On today’s podcast, I’m talking with Mike Payne, owner of Hill Manufacturing and Fabrication in Broken Arrow, Oklahoma, to peek inside the mind of a prolific acquirer of manufacturing companies.

Before purchasing Hill in 2018, Mike spent 20 years in M&A, orchestrating over 100 deals across nearly every industry.

Since then, Mike has acquired four machine shops, and he’s constantly scouting for more opportunities to expand.

What struck me about Mike isn’t just his deal-making successes – it’s his genuine passion for manufacturing. While some people get caught up in the game of acquisition deals, Mike seems to remain committed to his stated purpose, making quality parts and building lasting companies.

***********

Facebook: https://www.facebook.com/swarfcast
Instagram: https://www.instagram.com/swarfcast/
LinkedIn: https://www.linkedin.com/company/todays-machining-world
Twitter: https://twitter.com/tmwswarfblog

Link to Graff-Pinkert’s Acquisitions and Sales promotion!

*************

Main Points

Working in the M&A Industry

Mike Payne’s career began in the mid-1990s when he graduated from the University of Tulsa with a computer science degree. He started a software company specializing in shop floor data collection, working with manufacturers during the era when Walmart was pushing barcode implementation. This early exposure to manufacturing sparked his interest in seeing how things were made, from tires to fishing reels.

After successfully growing and selling his software company in 2003, Payne transitioned into private equity, where he spent 15 years buying companies across various industries.

What set him apart in the M&A space was his approach: rather than just completing deals and moving on, he would typically take board positions or operational roles in the acquired companies to ensure their success.

He completed over 100 deals during this period, attributing some of his success to being an outsider who asked “dumb questions” that often led to valuable insights.

Purchasing Hill Manufacturing and Fabrication

In 2018, Payne purchased Hill Manufacturing and Fabrication, a company he’d known for 30 years. The company, established in 1976, had become “tired” under an owner looking to sell, with minimal reinvestment in equipment and growth. Payne saw this as an opportunity to revitalize a solid business. Since his acquisition, the company has doubled in size through both organic growth and the acquisition of four additional shops.

What distinguishes Payne’s approach to business is his complex motivation. While he openly acknowledges his desire to make money (“I’m a capitalist”), he emphasizes that his greater satisfaction comes from creating opportunities for others. At 51, he could coast or even retire, but he continues growing his business because he enjoys developing his team and seeing them succeed. He shares examples like watching a 27-year-old manager building his first home and starting a family.

Payne also maintains strong relationships with the previous owners of companies he’s acquired. He shared a story about receiving a photo from a couple whose shop he bought in 2022. While he was at IMTS viewing the latest manufacturing technology, they sent him a picture from their retirement travels of an old lathe in an Arizona campground. This exemplified his goal of not just making profitable deals, but helping owners successfully transition into their next life phase.

Philosophy of Business Growth

The conversation also touched on the philosophy of business growth. While Payne acknowledges that maintaining a steady, non-growing business can be viable, he believes companies need to at least stay current with technology and market demands to avoid slow decline. He shared an example of a recent acquisition target that had gradually declined from $2 million to $1.2 million in annual revenue because they weren’t reinvesting or replacing lost customers.

Throughout the interview, Payne’s enthusiasm for manufacturing shines through. He describes the satisfaction of seeing raw materials transformed into finished products and particularly enjoys giving shop tours to people unfamiliar with manufacturing, as their fascination helps him see the magic of manufacturing through fresh eyes. He compared this to hiking with his daughter, who helps him notice beautiful details he might otherwise miss in his rush to reach the destination.

The discussion reveals Payne as someone who has successfully merged the analytical skills of a private equity investor with a genuine passion for manufacturing and people development, creating a business approach that values both profitability and purpose.

Questions:

If you were to acquire a manufacturing company, what would you be looking for?

What would it take for you to sell your manufacturing company?

Check out Mike Payne’s  podcast, Buy the Numbers.

The blog was assisted by Claud.ai