GRAND RAPIDS — As they approach retirement age, many family business owners are considering who to trust when passing on the leadership in the organizations they’ve built.
While the market is flush with cash from private equity firms willing to pay high multiples to acquire their companies, some owners instead are selecting buyers based on criteria other than the size of the check they bring to the table.
Grand Rapids-based investment and merchant bank Tillerman & Co. LLC witnessed that firsthand with its acquisition of Jackson Flexible Products Inc., a Jackson-based manufacturer of specially formulated rubber products for the aerospace industry.
Co-owners Ronald and Helen Jakubas wanted the company they founded in 1969 to continue its legacy in Jackson even after they decided to retire.
Although they entertained higher purchase offers from other firms, the Jakubases ultimately selected Tillerman, whose philosophy is to preserve a company’s local legacy and retain its jobs.
“They understood what we wanted,” Helen Jakubas told MiBiz. “It wasn’t just an acquisition to them. It was to keep the continuity of the business. They were a good fit for us. We don’t want to move the company and we don’t want to lose the customers — they’re number one and the employees are number two.”
The Jackson Flexible Products acquisition underscores the operational philosophy at Tillerman, which formed five months ago with the mission of focusing on closely-held companies valued between $3 million and $75 million in industries such as manufacturing, agribusiness, energy and other sectors.
“We hope this is a template for a series of transactions,” said Phillip Blanchard, a partner at Tillerman. “There are a lot of owners getting up there in years and it’s like selling a family member for them, so we’re trying to be very sensitive and honor that legacy.”
In the short term, Tillerman plans to integrate several processes to streamline Jackson Flexible Products’ operations, including implementing an ERP system to grow the company, Blanchard said.
Tillerman also plans to leverage the experience of Jackson Flexible Products’ newly appointed CEO, Timothy Dickerson, who previously served as the company’s general manager. The manufacturer hopes Dickerson’s history in the chemical industry can help it to better market its products.
“For 47 years, this has been a family business and the owners have done a great job with it, but it’s been a family business and you don’t know what you don’t know sometimes,” Blanchard said. “We have lots of resources we can bring to bear (that) they couldn’t even consider.”
Blanchard predicts that Jackson Flexible Products can grow its annual sales to between $15 million and $20 million in five years. The company currently generates annual sales of $5 million.
Comerica Bank provided the financing for the transaction while Grand Rapids-based Barnes & Thornburg LLP served as legal counsel.
Terms of the deal were not disclosed.
Tillerman plans to take the same strategy it employed in the Jackson Flexible Products deal as it looks to further build out its portfolio, according to Blanchard.
“Our ultimate goal is not to sell (the company), but to use it as a platform to consolidate more companies in the Jackson area,” he said.