Post-Integration Manufacturing M&A Planning: Getting the Most from the Deal

Post-Integration Manufacturing M&A Planning: Getting the Most from the Deal

by | Nov 28, 2023

The world of manufacturing investment banking tends to focus on everything that comes before the deal: regulatory snafus, final sale price, and the challenges of inertia. But for most companies, success unfolds during the post-merger integration, after the deal is sealed. This success relies on careful planning to ensure the deal realizes its promised value and maximizes time, effort, and talent.

Here are five strategies to ensure that, when the deal closes, you can capitalize on the opportunities and steer clear of potential pitfalls:

Identify and Understand Value Drivers

Start with what creates value for your business. Identify all the ways your business creates value and make a clear plan to succeed on each front. It’s not enough to simply point to potential sources of value. You must have reliable metrics for determining how much these value drivers are worth and how your business intends to drive that value higher. It’s good practice to prepare backup plans and be ready to adapt quickly should market or other factors change.

Know the Importance of Governance Structure

If you’re merging two companies with distinct cultural and operational differences, you’ll need to establish a new governance structure that helps expedite integration and reduces the risk of value dilution. Instead of creating functional teams, try defining cross-functional value-creation groups and focusing on solutions that address multiple functions. Start building your governance structure early in the process. Planning ahead will help ensure a smooth integration of operations and safeguard the value of your business.

Make a Diligence “Clean Room”

During the due diligence phase before closing a deal, having timely access to necessary data is critical. Delays can cause the deal to lose momentum. If you can’t produce the data a buyer needs, they may begin to lose interest. Using a “clean room”, where a neutral third-party vendor or individuals without conflicts of interest share data between the parties, can help you expedite the process. This not only accelerates due diligence but can also help with assessing future synergies and cost savings—a key consideration for integration planning.

Design a Detailed Operating Model for the Value Chain

You must have a deep and complete understanding of both company’s current people, systems, processes, and assets. This is the foundation upon which the team will build the new business, leveraging the respective strengths of each original company. The changes you make to the operating model depend on the type of deal and its goals. A small tuck-in may not require dramatic changes. A transformative deal, by contrast, presents the opportunity to implement sweeping reforms that increase value.

Pay Attention to Company Culture

Culture is an often overlooked element in the deal, and it’s the one that’s most likely to send the deal awry. Shifts in corporate demographics, management style, requirements, benefits, and more can be real challenges for your workforce—which in turn can create serious challenges for the business. The unspoken dynamics—who holds the power, who makes decisions, and how employees are treated—carry immense weight. So, acknowledge these differences openly and find ways to bridge these gaps.

Post-merger success hinges on a seamless integration of two businesses. You’ll need astute planning, foresight, a deep understanding of the two cultures, and the ability to adapt swiftly. Whether you’re in the midst of a merger or contemplating one, NuVescor can help you with integration planning. Contact us to learn more about how we can help you negotiate a successful deal for you and your business.

This blog was originally published in May 2021 and newly updated in November 2023.

5 Tips to Help the Acquirer of Your Manufacturing Business Succeed

5 Tips to Help the Acquirer of Your Manufacturing Business Succeed

by | Nov 15, 2023

5 Tips to Help the Acquirer of Your Manufacturing Business Succeed

As you move toward closing the sale of your business, it can also be a very stressful time for your buyer as the reality of running a new business draws near. Here are five ways you can help your buyer feel more comfortable and transition to ownership successfully.

Hand Over the Right Information

As you approach closing, give the buyer a list of all service providers that are crucial to your business operations. These providers may be able to offer the buyer better terms for business insurance, payroll, banking, employee benefits, or 401Ks because they already have a deep understanding of the business.

Introduce the Staff

Your team trusts you and has been the backbone of your success. Introducing your team to the buyer, gives them the opportunity to ease any concerns and build trust in the new leadership.. Work out a communication plan that fosters positive interactions and allows your team and the buyer to establish a rapport.

Take Ego Out of It

It’s natural to feel attached to the business you’ve nurtured for decades. You may believe no one else can run your company quite as well as you can. You may be right. However, letting go means letting the new owner take the reins without interference.

Resist the urge to micromanage or criticize their decisions. Instead, support the buyer and encourage a positive atmosphere among your team. Encourage stakeholders to direct any questions to the new owners. Your ego has no place in a sale.

