity partners for the capital required to invest in themselves. Whether that funding is needed for equipment, hiring, real estate, or any of the other expansive needs that can become a factor when scaling up a business.

PE groups provide leadership and experience

Private equity firms exist to boost efficiency and profitability. In working with other businesses, they can provide leadership and strategic experience and expertise. Many of these groups are very hands-on and provide valuable support and leadership to their growing partners with a focus on improving both their top and bottom lines.

John Garner, Head of New Business LDC, weighed in on this point in an article written for LDC.co.uk.

“While partnering with a private equity investor can enhance organic growth strategies,” Garner said, “It can also give management the confidence to try new strategies that may not have previously been considered, such as expanding internationally or buying complementary businesses to diversify services or increase market share.”

PE firms will help you complete your management team… and overstepping is very rare

According to co-founder and CEO of Gulf Capital, Dr. Karim El Solh in an interview with entrepreneur.com, “PE firms back management teams before they back companies. It is very important that the right management team is in place to execute on the ambitious growth plans. If a management team has a gap or uneven capabilities, the PE firms can step in and help strengthen the management team by sourcing experienced professionals from their wide network of contacts.”

He also added that, “In addition to the management team, PE firms will focus closely on the composition of the board and strive to attract the right mix of industry, strategy and finance experts at the board to help guide management on both strategy and execution. PE firms prefer to operate at the board level and empower the management team to execute their business plan. While they can help from time to time on a micro level or on a specific task, such as securing adequate bank financing, they prefer to remain involved at the board level and give the CEO and the team the free reigns and accountability to operate and achieve the business plan. However, they will step in and intervene if management is facing difficulties or not executing according to plans.”

If your goals are aligned with your PE group, growth will often follow

Another excellent point Dr. Karim El Solh brought up during his interview with entrepreneur.com is the importance of aligning goals with your PE firm. He explains that the PE group will spend considerable time drafting a proper business plan that all parties are aligned with upfront for good reason, “To ensure that management have clear goals to strive for and if they achieve them, the long-term incentive plan will ensure that they are properly rewarded accordingly.”

As Dr. Karim El Solh explains it: “By clarifying the long-term goals and linking financial rewards to them, PE firms ensure that the management team is properly aligned and everyone is working towards the same goals. Most long-term incentive plans include a cash (bonus) component and a stock component, which vests over time. Naturally, management is not allowed to sell its shares in the company until a proper exit is secured and both the PE firm and management are able to sell to the next buyer at the same time. By focusing together on the end financial result, the PE firm and management are completely aligned and share the same financial interests.”

When both PE firms and the management teams within businesses are pushing in the same direction, it is much easier for companies to scale quickly and efficiently – setting themselves up for long-term success.

If you’re a manufacturing or automation decision-maker who is looking to grow their business by partnering with a private equity group, NuVescor can help get you partnered with the right group. With years of experience and a proven process, our team delivers excellent results. Click here to get in touch with us.

When we last wrote about Mission Design & Automation, we were sharing the news that they were acquired by Concurrence Capital Holdings back in 2017. Now, 5 years later, we’re pleased to announce that the Ottawa County-based manufacturing automation company was named as one of The Michigan 50 Companies To Watch by Michigan Celebrates Small Business (MCSB). We’re proud to have been able to watch Mission grow after working with Rua Associates to represent Mission during their acquisition. We also think a lot can be learned from their example.

Here are several key takeaways for other manufacturing or automation businesses that are looking to sell and for companies looking to acquire those businesses.

Under new ownership, new growth is possible

Mission Design & Automation’s acquisition by Concurrence Capital Holdings has yielded positive results for both organizations. As a private investment and management firm, Concurrence was able to offer strategic capital, expertise, and partnerships to the already successful structure and technology of Mission. This allowed Mission even more room to grow and develop into the successful business we see today while allowing Concurrence Capital to benefit from that growth.

Commenting on the acquisition in 2017, Michael Brom, Managing Partner at Concurrence Capital Holdings predicted: “They are well-positioned for even greater growth as the automation industry continues to flourish. Jason Byrd and I are thrilled to partner with them and leverage our experience to help support their continued growth.”

Today, we are seeing that this prediction was correct both in regards to the growth of Mission Design & Automation and the growth of the manufacturing automation sector. In fact, the industrial automation market is expected to reach $355.44 Billion by 2028 with a CAGR of 9.2% between 2021 to 2028.

For sellers, a merger or acquisition can perpetuate your legacy

When you own a business, your employees rely on you. But it’s important to remember that deciding to step away does not mean your employees will not be taken care of. Mission Design & Automation’s success has allowed its employees to continue to grow and develop in their roles and responsibilities while also providing opportunities for promotion within the Concurrence Capital Holdings LLC network. A merger or acquisition can often lead to more jobs within the company allowing previous owners to improve the positive effects they have already had on their community even after stepping away.

Looking to build value with an exit plan in mind? Or looking to grow your business through mergers and acquisitions? NuVescor can help.

Whether you’re looking to buy, sell, or merge, Nuvescor can help you achieve your M&A goals. With years of experience and a proven process, our team delivers excellent results, whether you want to buy or sell a business. When you work with us, you are not just getting one person; we have a team of people who will help you with each different aspect of your business transaction.

Below is a list of all the services our team provides:

• Transaction Facilitation
• Project Management
• Market Development
• Financial Analysis
• Business Writing
• Transaction Support
• Access To Our Network of Potential Buyers & Sellers

If you’re interested in learning more, click here to get in contact with us!

Pennsylvania native Chris Gallagher grew up watching his grandfather, father, and uncles run The Walter B. Gallagher Company, a gaskets and seals distributor near Philadelphia. Little did he know then, that in 2017, he would take the role of CEO and grow the company not only organically but through numerous acquisitions. 

