Sullivan shares M&A best practices

At BizTimes Media’s annual M&A Forum on Wednesday, keynote speaker Tim Sullivan, president and CEO of Milwaukee-based REV Group Inc., discussed the human element of buying and selling a multi-million dollar company– an experience he knows all too well, boasting 21 acquisitions during his career, with four occurring in the past 12 months.

For companies making an acquisition, Sullivan recommends maintaining–rather than laying off– the employees of the acquired company. This applies especially to the company’s entrepreneur, who should sign a three-year minimum contract, he said.

“Keep everyone,” he said. “The last very last thing you do on a deal is concentrate on human synergies. If you’re looking at human synergies, you’re missing the boat. They will sort themselves out over time. People will self-select themselves out. You’ll figure it out, but don’t go too quickly because you can take a tremendous amount of knowledge out of a company and that is the value of a company.”

Sullivan joined REV Group Inc., a specialty vehicle manufacturer, in 2014 after previously serving as CEO of South Milwaukee-based Bucyrus International Inc. and then Gardner Denver, which he moved from Pennsylvania to Milwaukee.

Since assuming his role at REV, the company has grown from 14 to 22 manufacturing plants across the United States, and has made six acquisitions, including Lance Camper Manufacturing Corp. in January. REV does not currently have a Wisconsin manufacturing plant, but Sullivan said that will eventually change.

Sullivan also discussed timing and preparedness as critical components of completing a merger or acquisition deal. A deal should close within 60 to 90 days of the agreement, but even before the agreement, he said, the deal should be framed and should reflect the broader goal.

“Visualize integration and quantify the result before even going after the target,” he said. “We won’t even have the initial discussion with the entrepreneur or the family until we know what the end game is and how we think we can integrate the business.”

The event also featured two panel discussions.

The first panel discussion, “Motivators for a business sale: Lessons learned,” included panelists Lawrence Burnett, a shareholder with Reinhart Boerner Van Deuren s.c., John Lauber, founder and former owner of LauberCFOs, Linda Mertz, CEO of Mertz Associates Inc. and Mike Graf, former owner of Letterhead Press Inc. The discussion was moderated by Ann Hanna, managing director and owner of Taureau Group.

The panelists shared stories about their exit strategies and the process to deciding how to sell their businesses. The panelists, along with Sullivan in his keynote address, especially noted the importance of using outside professionals such as accountants and attorneys to execute a deal.

“You have to have people who are skilled working on your team,” Mertz said. “We’ve got an excellent investment banking community here within Milwaukee that add a lot of value and judgement. You need to look at your team to make sure you are well represented. Those who are not as well represented end up with something that is not as much of a win-win as what it otherwise could be.”

The second panel discussion, “Recapitalize or sell? Know the benefits and pitfalls before deciding” included panelists Jonathan Eder, co-owner of In-Place Machining Co.; Steve McGlothlin, executive vice president and chief credit officer of Old National Bank; Ron Beam, a former owner of Complete Office of Wisconsin Inc.; and Paul Sweeney, partner at PS Capital Partners. The discussion was moderated by Molly Dill, managing editor of BizTimes Milwaukee.

The speakers discussed the pros and cons of either completely selling their company or recapitalizing– selling a portion but staying on board– and the key lessons they’ve learned from letting go of operations or staying involved.

“Obviously, the first thing you decide or evaluate is the offer itself,” Beam said prior to the event. “And the second thing is who it comes from. Most owners, I would think, care about the people that helped build their company and make sure the buyer’s not going to tear it up.”

The M&A Forum, which was held at the Pfister Hotel in downtown Milwaukee, concluded with three breakout sessions, “Building Company Value – Timeline to Exit,” “Behind the Curtain – Financing Options and Little Known Secrets of M&A,” and “The Sale Process: What to Expect When You’re Expecting to Sell.”