Introduce the Customers

Your loyal customer base can be a valuable asset, but you need to make sure that loyalty to the business continues even when you step back. Gradually educate customers about the sale, and be sure to communicate openly about the benefits they can expect. Let them know what’s in it for them.

Use your credibility with customers to foster trust in the new owner, assuring them that you believe in the sale. . By strategically managing this transition, you’ll safeguard the long-term survival of the business you have built.

Share Cultural Knowledge

Each business has its own unique culture. These soft elements of a company can be hard to quantify or describe, but sharing core values, traditions, and practices can help the buyer understand this vital aspect of your business. . Talk openly with the buyer about your company culture—what makes it different, what’s important to stakeholders, and why you believe your company has thrived. Then, encourage the buyer to build on that culture to grow the company further.

At NuVescor, we’ve helped many business owners navigate the exit from their business, and we’ve gleaned these tips from our years of experience. Contact us to learn more about how we can help you secure your financial future and your company’s legacy as you move to your next chapter.

This article was originally published on June 4, 2021 and newly updated on November 15, 2023.

 

Read next: Want to Improve M&A Deal Value? Focus on Optimizing Manufacturing

Maximizing M&A Benefits: Strategies and Case Studies for Growth

Maximizing M&A Benefits: Strategies and Case Studies for Growth

by | Nov 8, 2023

Maximizing M&A Benefits: Strategies and Case Studies for Growth

The most successful M&A transactions are those that enable multiple synergies and drive increased cash flow for each participating business, surpassing what each could have achieved independently.

 

The Benefits of M&A (Mergers & Acquisitions)

When two companies merge, the resulting entity can experience significant revenue growth in several ways:

  • Diversification of product or service offering. The merged entity can combine its offerings for a wider range of products or services, potentially upselling to existing customers and reaching new ones.
  • Cost savings. Eliminating redundant functions or operational inefficiencies leads to reduced expenses.
  • Expanded geographic reach. Access to new customers and markets due to a larger footprint.
  • New distribution and marketing channels. Opportunities to tap into new market share.
  • Enhanced products, services, technology, or branding. Improved offerings that better cater to clients’ needs.

What does that look like in practice? Take a look at two quick case studies that demonstrate how companies can benefit when an M&A deal is handled well:

 

eBay’s Acquisition of PayPal

By leveraging each other’s customer base, offering complementary services, and enhancing customer convenience, eBay and PayPal created synergies that benefited both companies. PayPal edged out its competitors to become the default company for online payments, and eBay eventually required users to use PayPal for transactions. The result? PayPal increased sales volumes and dominated the market, while eBay benefited from the convenient payment processing option.

National Oilwell and Varco International

National Oilwell was a leading oilfield drilling equipment designer in the early 2000s. In 2005, it acquired 51% of Varco International’s stock. Varco was a leading provider of consumable replacement parts and engineered products. The $2.5 billion deal created the largest oilfield services equipment manufacturer in the U.S.

The acquisition allowed National Oilwell to provide replacement parts and maintenance to its oilfield customers at high margins, securing consistent cash flow. It also expanded National Oilwell’s global reach, provided access to Varco’s valuable intellectual property IP, and reduced competition by consolidating vendors.

Due to the merger, National Oilwell magnified its energy sector presence and has gained significant cross-selling options.

 

Achieving the Goal

The ultimate goal of any merger is to enhance positioning, reduce competition, realize synergies, and drive growth. For a successful deal, the two businesses must have compatible cultures as well as complementary products and services. The deal also must be viewed through a customer-focused lens to ensure that it aligns with the voice and needs of the customer.

 

Preparation for a Successful Transaction

Before bringing a company to market, the team at Nuvescor Group works with them to identify suitable buyers who meet the criteria for complementary services and compatible culture and are able to capitalize on the opportunities presented by the deal. This meticulous process often results in a more focused experience and higher valuations for clients.

Contact us to learn more about how we can help guide you through your buying or selling journey.

 

This article was originally published on March 21, 2018 and newly updated on November 7, 2023.

Read next: The Exit Checklist: Your Five-Step Plan to a Successful Business Exit​

On-Demand Webinar: The Future of the Automation Industry: Is It Time to Buy or Sell?

On-Demand Webinar: The Future of the Automation Industry: Is It Time to Buy or Sell?

by | Sep 30, 2023

On-Demand Webinar

The Future of the Automation Industry: Is It Time to Buy or Sell?

