Since 2006, The Dohmen Co. has made nine acquisitions and sold three divisions. And the 161-year-old company is gearing up to make more acquisitions as it transforms itself again.
Cynthia LaConte, chief executive officer of Dohmen, will give the keynote address at the 12th annual M&A Forum presented by BizTimes Media.
“Our goal is to continuously apply innovative thinking to how best to realize our vision,” LaConte said. “That means we stay vigilant about monitoring what business models can move the needle and which ones can’t.”
Dohmen has thrived over the years by bringing innovative solutions to market by either buying or building them, she said.
“The other side of that coin is to acknowledge that some business models reach a mature phase of their life cycle or they may need a different level of capital investment,” LaConte said.
Most recently, Dohmen sold its Life Science Services business; launched a new subsidiary, Dohmen Constellations; and transitioned to being a family-owned benefit corporation owned by a private foundation.
“We have a long tradition of innovation at Dohmen, and we’ve been successful staying focused on the future while staying true to our vision and values,” she said.
Following LaConte’s address, there will be two panel discussions: “Buy Side Preparation: How to Seize the Moment” and “Sell Side Readiness: How to Prepare for Your Moment.”
The Buy Side Preparation discussion will cover opportunities and risks associated with buying a business; implications of mistiming the market; and managing the before-and-after of a purchase. Panelists will include: Brian Baker, president and CEO of Sentry Equipment Corp.; Sequoya Borgman, managing director of Borgman Capital LLC; Jim Frings, president of G3 Industries Inc.; and Derek Smith, commercial bank executive and senior vice president at Old National Bank. BizTimes managing editor Molly Dill, who covers financial services news for BizTimes, will moderate the discussion.
Before a potential buyer can even get to the point of making an offer, there are many potential candidate companies to consider, and patience is a virtue, the panelists said.
“When I bought G3, it took me three years to find and acquire the business,” Frings said. “In the process, I looked at over 100 companies and I put in offers on eight.”
When considering buying a business, it’s key for the acquirer to conduct very thorough due diligence and make sure the business is a good fit financially and culturally, Smith said.
“I would really think through: is this core to your business? What’s the strategy and plan?” he said. “Make sure you’re adequately capitalized and you have the working capital needed to bring this into your business.”
Baker learned firsthand the level of due diligence required when an acquisition failed and he had to abandon it – along with a larger sum than the transaction price.
“You can just basically make blocking and tackling mistakes where you misjudge something or you don’t do all your homework and it can have bad consequences,” he said.
Frings has experienced acquisitions both as a strategic buyer at G3 and now as co-founder of a private equity firm, Wisconsin River Partners.
“As a principal of course you can blow it and lose all your money and all that,” he said. “As a private equity person it’s less personal, but the challenge there is that you have investors and having those fiduciary responsibilities is the daunting piece.”
As a private equity buyer, Borgman has learned the importance of not making changes too quickly.
“We find one of the biggest risks besides the leverage on the company…is really the transition from the owner-operated or owner-bound business to more of a professional management like we would normally put in place and that’s a very high risk proposition,” he said.
“It’s hard for the seller, oftentimes, to operate under conditions other than the ones he sets for himself or herself,” Frings said. “So it sometimes can be a struggle to have a different strategy and a different feel and culture of the company.”
If you’re buying a business in a cyclical industry, it might make sense to put an earnout agreement in place to protect yourself, Baker said.
“They’re upside for the seller so if it’s really successful, the seller’s going to make more money than if they had just locked in the price and paid that,” he said.
It’s also insurance for the buyer, such as when Sentry bought a business that was was heavy in oil and gas and then a year later, the bottom fell out of the oil market. With the earnout in place, Sentry ended up paying less for the company.
The “Sell Side Readiness” panel will focus on personal readiness versus market readiness; driving value through business readiness; and considerations after the sale. Panelists will include: Rick Blaha, president of Pak-Rite Ltd.; Dr. Aly Gamay, president and CEO of DreamPak; Steve Peterson, managing director and co-founder of Bel Air Growth Partners; and Nate Neuberger, shareholder at Reinhart Boerner Van Deuren S.C. Ann Hanna, managing director and owner of Taureau Group, will lead the discussion.
Blaha sold Milwaukee-based specialty packaging manufacturer Pak-Rite to Grand Rapids, Michigan-based Universal Forest Products Inc. in October.
In her work with business owners, Hanna has found health considerations often force a sale.
“Business owners tend to intellectually focus on market readiness, but at the end of the day they end up generally choosing to move forward due to personal reasons,” she said.
Sellers should plan ahead to give themselves the opportunity to choose the timing, and drive the best possible valuation, Hanna said.
“They should make sure the business is not dependent on them. They should be in a situation where sales is growing and EBITDA is steady or growing,” she said.
And since it’s a seller’s market, business owners should consider taking advantage of it, Hanna said.
Following the panels, attendees will have the opportunity to attend one of three concurrent breakout sessions: “Maximizing Company Value – Beyond EBITDA,” led by Ann Hanna and Corey Vanderpoel, managing director and owner of Taureau Group; “An Honest Discussion about Financing the Deal,” led by Brian Baker, Derek Smith and David Bartelme, managing director at Borgman Capital; or “Avoiding Deal Killers…There’s Always Something,” led by Carl Kugler, shareholder at Reinhart Boerner Van Deuren S.C.
The M&A Forum will be held on Wednesday, April 3, from 7 a.m. to 11 a.m. at The Pfister Hotel, 424 E. Wisconsin Ave. in Milwaukee. The theme is, “Selling or Buying a Business? Don’t Miss Your Moment!” For more information or to register for the event, visit biztimes.com/maforum.
