Making Chips Podcast for Manufacturing Leaders MC038: Growing your Manufacturing Business Through Acquisitions with Tom Hilaris
Business growth what we all want to see. More customers, more jobs, and more revenue. But there are other ways to grow your company, including the purchase or acquisition of another company in your niche. In this episode of Making Chips Jason and Jim chat with Tom Hilaris who has recently become CEO of Ergoseal, a company that manufactures seals for OEMs in the industrial and aerospace rotating equipment industries. Within a two month period Tom’s company acquired 2 other companies and grew both his manufacturing capabilities and his bottom line. Find out more about Tom’s experience, including things to watch out for in acquisitions, on this episode.
What is the right motivation for acquiring another company?
While the individual details of each situation will vary, there are a couple of foundational motives that would make the acquisition of a company a good deal, and there are others that wouldn’t make sense - financially or otherwise. Tom Hilaris shares his experience in leading Ergoseal in the acquisition of two other companies in the last year, on this episode. It’s about more than simply acquiring another company. It’s about adding to your product line, cutting expenses, and making greater profits. Find out how to make those determinations regarding possible acquisitions on this episode of Making Chips.
Did you know that you can hire an acquisitions advisor to guide your company in an acquisition process?
A very important part of Tom Hilaris’ story of leading his company to acquire two other companies, is the role a hired Acquisitions Advisor played. He was instrumental in helping Tom and his team pull together the paperwork they needed, locate the right companies to purchase, and strike the deal in a way that was beneficial for everyone. Looking back, Tom feels that he could possibly do those things himself from here on out, but feels that he’ll stick with an Acquisitions Advisor for future acquisitions as well simply because the expertise the Advisor had made his role much simpler and the process more streamlined. Find out more on this episode.
What are the funding options for acquiring another company?
Jim and Jason asked that question of Tom Hilaris in this episode and his answer came from his experience in leading his company in 2 acquisitions. He says that owner financing is obviously the best deal if you can make it work, but most owners who are trying to sell are wanting out of the situation entirely and aren’t open to carrying the financing. They want to take the cash from the sale and leave. That means that other types of financing will be required and Tom found that the tight formulas used by the larger banks made it impossible for his smaller manufacturing company to get financed with them. He wound up going with a smaller bank that took other things into consideration. Find out what options might exist for your situation by listening to Tom’s advice on this episode.
Hear the 3 fundamental things to consider when looking at a possible acquisition.
The lessons we learn from experience are often the best ones, and Tom Hilaris shares 3 important things to keep in mind when you’re considering the acquisition of another company. First, he cautions that you make sure you have the right motives for making the move, second, that you figure in at least 3% more than the costs that show on paper for related expenses, and third, take into account the cultural impact the acquisition will have on your employees and the employees of the incoming company. Hear more hard-learned wisdom from Tom on this episode of Making Chips!
Outline of this episode
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[1:17] Extended promotion of www.OnlineMetals.com from Thyssen Krupp (sponsor). Get your 15% discount by using the code CHIPS2 (through September 2015)
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[3:12] Business news: Acquiring a new business as part of your current business?
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[5:17] Introduction of our Guest: Tom Hilaris, CEO of Ergoseal.
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[6:16] Tom’s recent experience acquiring companies to add to his present company.
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[7:12] The motivations involved in buying and selling companies.
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[8:29] The steps Tom took to begin acquiring companies and how they navigated the journey.
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[9:34] What is an acquisitions advisor? How does his role help in the process of acquiring a company?
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[11:24] Gaining a product line through an acquisition - the benefits Tom experienced.
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[12:31] How gaining the customer list of an acquired company boosted sales, etc.
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[14:11] Tom’s decision to acquire a second company that was in the same building his company was in.
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[15:22] How an acquisition could be a good option for older owners who are thinking of liquidating.
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[15:59] How the advisor helped them determine the costs and projections for the acquisition.
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[18:09] What is the best approach to finding funding for a company acquisition, and what hurdles or roadblocks might you experience?
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[21:50] The impact federal regulations have on business financing for acquisitions and growth.
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[22:47] The 3 fundamentals to consider when thinking about an acquisition of another company.
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[25:07] Be careful of the overall costs - add 3% to what you see on paper.
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[27:40] Tom’s plans for further acquisitions.
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[28:44] Contact Tom Hilaris on LinkedIn.
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[29:19] Please comment or interact about these issues on the show notes page www.MakingChips.com/38
Links mentioned in this episode
Connect with Tom Hilaris through his LinkedIn Profile - https://www.linkedin.com/pub/tom-hilaris/5/552/a45
Tom’s company - Eergoseal - http://www.ergoseal.com/
Or call us at 312-725-0245
Tweets you can use to tell others about the episode
Benefits of company acquisitions, on this episode of Making Chips http://www.MakingChips.com/?p=628
There are more ways to #GrowYourNusiness than adding customers http://www.MakingChips.com/?p=628
3 fundamentals to consider when looking to acquire another company http://www.MakingChips.com/?p=628
Add 3% to the acquisition costs you have on paper - here’s why http://www.MakingChips.com/?p=628
Company culture is a huge consideration when acquiring another company http://www.MakingChips.com/?p=628