Our Canadian client in the metal fabrication industry built cart corrals and metal display cases for sale to supermarket chains. Growing their operation organically was not yielding the desired results. Their sales were flat, they had excess capacity, and they had tried unsuccessfully to grow their customer base with a number of different salespeople. Ultimately it was decided to grow through making an acquisition. Their goal was to invest in a US Company with its own product line with hopes of both expanding into the US market and adding new products to their existing line to enhance their sales in Canada.
Following Next Point’s acquisition process, we worked with the client to develop a targeted acquisition specification and researched companies that fit the profile. We directly reached out to each company on the list to determine if they had an interest in being acquired and if they are a match to the specification. The right operation would have existing customers, distribution channels, and complimentary product lines. By combining the operations, our client would be able to achieve economies to scale while both selling their products in the US and would be able to offer new products to their existing Canadian customers.
The Turning Point
The Company ultimately purchased a distressed US manufacturer of metal salad bars that fit right in with their sales and distribution channels in the supermarket industry and aligned itself directly with their metal fabricating expertise and production equipment. They were able to consolidate the US acquisition into their operation and achieve economies to scale by eliminating duplication of fixed costs.