Massman sets sights on the long haul

Make no mistake, Massman is in acquisition mode. But Jeff Bigger, CEO and president, isn’t in any hurry. He has settled into a unique partnership that moves the goal posts from overnight wins to long-term, sustainable success.

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In an industry composed largely of family-built OEMs doing less than, say, $20 million in revenue annually, private equity groups (PEGs) often get a bad name. And some of that is earned. There are more than a few cautionary tales of private equity’s perceived propensity to buy, lean out, then sell a business that may have been someone’s life’s work.

Often, PEGs can be seen as an exit strategy for OEM owners when the next generation decides against picking up the family mantle. But while that strategy may work for the owner, the business itself can be subject to being “churned and burned.”

That said, in today’s machine builder environment, there are undeniable advantages of scale that PEGs can offer OEM owners in strategically growing their business. With PEGs’ deep pockets at the ready, OEMs can potentially become strategic buyers themselves, adding both scale and robustness in line solutions that reach further up and down the value chain.

Walking the PEG tightrope, Jeff Bigger, president and CEO, Massman Automation Designs, knew that to stay competitive, he had to start piecing together strategic pieces outside of his company’s original case packing core competency.

Brands Massman has purchased included Midmac in 2005, adding a filter assembly division. It acquired Sabel Engineering in 2008, adding bottom load and robotic case packing, then Talon Manufacturing in 2010, adding microwave popcorn packaging and flex pouch packaging lines. In 2012, it acquired Packaging Systems Automation for expanded cartoning and material handling, plus PASE Group, a liquid filler that became its first off-site, stand-alone company. In 2013, it purchased Bedford Technology®’s packaging equipment division for reclosable packaging solutions. In early 2016, Elliott Manufacturing was acquired, adding case erecting and case sealing. Massman completed all these acquisitions with its own internal resources but found the time might be right to find a strong partner to continue the growth.   

New private equity attitude
A new 2016 partnership with Granite Equity Partners changed the game in terms of acquisitions. Granite Equity is a local Minnesota private equity group with a stated commitment to the long haul.   

“The industry is small, so there were strategic buyers that were talking to us. But I sought out—not the other way around—Granite Equity because they have a 100-year horizon,” Bigger says. “And they were in direct alignment with what we wanted to do, which is stay here and keep growing.”

The 100-year horizon has made a big difference in Massman’s acquisition plans, and doors began opening more readily than they had before. In 2016, Massman acquired EDL Packaging Engineers, adding shrink wrapping and bundling. Located in Green Bay, Wis., EDL has been Massman’s largest acquisition to date and was completed with the help of Granite Equity. The company will remain a stand-alone facility poised to grow in Green Bay. 

“Granite Equity is a remarkable equity group, and I’ve worked with a lot of equity groups through my career. They fit in the context of other Midwestern companies and values here in Minnesota and Wisconsin,” says Greg Gorski, VP and general manager, EDL Packaging. “It values things like employee development and sustainability programs. Those are things you don’t typically get from an equity group. Most are looking to maximize dollars and squeeze every penny. They tend to do a lot of bloodletting, then sell and move on. Granite Equity is completely opposite of that.”

Plus, according to Bigger, the pocket of technical competency around a good product line really can’t move without the product declining.

“You have to leave those people where they are. EDL has been a good example. And knowing what I know about Granite Equity Partners allows me to honestly say to a potential acquisition, ‘Anybody that’s interested in selling their companies and want their brand to stay, want their people to stay and their company to stay in their environments, that’s what we do.’ The only way we can be successful together is by partnering with other companies—even if it’s short of the acquisition concept. We’re looking to partner with companies in a consolidating industry because it takes strength in numbers,” Bigger says.

Shuffling the decks of cards together
As has been learned and demonstrated elsewhere in the industry, it’s best for the buyer in an acquisition to avoid tinkering with the “secret sauce,” or whatever made the acquired OEM successful. While this usually involves the technical competency closest to assembly and engineering, it doesn’t always end there.

PASE Group, which specializes in fillers, has long held a distribution relationship with Mettler Toledo; in fact, PASE fillers are branded as Mettler Toledo to be incorporated into that company’s full lines. While there are no two identical PASE fillers, they do have to keep things relatively modular in the form of more standard models for easy distribution and shorter lead times. So while Massman sells through direct sales and a network of independent reps, PASE has a baked-in distributor relationship with Mettler Toledo.

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