This article by Christina M. Fuges originally appeared on the Modern Machine Shop website.
With the average age of mold shop ownership nearing 60 and many owners wanting to settle into retirement, an acquisition sounds like a sensible option as long as their people are put in good hands. Therein lies the problem. As stories of private equity firm buyouts gone wrong persist, ownership can be very hesitant to go down the mergers and acquisitions (M&A) road.
What makes for a successful acquisition? If you ask me, it’s considering all aspects of the human side of the business, as well as taking into consideration and care the employees’ health, safety, success and growth. This means a heavy focus on a culture of leadership and lean.
Following this strategy is how B-Square Precision Group’s CEO Mark Beck and CFO Tony Butler have met success with their first two acquisitions.
B-Square Precision Group currently consists of KAM Tool & Die (Zebulon, North Carolina) and JMC Tool & Machine (Sanford, North Carolina). KAM Tool builds and reverse engineers tools, dies, fixtures and molds. JMC provides precision-machined components and assemblies (10,000 to 30,000 parts per year) to the medical, industrial, aerospace and pharmaceutical markets. Beck and Butler are trying to build a group of companies that cover the precision manufacturing spectrum, and aim to add three more to the B-Square family.
“We look for companies that can cross-sell for each other, eliminating what we call a ‘customer concentration problem,’” Beck says. “Many smaller shops have a customer dependency problem, but if you combine five companies that each have a customer concentration problem into one company, you eliminate any customer concentration problems. Then you can grow.”
The key to B-Square is culture. “We keep the businesses we acquire and their brands autonomous, we invest in new equipment to grow the companies, we leverage world-class operating techniques and we provide training to every team member,” Beck says.
After acquiring KAM Tool & Die, Beck and Butler came into KAM and presented their four foundational values:
- Integrity — Do What Is Right
- People — The Best Team Wins
- Customers — Be a Trusted Partner
- Performance — Improve Every Day
To uphold these, they met with each employee one-on-one to learn likes, dislikes and future career and educational goals. Beck and Butler both believe that employee buy-in is gained by immediately investing in people and improving their environment.
“Listen,” Butler says. “Get their ideas regarding what can and should change, then do as many as you can (the easy ones) right away. Most of the time, if you allow people to shine, grow and progress, they will not disappoint you.”
For the first quarter, Beck and Butler sat back, watched and learned as the KAM team did their thing. They recognized that watching and listening were vital. Since then, Beck and Butler have been committed to the people and avoided micro-management.
“I couldn’t ask for anything better,” says Randy Jones, general manager at KAM. “What they’ve done for me in the last year and a half has been more than the previous ownership did in 24 years.” For example, Beck and Butler gave immediate raises and bonuses to the whole shop, and instead of coming in and cutting benefits, they improved them — increasing the 401(k) match and decreasing healthcare costs.
There are also lean initiatives that have made a significant impact on KAM. Two fundamental changes supported their lean approach: a TPM (total productive maintenance) implementation and a scoreboard strategy.
After the first quarter, Beck initiated a visual scoreboard that tracks five metrics: safety, on-time delivery, quality, maintenance and cost.
“We place a green dot on the scoreboard for every goal that we meet and a red dot for each goal we do not meet,” Jones says. “This is posted for everyone to see, which promotes accountability. Then every Monday, we send Mark a report.”
Beck and Butler additionally committed to training by bringing in trainers and offering tuition aid. They purchased an unlimited training package from Haas allowing employees to take training courses anytime in its local Greensboro, North Carolina, facility.
Tied to training is mentorship, and Beck believes strongly in mentoring. Once a quarter, he comes in and assigns tasks to help improve employees’ skills to the next level.
Common Perspective, Different Approach
Howard Nystrom is the general manager and president of JMC Machine & Tool, and was one of the three previous owners prior to B-Square’s acquisition.
Nystrom and the other owners were adamant about keeping things the same for their people as Beck and Butler got to know the business. This was precisely what Beck and Butler had in mind, as they believed in JMC, the current team and the ownership.
Beck and Butler tailored their approach to the company, knowing their strategy with KAM would need adjustments for JMC’s situation and workforce. Their main pushes have been for data-driven approaches, leadership training, improved collaboration among employees and more cross-pollination of customers.
Beck and Butler’s leadership approach is to be supportive and help the team accomplish its objectives, but not to tell the team how to do it. They want these businesses to be able to run on their own. “Plus, they understand the required capital investment and the need to add capability if you’re going to maximize the efficiency and the utilization of what you have in your shop,” Nystrom says.
For those shops out there considering an acquisition, Nystrom advises preparation. “Ensure you have a solid management team in place, understand your growth story, learn to be proud of who you are, talk to other people that have been through this and work with an M&A firm.”
For those shops in the throes of the early stages of new ownership, Nystrom emphasizes the importance of being open to change. “No one should change just for the sake of change, but you should also not keep doing something just because you’ve always done it that way.”
A longer version of this story originally ran in the January 2021 print issue of our sister magazine MoldMaking Technology under the title “Taking Care of the People Side of an Acquisition.”
Find it here: gbm.media/m-and-a.