Execs offer insights on growing business
The economic environment is ripe for mergers and acquisitions, but they require much more than a grab-and-go approach, experts say.
A number of equity investors gathered last week at Westchester Country Club in Rye for the third annual Association for Corporate Growth-NY Manufacturing and Logistics Conference to talk growth in post-recessionary conditions.
“We haven”™t changed our corporate strategy,” said David Siegel, senior vice president for strategy and corporate development for 1-800-FLOWERS. “As the economy hits, it was a great opportunity for us to knock out businesses and channels that didn”™t make sense for us to own (such as catalog channels). We”™re getting more aggressive in franchising. We have been and will become more aggressive in acquisitions. We will look to acquire more vertically integrated companies.”
Stamford, Conn.-based Pitney Bowes Inc., on the other hand, found itself rethinking corporate strategy.
“We”™ve had a certain way of doing things for a number of years and in recent years, as communication channels have changed, we”™re trying to become much more flexible in our cost structure,” said Jeff Brennan, Pitney Bowes director of corporate development. “Fixed cost is so heavy that this environment has taught us we have to be a lot more flexible with that. It was a different way of approaching how we do what we do.”
Echoing his sentiments was William Jennings, chief financial officer of Hudson Baylor Corp. in Newburgh, an independent operator of commercial and municipal recycling facilities.?Jennings and his management team “saw a few operators enter the industry that may have just been benefiting from bubbles in commodity prices” but was initially surprised when they did not pan out into acquisition opportunities.
“Our management team really had to look at our core and what we learned was you really have to assess yourself all the time and valuate what is the core of your business,” Jennings said. “Protect relationships you have with key customers and suppliers because when times are dark, you will need them.”
Hudson Baylor is now evaluating growth opportunities in the marketplace.
“This company is about $55 million in sales and it”™s fun now to be at a point where instead of just reacting to opportunities, we”™re actually trying to select and filter those we want to go for,” Jennings said.
On the opportunities and challenges for middle-market companies when distressed debt comes due, the lending remains a concern.
“I am in the middle of a refinancing and I”™ve been very fortunate, but it”™s way tougher than in 2005,” said Brian Fitzpatrick, president of Bentley Laboratories L.L.C. in Edison, N.J. “It”™s slower and they want a lot more control. You can get a big pushback when you try to negotiate. But if a company is secure, the lending is better.”
Laurent Paty, a senior executive at Petra Solar Inc. in South Plainfield, N.J., foresees “hundreds of middle-market solar companies that when some debts arrive at maturity, I think a lot will disappear.”
In an instance where an acquisition occurs, “business ownership is critical and you should have an integration manager owning the integration,” Siegel said.
Execute quickly and have frequent communication with those onboard, the panelists agreed.