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On-Demand Webinar: The Future of the Automation Industry: Is It Time to Buy or Sell?

The automation industry is at a pivotal moment. Technological advancements, rising labor costs, and an ever-increasing need for productivity and quality are driving unprecedented growth. As the market expands, business owners within this sector face a critical decision: Is now the time to buy or sell?

Join NuVescor for an insightful webinar that explores the current market trends and factors influencing the decision to sell an automation business. Whether you’re approaching retirement, seeking new ventures, or simply curious about the future of the industry, this webinar is tailored for you.

 

What You Will Learn:

  • Market Trends: Understand the latest developments in the automation industry and how they impact your business.
  • Buy or Sell Decision Making: Gain insights into the factors that should guide your decision to buy or sell in the current market landscape.
  • Expert Perspectives: Hear from others as they share their experiences and insights on navigating the automation market.
  • NuVescor’s Approach: Learn how NuVescor’s sell-side services can support automation business owners considering a profitable exit while preserving their business legacy.

 

Download the Webinar Presentation

Presented By:

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Randy Rua
President, NuVescor Group
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Randy provides vision, leadership and extensive knowledge to guide NuVescor confidently towards its goals. He first experienced the M&A industry when he decided to purchase a business through a business broker. Later, as he worked closely with an M&A advisory firm to sell that business, Randy saw true value in working to fulfill dreams through successful business ownership transitions.

As he worked at a few firms over the next five years, Randy began developing his own unique process and experienced great success. Randy founded Rua Associates in 2010, and in 2016 he and his wife and business partner, Tami, decided to purchase NuVescor and apply Rua’s successful process to NuVescor’s clients, seeing immediate results.

Randy has a BS in Engineering from Calvin College and an MBA with a concentration in entrepreneurship from the University of Southern California. He is a Certified Business Appraiser through the National Association of Certified Valuators and Analysts, a Certified Exit Planning Advisor through the Exit Planning Institute, and a Certified Advisor for the Value Builder System. In addition, Randy has served as an adjunct professor at Calvin College and Grand Valley State University.

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Eric FoggAdam Crandall
Chief Revenue Officer at Addtronics Group
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Adam Crandall is an engaging Executive possessing a winning blend of strategy, business development, operations, leadership, client relationship management, negotiation and communications acumen. Crandall has a successful track record building high-performing teams and leading new commercial initiatives.

Previously, Mr. Crandall served in various senior leadership positions at VWR International (now Avantor), Refractron Technologies Corporation, Micro Instrument Corporation, and Dynamic Design Solutions. In his current role as CRO of Addtronics, he continues to build and lead sales, marketing, and applications teams, while also driving revenue growth.

He embraces challenges with enthusiasm and consistently delivers solutions that optimize performance and create long-term value. With a forward-thinking approach and a commitment to excellence, Adam Crandall is a driving force behind Addtronics’ continued success in the ever-evolving landscape of robotic solutions.

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Corey Carolla
Engineered Solutions Provider, COMI Americas
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Corey is with Comi Americas, where he focuses on identifying and evaluating new growth initiatives, primarily through strategic partnerships, talent development and long-term corporate strategy, to provide their customers with engineered solutions, across industries and sectors. Corey excels in guiding and supporting companies to create, plan, and execute on their journey to the next level, integrating automation and process improvement to directly impact the company’s efficiency, and their bottom line.

Corey brings a unique skill set coupling his Economic, Business and Workforce Development background with his 25+ years of experience in manufacturing. Having held key roles in Economic, Community, Workforce, and Business development, Corey continues to fuel his passion for business startup, and recovery. Corey has assisted in the creation and implementation of business and economic development initiatives at regional, national and international levels, supporting economic vitality globally.

A key to Corey’s success is his keen ability to identify, create and attract solutions for new and evolving industries. In working directly with key business, community, economic development, and education stakeholders, and industry supply chain, Corey plays an integral role in the strategic planning of activities to support expansion and further development, particularly in manufacturing.

Ready to Sell?

Our initial consultation is designed to understand your acquisition criteria, ensuring a tailored approach throughout the selling process. Schedule a meeting with our team below.

