Manufacturing Company Ownership 2.0

On October 25, 2023, five members of IBA’s manufacturing industry transaction team attended this year’s CAMPS (Center for Advanced Manufacturing Puget Sound) Conference at Meydenbauer Center in Bellevue, Washington.  

IBA has been an active participant in and sponsor of the excellent programs and services offered by CAMPS in support of the manufacturing community for multiple years.  Each year the IBA team looks forward to attending the conference and enhancing our knowledge related to current trends and processes employed in the manufacturing sector.  

We applaud Kirk Davis, CAMPS Executive Director, Stacie Buchanan, CAMPS Associate Director, and Jodi Sahlin, CAMPS Director of Member Relations, for their superior planning and execution of another educational and thought-provoking event. The content and speaker selection were excellent.
 
A focus of the conference was Industry 4.0, the connection of advanced analytics, automation, and technology to manufacturing processes.

Speakers covered subjects ranging from the integration of AI to RFID technology into modern manufacturing plant operations.

An electric hydrofoil manufactured by Navier that was tested in the Puget Sound was featured showing the benefits of public/private sector collaboration in innovation in the manufacturing sector.

This decade the urgency for incorporation of technology into manufacturing was emphasized with examples of Industry 4.0. Once example can be seen at Hannover Messe, the world’s largest industrial trade fair, Microsoft and Amazon were not exhibitors in prior decades and are now two of the largest exhibitors at the event. The marriage of manufacturing and technology is happening in the industrial world whether it has executive management’s blessing or not.  

IBA, as the Pacific Northwest’s oldest mergers and acquisitions firm, has seen technological innovations change industries in the past:

IBA merged Encore Video, a Washington video and music store chain, after facilitating a bidding war between Blockbuster Video and Hollywood Entertainment, into Hollywood Video for a client before video stores became a thing of the past.  

In the 1990s and early 2000s, IBA merged numerous Internet Service Providers into larger entities before that industry became dominated by COMCAST and cell phone companies.

When technological change is on the horizon, business owners have a choice, they can

1. Invest the time, energy, and resources to evolve along with the industry, ride their horse-drawn carriage as far as possible before shutting down and liquidating assets.
   
   
2. Or exit in a professionally facilitated transaction and let the next generation execute the needed changes in the best interest of the company.

"If Industry 4.0 is the integration of manufacturing and technology, Manufacturing Company Ownership 2.0 is the strategic execution of a transition of business ownership in the best interest of the entity, its employees, customers, and vendors."

IBA commonly facilitates the sale of manufacturing companies based on five primary shareholder motivations.

1. The most common reason is a desire to retire trading in daily executive responsibilities for the ability to travel; spend more time with family and friends; pursue philanthropic interests; leave the Pacific Northwest in our rainy season for a warm, sunny location; pursue hobbies like sailing the San Juans or golfing; or simply taking accumulated assets from entrepreneurial success off the table. 
   
   
2. The second most frequent motivation for wanting to sell a business expressed by our clients is the recognition that they are not the right executive to lead the company into the future.  This realization can be based on skill set, changing market dynamics, technological evolution, and/or the level of resources needed to sustain current productivity and/or move the business to the next plateau of revenues and profit.
   
   A mountain on the horizon is not of significant concern if it is 1000 miles away and the path of the company will not reach it for years, if at all. Conversely, a swamp surrounding a company on a peninsula that will need to be traversed due to competitors equipped to travel through it closing in from the rear can be an eminent threat to business survival. Most people are familiar with the phrase,
   
   “Those that fail to plan, plan to fail”.  
   
   Industry 4.0 will create a group of companies that plan accordingly and thrive in the future over the next decade. It will also see a group of businesses that fail to implement Industry 4.0 strategies that cease to exist.
   
   In the 1900s, Sears mailed their catalog to almost every home in the nation which became a symbol of American success with the largest building in the world bearing their name in Chicago. In essence, they were Amazon before Amazon. Today, Sears does not exist, and Amazon is the fifth largest company in the world by market cap.  Where would Sears be today, if they had taken their catalog online 20 years ago?
   
   
3. The third reason entrepreneurs contact IBA to sell their companies is because they are ready for a change.  As my father taught me as a youth, “If you don’t want to get out of bed in the morning to go to work, you should make a change.” This is true whether you are an owner or employee. There is no dishonor in recognizing you are no longer challenged or happy in your present occupational pursuit. The good thing about owning a business versus working a job is that you can sell a business, you cannot sell a job.
   
   The first three motivations for sale are proactive and positive reasons. The next two are real-world motivations, although more negative in energy dynamics.
   
   
4. The fourth reason for selling is a caustic turn for a relationship such as a marriage or partnership.  It can frequently be in the best interest of a company to have a change of leadership/ownership when parties are in disagreement in terms of direction or strategic decisions. This is equally true if executive management is experiencing health issues, the final primary reason for the sale.
   
   
5. Father time stops for no one. Technology marches forward not backward. If you are a Baby Boomer starting to think about retirement or fearful of what needs to be done to incorporate Industry 4.0 into your manufacturing plant, IBA, as a member of CAMPS, is available as a resource.

All conversations with IBA are held in strict confidence. No question is inappropriate.  It is our objective to develop a relationship, not close a sale.

Take a moment to reach out to us at IBA, regardless of whether you want to sell next year or 10 years from now.

All CAMPS members will receive a complimentary market business valuation. 100% of IBA’s fees are performance-based, payable at project completion.

About the Author

Gregory Kovsky is the owner & CEO of IBA, a mergers & acquisitions firm, specializing in the sale of privately held companies and family owned businesses in the Pacific Northwest.

Contact Gregory Kovsky, at (425) 454-3052 or gregory@ibainc.com, for assistance.

A note from Kirk Davis, CAMPS Executive Director:
IBA is a highly trusted and recommended member of CAMPS. They were a sponsor of the CAMPS 2023, "Inspiring Innovation" Annual Conference and contribute to CAMPS' overall mission of strengthening and growing manufacturing in Washington State. Take the time to get to know them. You'll be glad you did.