The new owners of Grandville-based Jireh Metal Products Inc. hope that the traditional manufacturing company can benefit from some growth and leadership strategies gleaned from their experience in other industries.
New Jireh CEO Michael Davenport has big plans for the full-service metal fabricator that specializes in metal stampings. In particular, Davenport plans to harness lessons learned from a career spanning banking and law and his experience as a college basketball coach for West Point and Xavier University to lead the company to growth.
“I’ve never made a widget, but I’ve turned a conversation into a will or a contract. So I’ve made stuff, it just hasn’t been this,” Davenport told MiBiz. “Now we’re taking what’s been good with the company and putting our spice on it.”
The new ownership finalized the deal in late February after Jireh’s previous owner, Ron Wierenga, decided to exit the business to pursue other opportunities. Andy Otteman, director of new business development, is a co-owner in the company.
The pair privately financed the deal through a combination of cash and debt from Mercantile Bank. Davenport declined to disclose the terms of the transaction.
Zeeland-based Hoesch & Vander Ploeg PLC advised Jireh’s new ownership on the deal.
Despite taking over the company a relatively short time ago, the new ownership has laid out an initial strategy that hinges on an “all of the above” approach to growth, Davenport said.
While Jireh plans to grow with its existing customer base, it sees the bulk of its future potential coming from outside markets that use metal components. Jireh has left the market possibilities open, but it plans to immediately begin targeting companies in the health care, mortuary and automotive industries, Davenport said.
Jireh currently has annual sales of between $20 million and $50 million and plans to grow the business 15 percent over the next year, Davenport said. The company plans to hire an additional 15 workers to support that growth.
To meet those goals, the company plans to adopt an aggressive sales strategy both externally and internally. Davenport hopes to instill in all employees that they play a part in sales, regardless of their title.
“We all have a component in sales,” Davenport said. “Everyone is important. If we sell a job and get in a great tool that operates just how it’s supposed to but we don’t ship it on time, it’s for naught.”
Jireh is also undergoing a marketing push that includes a new website slated to launch at the end of May and a heightened social media presence it hopes will give it exposure to potential new customers — a strategy that the company lacked in the past, Davenport said.
Despite the overall health of the mergers and acquisitions (M&A) climate, lower-middle market deals such as Jireh may be few and far between going forward.
While the lower middle market has seen its fair share of buyside activity, the supply of sellers looking to make an exit has not kept up with that demand, said Max Friar, managing partner at Grand Rapids-based Calder Capital LLC.
“Deals are getting done, but as M&A advisers, some of us are scratching our heads and wondering why there’s not more owners selling,” Friar said.
Even with banks increasingly being willing to lend to private owners — and despite large amounts of deployable capital on the table from private equity firms — many owners simply aren’t interested in selling their organizations in the current market, he said.
“I don’t know (why) other than to say things are good again,” Friar said of his explanation of the lack of sellers. “I think people are returning to that 2005 mentality, and owners are thinking it’s time to milk it and ride the good times out a little bit.”
Good times may have tempered companies on the buyside looking to make strategic acquisitions as well, Friar said. Manufacturers may be too busy managing growth, expansions and hiring to do deals at the moment, he added.
“There is a lot of organic growth going on right now and because of that, acquisitions might be on the back-burner for strategic buyers,” Friar said. “A lot of them don’t have the time to deal with an acquisition.”
For those that do end up doing deals, it’s best to adopt a strategy of full transparency with the existing workforce during a leadership transition at a company, Davenport said.
“As a new ownership team, you have to calm any sort of fears,” he said. “That’s what we were the most concerned about. We had a great group of folks and we didn’t want anybody starting to feel unsafe (with their positions).”
While Davenport said the leadership transition at Jireh went fairly smoothly, he and Otteman used a strategy of company-wide meetings, open-door policies and visibility on the shop floor to quell any misgivings about them taking over the company.
Jireh retained all of its 94 employees in the transition, Davenport said.
The new executive team plans to gather as much information about the company as possible and listen to employees’ needs before gradually layering in more of their own philosophies and ideas, Davenport added.
While the new ownership of Jireh Metal is still “getting their feet wet,” they’re confident that they’ll be able to reach the company’s growth targets and diversify in the future.
“We have a very solid today, a very solid yesterday, but a really bright tomorrow,” Davenport said, “and I think that’s the piece that really attracted us to this opportunity.”