Smart Business Magazine, Nov 2012

18 Smart Business Cincinnati Northern Kentucky November 2012 Growth is an expectation he says Its not something that you just do by mistake Growth of companies is whats expected and its expected by our board Growing organically can be difficult and I think a lot of companies are experiencing that So with our equity partner we have a company that is an expert at it Theyre on a constant search and raising the capital to make the acquisitions is something that they do every day and theyre very good at In todays market if youre going to grow you have to look at growing both through acquisition and organically If you grow through acquisition you have to understand the business youre interested in We set up a model of companies that are in a certain range of what their revenue is what their margins are how we can be more of a strategic acquisition and what synergies there are he says If we merged how can both firms benefit from it It is something that we need to know something about Were not going to buy a company we have very little knowledge about The other part of acquiring a company is what leadership comes with it That is just as important as the company itself because we are constantly looking for leaders and leadership he says When you acquire a company you also acquire the leadership and you have to look at how those leaders can help you grow in other areas One of the most challenging aspects of the acquisition process is not losing sight of your current business You have to align yourself with a private equity company that can assist you in your search because it can be very distracting not only for the buyer but for the seller Wendle says You have a business to run while youre doing all this and you want to keep your eye on the ball Ive seen sellers particularly get so distracted through the process that they dont watch their business You have to stay focused and keep your eye on the ball Dont get all consumed in an acquisition potential Wendle understands how difficult a merger process can be so he makes sure he is as helpful to those involved as he can be Thats the way I develop a relationship with the people because it is a relationship he says If the process goes well then the closure is going to go well It cant be adversarial It needs to be very friendly and very professional Instead of looking at it like youre out there buying assets you should look at it as youre being an advocate of the sellers and youre helping them sell their business Integrate the merger Once a deal is made to move forward with the merger and youve gone through and agreed on terms and produced a letter of intent then you need to go through due diligence Were really trying to understand more and more about the company and theyre trying to understand more and more about us Wendle says The integration actually starts in the due diligence process You want them to learn as much about you as you learn about them You want them to learn about what your benefits program is The key for owners selling is how are my employees that I hired going to be treated EQM gets its HR department involved to look through the merging companys benefits program and matches it up with theirs Typically ours is going to be overall in a better position so the new employees are going to benefit from it he says Then its integrating the financial packages or the business systems How do we communicate financially Rarely do the new companies coming in have the same types of systems that we have From there we really try not to make changes Any changes we have to make we want them to go slowly Whats working obviously has been working and the last thing you want to do is keep it from working You want the leaders and the employees to keep on doing what theyre doing In a merger process there are two sides a legal side and an emotional side The due diligence process focuses primarily on the emotional side The legal side is pretty cut and dry Wendle says The emotional side is more cultural What kind of culture are they coming into and how comfortable do they feel with it I start explaining that once I first meet a potential acquisition candidate For someone whos going to sell their business its a very emotional process and they have to be very comfortable with it If you look in two to three years youre going to have a better chance of meeting your goals and putting more realistic goals out there James Wendle president and COO EQM Technologies Energy Inc Cover Story EQM Technologies Energy Inc