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3380 Chicago Dr, Hudsonville, MI 49426
616-379-4047

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Want to Improve M&A Deal Value? Focus on Optimizing Manufacturing

Want to Improve M&A Deal Value? Focus on Optimizing Manufacturing

by | Aug 29, 2023

Want to Improve M&A Deal Value? Focus on Optimizing Manufacturing

Your manufacturing business is thriving, you’re proud of your legacy, and you want to retire knowing that the business is in good hands for years to come. It’s a common story, but finding the right buyer and minimizing disruption to the business and your loyal employees while you go through the process of selling can feel overwhelming.

It’s a big decision, but at NuVescor, we’ve worked with many business owners in your position, and one of the best pieces of advice we can give you is to focus now on optimizing your manufacturing to make your business as attractive and as stable as you can before entering the market.

Why Boosting Manufacturing Performance Matters in M&A

Let’s start at the beginning. Optimizing your manufacturing performance typically results in increased efficiency, reduced production costs, and improved profitability. A boost to your performance increases gross margins and releases cash. These factors can enhance the overall value of the business, making it more attractive to potential buyers and potentially leading to a higher sale price.

Here are some key steps to help you realize additional value and position your business for sale:

1. Prioritize Business Continuity

Mergers can be disruptive; it’s your job to minimize disruption to your customers and ensure that the merger ultimately provides additional value. You can help keep disruption to a minimum by fine-tuning your manufacturing processes to boost agility, responsiveness, and efficiency so that your operations can seamlessly absorb changes.

Proactive supply chain management, coupled with streamlined manufacturing, minimizes disruptions to product availability or delivery timelines. Your transition plan should also include getting plant certification and other regulatory requirements in place as early as possible.

2. Focus on Streamlining your Network Design

Plant rationalization can be a key value driver, significantly reducing fixed costs. Reviewing your current operating practices and strategy and comparing them to the deal’s goals can help you define an optimal manufacturing network and take strategic steps to achieve it. You’re looking for areas where you can enhance efficiency, agility, and overall performance while reducing redundancies, bottlenecks, and inefficiencies.

Key aspects of streamlining network design in manufacturing operations include:

  • Analyzing and redesigning the physical arrangement of machinery and workstations to minimize material movement, reduce production delays, and optimize workflow.
  • Establishing well-defined and streamlined workflows that minimize unnecessary steps, handoffs, and waiting times.
  • Introducing automation and integrating advanced technologies, such as IoT devices, sensors, and data analytics, to enhance real-time monitoring, data collection, and decision-making. This leads to improved quality control, predictive maintenance, and resource allocation.
  • Designing the network to accommodate changes in demand or production requirements. This includes creating modular production setups that can be easily reconfigured or expanded based on evolving needs.

Streamlining network design in manufacturing operations involves optimizing the entire operational ecosystem for higher efficiency, reduced costs, improved quality, and increased responsiveness. This approach will help your business adapt more effectively to changes, including those brought about by mergers and acquisitions. Note: Depending on your state, there may be funds available to help pay for some manufacturing improvements.

3. Efficiently Manage Changes to Manufacturing Sites

In the lead-up to a sale, closing, merging, or significantly altering manufacturing sites might be necessary to enhance the business’ overall value. This transition requires a careful execution plan, including options for relocating products and equipment, harmonizing operational changes, and ensuring employees know their roles.

To minimize disruption and maximize the attractiveness of manufacturing operations, executives need to identify constraints and think through product processes and capabilities, current and potential volumes, costs, labor, operational factors, and product mix.

4. Integrate Your Operating Model

Integrating your operating model means rethinking and adjusting how your business works to promote collaboration, sharpen the focus on customers, and maximize value. At the corporate level, you’ll focus on the degree of centralization, the extent of integration, and who fills which roles.

It’s also imperative to understand that changes may affect service and product quality. Be prepared to justify these tradeoffs and ensure wherever possible, you’re working to create more value and a better customer experience.

By optimizing your manufacturing processes, introducing automation, and thinking through your network design and operating model, you’re adding value to your business. You’re also helping ensure a seamless transition that safeguards your legacy and goals.

At NuVescor, we specialize in helping manufacturing business owners in the Midwest and beyond build the value of their companies as they prepare to exit.

Contact us to learn more about how we can help you make the best decision for you, your company, and your shareholders.

This article was originally published on May 3, 2021 and updated on August 29, 2023.

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Read next: Preparing Your Manufacturing Supply Chain for M&A