Here you’ll find just a few of the many stories of how we collaborated with our clients to ensure their business continuity and growth.
Some of our stories.
That’s what we deliver through strategic acquisitions and sales. We’re strategic growth specialists.
Valley Aurora grew from $8 to $116million, capturing 50% market share in one market segment in just 11 years.
Four strategic acquisitions were an important part of this success.
This is where the basis of our strategic approach to acquisitions was developed.
While we have added tools to our toolbox over the years, the basic philosophy and approach has not changed.
The owners bought a small, run-down distribution company in a major U.S. metro market, one of the largest in the country for their industry.
Their vision was to become a leading distributor in the metro area.
Their strategy was to continuously search for and learn how to create greater value for all stakeholders.
Their strategy created dramatic growth. But they could not grow quickly enough to meet the demand through organic growth. The answer was acquisitions.
Their sales force could not sell their entire product line effectively because customer channels had different needs. Some salespeople were great at selling to one channel but terrible at selling to the other, and vice versa.
Therefore, they divisionalized their customers and sales force based on customer needs and salesperson skills that synched with those needs.
They applied this approach to their acquisitions. They kept the entire sales force from the acquired company but divisionalized them in the same way. The result was that some customers had two and even three salespeople calling on them but representing different products and brands.
This doubled or tripled their share of mind . . . and their sales with their customers.
Conversely, they consolidated their warehousing and distribution activities into a single operation. This created dramatic efficiencies. It also gave them scale to justify investing in automated equipment and information systems that improved their profitability even more.
These new assets and capabilities drove other value for customers. With the new information system, Valley Aurora could predict 90 days before a customer would run out of product.
The customers then had time to reprint their price lists so they didn’t have to disappoint customers by not having the items listed.
Similarly, they were able to tell customers about their sell-through rates and revenue by location – very valuable information. They also helped restructure their customers’ offerings to drive even more sales.
Their experiences led them to adopt the discipline of drilling down into every aspect of their business as well as their customers’ businesses.
They were relentless in searching for and finding more ways to create value.
This never-ending search was applied to each acquisition as well.
They analyzed each acquisition to learn where and how they could create exceptional value.
Then adopted that throughout the combined companies.
These new assets and capabilities drove other value for customers. With the new information system, Valley Aurora could predict 90 days before a customer would run out of product.
The customers then had time to reprint their price lists so they didn’t have to disappoint customers by not having the items listed.
Similarly, they were able to tell customers about their sell-through rates and revenue by location – very valuable information. They also helped restructure their customers’ offerings to drive even more sales.
These examples illustrate the strategy and approach used by Valley Aurora.
This became the basis of our strategic approach to acquisitions and sales and our Value Framework.
While the Framework has grown in depth and sophistication over the years, the focus is still the same.
This was a high leverage recent acquisition with 10 operating divisions and 1,100 employees.
It had $350 million in sales, was losing $5 million per year, and had $52 million in debt.
It was technically insolvent; the bank had already written off $22 million of the debt when Mike Berns was brought in to turn the company around.
Using what is now the BizSplice Value Framework, he sold off 9 divisions that were each losing money in a total of 22 transactions in 24 months. The proceeds paid off $48 million of the debt.
The remaining company (the manufacturing division) had revenue of $100 million, 112 employees, $2 million in debt, and generated $5 million in profit per year.
Using what he learned doing strategic acquisitions, Mike reversed the process to apply it to selling companies strategically.
He taught each buyer how their strategic acquisition would work and what the benefits would be to their company. None of them had ever done an acquisition before.
Mike began by analyzing the Value Accelerators to identify where the value was in each of the ten divisions. There was one manufacturing and nine distribution divisions. The management team thought that the manufacturing division should be sold off.
He concluded just the opposite – sell off the distribution divisions and keep the manufacturing.
His findings showed that many of the manufacturing division’s products were the category leader in the mid-west with huge profit margins. They also had great customer brand recognition and loyalty. But these products were being neglected and underpromoted by Philips. Conversely, the distribution divisions were selling too many product categories that were diluting their efforts and profitability. They weren’t the leader or expert at anything. It would have taken too much time and money to fix each division.
Through the analysis of each division, he recognized that each had multiple components that had value, but to different buyers.
Therefore, he sold the part of each division to the buyer where it would create the greatest value.
This allowed Mike to charge a premium for each division part rather than cents on the dollar if he had sold the whole division to a single buyer.
Because he picked his buyers based on their strategic fit, they each ended up with exceptional value for their companies. In one instance, the buyer of a portion of one division doubled his revenue to $40 million and double his market share to 50%.
This gave the buyer the pricing power of a market leader. And as Mike projected, the acquisition didn’t just double his profits, it tripled them.
One doesn’t buy a company or part of one and just expect the profits to role in. There are numerous key activities that must be undertaken in each strategic acquisition in order to capture all the potential value.
These activities are unique to each situation. Mike provided each of buyers with a roadmap of the key activities for their situation.
Click to learn more about the BizSplice Framework