For five years, Fuller had periodically approached ACR’s owner about buying the company, but he’d lost contact by the time he ran into the sales rep at a trade show in 2017.
Owner was looking to sell
“I said I can never get a hold of your owner. Can you set me up?” Fuller says. “It turned out the owner was getting ready to sell the business. He’d actually talked to a couple of different people and a couple of deals had fallen through.”
“I got a little bit lucky. But, like they say, luck is when preparation meets opportunity.”
Fuller’s preparation was part of a methodical approach he took to his first acquisition. He and his team identified the attributes they were looking for in an acquisition target, including geographic and product diversification.
A structured approach: The key to a successful acquisition
Once, Fuller had made the deal to buy ACR, he put together an acquisition plan that included objectives for sales and productivity improvements as well as a communications strategy designed to support the integration of the two companies. He also assigned a team of executives to oversee integration.
“You’ve got to put that team together and make sure it’s super high-functioning with a clear vision and objectives,” says Fuller, whose combined company has about 160 employees.
The wisdom of Fuller’s approach is supported by the findings of a 2019 BDC study on how to acquire a business, which is based on a survey of almost 1,000 Canadian entrepreneurs.
The study found that companies that take a structured approach to an acquisition are 94% more likely to experience high-revenue growth in the three years following the deal.
A complementary acquisition target
Fuller’s purchase of ACR, which was partially financed by BDC’s Growth & Transition Capital team, has diversified the company and provided new opportunities for sales growth. Fuller is targeting new business in Alberta’s oil sands and cross-selling complementary product lines to customers of the formerly separate companies.
Additionally, the acquisition stabilized the company’s revenue. That’s because 80% of the Fuller’s business was from supplying new projects with the other 20% from maintenance work—replacing worn out parts and material. ACR’s business, conversely, is 80% maintenance, which produces a much steadier stream of revenue.
Integration produces culture clash
Despite all the preparation, the acquisition has been far from smooth sailing. At its Sudbury plant, Fuller Industrial embraces lean manufacturing techniques pioneered by Toyota that focus on continuous improvement, team work and employee empowerment.
When Fuller introduced the system to ACR, it produced a culture clash that made it hard to achieve forecasted productivity gains. Fuller ended up replacing ACR’s top management as well as some production workers.
Don’t be afraid to make the changes you need to make rapidly to get the right people on the bus because you can’t get there with the wrong people.
He admits he didn’t focus enough on the human resources dimension during due diligence and then waited too long to make the necessary changes. He cautioned other entrepreneurs not to make the same mistakes.
“My recommendation would be spend a lot of time on the human resources part,” says Fuller, who learned the business working at his father’s company, a predecessor to Fuller Industrial.
“Assess the potential of each of the people you are going to be inheriting and understand what you’ve got. Don’t be afraid to make the changes you need to make rapidly to get the right people on the bus because you can’t get there with the wrong people.”
Beside the HR turbulence, Fuller replaced an outdated enterprise resource planning system at ACR and centralized the sales and accounting functions in Sudbury. He says entrepreneurs shouldn’t underestimate the challenges that come with merging two companies into one.
Integration was a grind
“There’s a point where it’s just a good old-fashioned grind. It’s hard on everybody when you’re going through these changes.”
A commitment to good communications throughout the company played an important role in the integration. The company has introduced collaborative telecommunications equipment, a newsletter and quarterly visits by Fuller to the plants for “state of the union” meetings.
You can never over-communicate, but it’s easy to under-communicate.
“We needed everyone to feel like it was one company and not three different plants,” he says. “You can never over-communicate, but it’s easy to under-communicate.”
Despite the challenges, he says the acquisition has positioned his company for major growth in the years to come. Today, about 50% of revenue comes from outside Canada, supplying mining operations in far-flung locales such as Madagascar and Mongolia.
Fuller says he’s looking for other acquisition targets and will benefit from the lessons he’s learned during the ACR purchase.
“It’s a springboard for what’s going to be massive growth. Everybody here wants it. Everybody here can do it. So that’s our plan. Whether it’s organic or acquisitions or both, we are going to grow.”