A Shot in the Arm

\"GroveEarlier this year Codale Electric, a Sonepar operating company, acquired Grove Madsen.  Two months later Codale and Grove Madsen have big growth plans.  A recent story in the Northern Nevada Business Weekly shared some of the strategies that are in development that will give this formerly independent distributor a shot in the arm.
The benefits of the acquisition, according to the article, include:

  • Providing numerous resources of a bigger company to its customers
  • More buying power to offer more competitive pricing
  • More inventory
  • Re-configuring the racking system to double capacity at the Reno location
  • Installing / upgrading the computer system (Sonepar standardizes its companies on Epicor\’s Eclipse platform and Eck, in the Carolinas, will be converting to Eclipse also)
  • Bar coded warehouse
  • Grove Madsen had three trucks but now has access to a much larger fleet
  • Gained access to Codale\’s 13 distribution centers
  • Increasing its delivery routes
  • Receiving a nightly transfer truck from Codale\’s Salt Lake City facility
  • Increased access to manufacturer lines (lines that had a relationship with Codale and are preferred Sonepar manufacturers.
  • Adding staff

Not bad for two months under new ownership.  And it wouldn\’t be surprising to see a new, commerce-enabled website shortly after the new Eclipse system is installed.
So, it begs a couple of questions…

  1. Why can this growth acceleration strategy occur post-acquisition?
  2. Does this happen in most / all acquisitions?

Let\’s answer the second question first with an emphatic NO!  Every company that makes an acquisition is different.  Some leave companies alone; others get actively involved; some let local management continue; some have vision of how to grow a company; some have been known to \”deteriorate\” an acquisition relatively quickly.  Each acquisition, each acquirer is different.  Owners interested in the welfare of their former company, employees and perhaps their local legacy should do their due diligence to determine what they want in an acquirer.  Some want the money; others will take a little less.
Now, to the first question.  Implementing a growth acceleration strategy takes three things:

  1. Ownership\’s commitment to grow.  This is an issue of time, support and financial investment
  2. Development of a vision and a plan. This is the development of a plan (and yes, we have a defined process that can help provide a path. (Email for an overview of the process.)
  3. A commitment to executing the plan. Plans are great. Execution generates the results. The key is resourcing the plan and empowering the team.

The alternative is a lifestyle business waiting for an exit strategy which is frequently defined as \”someone else has a vision for your company.\”
Which \”shot in the arm\” is right for your company?
 

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