“My goal is to get to $100 million in sales for our company, and I think we’ll get there in the next three to five years,” Gallagher said recently about the business, now renamed Gallagher Fluid Seals, Inc. and based in King of Prussia, PA. “In 2014, we were a $17 million company, and next year we’re forecasting sales of $75 million — and that has come through aggressive M&A.” 

Chris Gallagher clearly conveys momentum. His company has completed multiple acquisitions since he stepped into his chief executive role, including three in 2022 thus far. In January, the business snapped up IES Technical Sales, a Danvers, MA-based provider of high-technology vacuum and semiconductor products. In March, Gallagher bought IEQ Industries, a Grand Rapids, MI-based virtual distributor of pumps and parts for use in commercial and industrial applications, largely for oil and gas production. And on May 13, Gallagher’s company acquired Packing Seals & Engineering, a Fitzgerald, GA-based distributor of gaskets, seals, and other sealing products. And according to Chris Gallagher, there’s more to come. 

By all accounts, it takes a village to operate and guide a rising star like Gallagher Fluid Seals. But there’s no doubt that Chris Gallagher, now age 42, is leading the charge with his eyes on growth through acquisition. His no-nonsense, straightforward personality has manifested well at the deal-making table and he has a knack for shortening the transaction process.

“My first impression of Chris Gallagher was that he was a genuine person —what you see is what you get,” said Joseph Bichler, former owner of IEQ. “By the end of that hour-and-20-minute meeting, I had a real sense that he was a man of integrity, and that gave me a sense of peace about completing the deal.” Gallagher Fluid Seals, Bichler said, was “the perfect buyer”, and the deal closed in a record two months.

Bichler chose to sell IEQ because he was ready to retire, and wanted someone else to take his six-employee business to the next level and expand on CXI, his company’s not-yet-launched asset management system that enables pump customers to order the right equipment and components, no matter their location. Chris Gallagher, meanwhile, was attracted to IEQ because the business was profitable (last year the company’s sales hit $6 million, Bichler said), had 10 websites used to promote its pumps and parts, and had developed CXI, which could be used for managing not only pumps but other products as well.

To help sell the company, IEQ hired NuVescor, a Michigan-based M&A advisory firm focused on manufacturing, who used the Axial platform to market the project. Almost 100 buyers in total inquired about IEQ, and eventually four active suitors remained. But in the end, Bichler only personally met with Chris Gallagher, and the two connected immediately. Gallagher “pushed hard delivering the first draft of the purchase agreement, and was responsive and timely,” noted Travis Ernst, NuVescor’s managing director. “He was able to move through the diligence process quickly.” Chris Gallagher made a cash offer —which was swiftly accepted— and his company retained all six IEQ employees who continue to run the systems and platforms today.

Milestones and Missions

The Walter B. Gallagher Company launched in 1956, and generated sales of $48,000 in the first year, according to the company’s current website. Walter’s mission was “to found and develop and grow an independent distributor of sealing products that could form a loyal customer base,” said Chris Gallagher about his grandfather. By 1961, the company was incorporated and surpassed its first $1 million in sales. In 1975, Walter’s three sons, including Chris’ father Brian, joined the business, and in 1983, Chris’ uncle Joseph was elected president and chief operating officer.

The company did a handful of acquisitions between 1983 and 1994, and then took a 20-year pause until January 2014, when it purchased Johnson Packings, a seal distributor and gasket fabricator in Massachusetts. With that deal Gallagher inherited 28 new employees and became one of the largest sealing distributors in the United States, the website reported. That deal was “a big swallow,” increasing the company’s sales by 50% overnight, Chris Gallagher said. 

Since stepping in as CEO, Gallagher’s desire to grow his business through acquisition has now intensified, and he is seeking deals not only in the fluid seals space but outside the company’s wheelhouse. “IEQ and some other opportunities that we’re pursuing right now represent an intentional diversification of our historical fluid seal focus,” he said.  

“It was opportunistic,” Gallagher added about the IEQ deal. “Historically our M&A activity has been focused on pure competitors in our distribution market space.”

Today, Gallagher Fluid Seals is a shadow of its former self. The company now has three divisions —fluid seals, fluid handling, and vacuum and semiconductor —and is heavily data driven. This live data gives personnel updated views of customer interactions and allows them to analyze “historical sales patterns to drive optimal procurement patterns,” which in turn helps company leaders “ensure that investments made in areas of the business are paying off,” Chris Gallagher noted. The business also owns numerous websites — some of which it inherited with IEQ —  and Gallagher said he wants the company’s growth to be “more ambitious,” with a focus on digital marketing and e-commerce across all of its divisions.

Chris’ dad, Brian, and his brother Kerry are currently key account managers at the company, and his youngest brother Brett works as a junior marketing analyst. As the organizational structure changes, Chris Gallagher may eventually “step out of the way of things and empower them to take leadership roles,” he said of his two younger brothers. He will soon be transitioning into a role as CEO of Gallagher Industrial Products, the newly formed parent holding company, which could unveil an opportunity for his brother Kerry to lead the fluid seals division at some point, he noted. 

To date, despite huge growth in the last decade and likely countless changes ahead, Gallagher Fluid Seals remains true to its core: to be an upstanding business that covets its loyal customers, something his family has always instilled. 

“I learned that your reputation as a company, as a brand, takes years and decades to build, and it can be lost in a heartbeat if you cut corners, if you are not ethical and honorable,” Chris Gallagher said. “And I’m very cognizant of that. Anytime that we hit a fork in the road… we’re always going to do the right thing for our customer.”