After doing nearly 60 deals throughout his career, Bill Baker knows himself. He’s a niche strategist who looks to buy companies where one-and-one makes three.
“My background has been in building companies, growing companies and integrating them,” says Baker, president of material handling company Irwin Car and Equipment. “I bring all the pieces together so that each individual piece is a part of the sum, which is greater than any one piece.”
Baker likes to buy and hold, seeking out synergies that have long-term potential and fit hand in glove with his company’s nine business units. “I’ve always been very open and told people what I thought,” he says. “If you have a sick business, it’s sick. If you have a good business, it’s good.”
This week, Dealmakers talks with Baker about the lessons he’s learned from buying and selling companies.
Build a reputation
You get what you pay for. There are no bargains out there. If you want a good quality company, you have to pay for it. I think it’s all about where you find your deals. I’ve been doing this for a long time. But even when I first started doing this 40 years ago, I learned about it because I’m out in the marketplace a lot — in the market with my customers, with our competition and with the industry. I’ve been in several different industries, so you get to know a lot of different people.
As some of those people start to age, they want to sell their company. Fortunately, I’ve had a very good reputation and I’ve done good deals, so people actually seek me out in some cases. My bankers have brought me deals. Attorneys have brought me deals. Brokers have brought me deals.
I don’t think that I’m paying more for a deal now than I paid five years ago. There are two ways to value a company. You either value it based on a multiple of earnings, or you buy it based on the assets. I’ve done both.
Have a vision
What can I bring to the table that makes it better? I don’t just buy a company or buy a product that I just want to buy and keep it the same. Because my philosophy is if you don’t grow, you get left behind. And nothing stays the same because the market is changing, the competition is changing, the product is changing — it’s ever-changing. So, we look for opportunities that we can enhance, and because of our salesforce or our presence in the market, what we can do to double or triple that product line.
It’s all about communication in terms of paying for what you’re getting. But you can’t pay the seller for what you’re going to do to the business. If you buy a $1 million business and you think you can take it to $10 million, you’re not going to pay that seller for taking it to $10 million.
Find the potential
It’s not like I just look at deals to look at deals. Because I could do that all day. I’m primarily looking at deals that have a lot of potential. I did a deal in Florida back in 2014. We’ve quadrupled the business in four years. I think it still has room to grow. I looked at four deals back in 2014 and I did all four of them.
I did make one acquisition, probably back in 1988 or ’89. I bought three travel agencies. That was something that I didn’t know anything about, and I probably made a mistake. That’s the only deal that wasn’t something I would do again.
When you spill the secret, don’t hold back
When I bought the Penn Machine Co. back in 1987, I bought it from an English company. We closed the deal in Cleveland, and I said, “OK, are you going to drive over with me to Johnstown to announce it?” And they said, “Nope, we’re getting on a plane to go back to London. You do it yourself.” So, I had to drive over and tell all the people — we had about 400 employees — that I bought the company. That was strange.
It’s very important to do that personally. On the day of acquisition, in every deal I’ve done, I’ve always gone and visited with the people and I talked to each person and I told them what we did, what to expect, what the timeline was and what the benefits would be.
Persist when emotions run high
Deals are very emotional. One day they’re on and the next day they’re off. When I sold Penn Machine Co., the deal was at the table to close, and the buyers wanted to change the deal. We got up and walked away. That’s emotional.
Some take time. Sometimes they take a year. I’ve been working on this one thing now for four or five years. You have to be persistent. You can’t be overly emotional. You have to be able to be fluid. You can’t take it personally. You can’t get stressed out. If it’s meant to be, it’s meant to be.
I just remain persistent. If it’s something that we really want, I stay after it. Not to the point of being overwhelming, but just to express interest.
