Growth in many sectors of the manufacturing industry happens increasingly through mergers and acquisitions.
If you want to add M&A to your growth strategy, Chris Astley, senior vice president and president, Advanced Airlaid Materials Business Unit at Glatfelter, a global supplier and leading manufacturer of specialty papers and fiber-based engineered materials headquartered in York, Pennsylvania, draws on his experience to offer advice. Astley played a key role in Glatfelter’s 2013 acquisition of Dresden Papier, in the buy of electrical papers maker SPO in 2014, and in investment in Dreamweaver, a company developing groundbreaking technology to support the fast-growing electrical papers market.
The first step is to decide on your goal.
Is it to buy or merge with another company that’s synergistic with your business, one with similar customers, markets, and manufacturing technology, or do you want to grow into a new market?
Then, make an X-Y graph and brainstorm.
Plot potential targets in attractive markets that may be available on one axis and those that would fit your goals on the other. Your tier 1 targets are in the upper right, those that are both a good fit and in the most attractive markets.
Ask whether any of those targets are available and would be interested.
Would a direct approach be best, and what form should the contact take? Phone call? Formal letter? Are there relationships between executives at the two companies? Leverage your network of investment bankers, lawyers, accountants, market experts, and other advisers who may have insight to share.
After much conversation, you may find the right fit, bringing two companies into one. Assuming a deal is struck, now it’s time to smoothly combine the two corporate cultures. Astley says it’s important to know what the differences are between the companies, from dress code to how companywide decisions are made. Recognizing differences and similarities will help as you move toward blending two cultures and two ways of doing business. From there, determine which core values, policies, and procedures are non-negotiable. And, conversely, decide the issues where concessions can be made.
The insight and steps for strategizing that Astley shares—identifying your goals, brainstorming, using finesse, leveraging relationships, and knowing when to be flexible and when to hold the line—can be used by manufacturers in any sector to grow confidently through M&A and thrive once the deal is done.