Learn How To Pivot
Mario Toneguzzi
Tom Kramer, President of the Smith Cameron Operating Group, has learned a simple thing over the years when it comes to mergers and acquisitions - learn how to pivot.
Key takeaways:
- Creating a saleable business involves a ton of due diligence work.
- The highest multiple in a sale involves a strategic buyer.
- The importance of building a strong leadership group.
Enjoy,
Mark
Tom Kramer, a veteran and active participant in the area of mergers and acquisitions, has a simple and key piece of advice for people who are buying or selling companies.
Learn how to pivot.
Most of Kramer’s activity over the years has been in the area of very targeted and strategic acquisitions.
“Be ready to pivot,” said Kramer, President of the Smith Cameron Operating Group. “It’s never exactly what you think it is. There’s always grand opportunity on the other side of closing.
“Your job is to do a ton of questioning and be the grand inquisitor and then make a determination with respect to the right pivot. What is the vision for this?”
From 2006 to 2010, Kramer served as President / CEO of Canadian Utility Construction headquartered in Surrey, BC. In 2011, having grown Canadian Utility Construction by six times and the Empire Cat rental business by 25 times, he decided to invest in his own business and pursue a similarly aggressive growth trajectory once again, this time as an entrepreneur. He acquired Smith Cameron Group with an equity partner, and, through organic growth as well as multiple strategic acquisitions, grew it fivefold over 10 years.
By 2021, Smith Cameron was an established leader in the distribution of pump and blower products in Canada with expertise in fluid sealing, chemical feed, pump parts manufacturing and flow monitoring. Kramer sold SCG in July 2021, and was named Dealmaker of the Year by the Association for Corporate Growth, British Columbia .
Following the successful 2021 sale of his company, Smith Cameron Group, to Flow Control Group (FCG), he was named President of the new Smith Cameron Operating Group (SCOG), which was combined with CB Engineering to become FCG’s largest Canadian operating group.
SCOG encompasses several leading brands including CB Process, Turn-Key Controls, Provan Controls and Flowstar Industrial.
Kramer is one of the featured speakers at the Business Transitions Forum in Vancouver on November 23. He will be on a panel discussion titled Your Guide To Creating A Saleable Business. The session will look at strategies that will help people operate a better business that is more attractive to future buyers and investors – even in turbulent times. What are some tips for increasing financial sustainability for the long term (for you or a future buyer) through diversification, greater market share, potential synergies and cost reductions? What are some red flags that will set potential investors or partners running? What are some practical tips for creating a saleable business in a turbulent economy and the best positioning to investors? How is the current environment impacting private equity’s approach to investing and how may it impact the future saleability of a business?
Kramer said creating a saleable business involves “a ton of due diligence work.”
“I am myopically focused with building a great company with great people first but if I want to build something that is going to be of great value to a buyer in the future, I want to identify the buyers that are paying the most, that have the deepest pockets and are strategic buyers,” he said.
“You’re going to generally get the highest multiple from a strategic buyer and understanding what the strategic buyer is driving towards. What they’re trying to build, so that you can make it like something they value considerably. It was the focus of my last five years.”
Some of the critical factors Kramer identified in his business sale were the ability to acquire strategic roll-up companies that are quickly accretive, and sustain a solid single-digit CAGR organic growth component year-in and year-out over a decade; a demonstrated ability to build a strong leadership group, under-pinned by providing the entire group with an ownership opportunity through selling shares at current value to them, financing a portion and providing vested options .
“It was clear during presentations to prospective acquirers that we had an unusually strong and engaged leadership group,” he said. “The hardest part was sorting through the spin and selling narrative to identify the true value and potential. Then, executing change fully supported by the acquired employees.”
Through the process, Kramer said he tried to sleep more and enjoy his life more outside of his COVID-home office.
“Realizing that the outcome would take care of itself. I have a tendency to be paranoid - seeing things that could go wrong and doing all I can to mitigate - and can spend too much time shoring up bits that didn't require shoring up.”
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