An illustrious panel gathered at the CEDIA Capital Summit at CEDIA EXPO in Dallas today to discuss the rewards and pitfalls of mergers, acquisitions and private equity funding.
While most of the talk was more appropriate for the manufacturers in the room, there were some good takeaway points for integrators who might be looking to sell or grow their businesses.
The panel consisted of Itai Ben-Gal, CEO and co-founder, On Controls; LeGrand Lewis, chairman, weBoost, and managing director, Sorenson Capital; Kevin Duffy, president, Sound United; Gary Rabishaw, managing director, Intrepid Investment Bankers and Paul Jacobs, president and CEO, Klipsch. It was moderated by John Stiernberg, president, Stiernberg Consulting.
If you're thinking of merging with a business, acquiring a business, or selling your business, the panel imparted some good advice.
"Be very particular about who you partner with," said Ben-Gal, a sentiment echoed by his panelmates.
Jacobs said "broken companies aren't easy to turn around. Buying something on the cheap that doesn’t fit your strategy can be a big mistake." He said companies should look to partner with other companies that are "additive" to their business. All of the panelists said it's important for there to be a strong management team in place at any company you buy.
Duffy encouraged entrepreneus to ask themselves: "What can we buy that’s really differentiated and can accelerate how we grow? What’s the point of differentiation? How is it proven? Why should I believe we can exploit that in a way that we couldn’t on our own?"
When seeking funding, the panelists advised caution, preparation and a thick skin when dealing with potential investors. Jacobs said founder-owned businesses should be careful to know if the company they partner with intends to run the business for them, which can lead to an awkward and demoralizing situation for hands-on businesspeople.
Said Rabishaw. "Interview potential partners. Have a clear understanding of who you’re going to bed with. When trying to raise private equity, interview the other side. Owner-operators might not like having a boss."