Luis de Leon joined the 100-year-old Bradley Corp. in 2019. The vision was to take the existing platform and expand it by acquiring other companies, mostly other family businesses, and leverage that as the sense was plumbing was overdue for consolidation. But that’s not what happened.
“Six months ago, we sold the business to Watts (Water Technologies Inc.) for 13 times multiple,” the company’s president and COO told attendees at the Milwaukee Smart Business Dealmakers Conference.
The fifth-generation business had been generating a lot of cash flow for the family. So, he says he’s often asked what changed?
“We started out as we're going to go out there, we're going to go acquire, we're going to build this company — trying to create that opportunity to really build out the platform and to take it to the next level, to be the consolidator of the industry,” he says. “And it ended up us being consolidated.”
He says when he came on board, he found a team that had been there for very long time — managers with 20-30, years of experience — which, though he says there's nothing wrong with that, they wanted to try to change somewhat how they go about the business to modernize the company while keeping the family feel. The aim was to find a mix of experienced people and invest in new talent who had a different perspective with a good mindset around values that were adequate for family businesses.
“Not everybody fits that profile,” he says. “You have to have somewhat of patience and understand and work with people and communicate a lot.”
He also brought industry insiders to the table, which drew questions.
“It was important because we had a lot of people in the company that felt this has worked very well,” Leon says. “It's been very good. This is what we've done for the last 10-20, years. It's been successful. Why do you want to change it?”
As they looked to accelerate growth through acquisitions, a first step before executing that strategy was to leverage data. So, they went out into the marketplace to better understand what their customers and competitors are doing.
“I think some of the shareholders still had a very old, antiquated idea of what the competitors were,” he says. “Yes, we were all in the same business. We all know each other. They know the families. But some of them have really stepped up their game and grown a lot, become a lot more aggressive. They offshored work. So that was one of the things that we didn't want to do as a family business. We didn't want to move production to Asia, for example, or South America. They want to keep the jobs here in the United States, here in Milwaukee — very honorable. But that's why data is so helpful to say, ‘Listen, we are really losing market share in these product lines. Our competitors are moving products away. If we don't do it, we're not going to have these jobs at all.’ So, I think we need to try to refocus, need to reinvest, maybe in newer products that we want to still make here in the United States, but also some of the other products, make sure that we move those offshore. Try to keep us being more competitive.”
That led to a lot of discussions with the board, as well as a lot of friends of the patriarch of the family. He says they never tried to second guess what was done as he suspected that wasn’t a winning strategy. Instead, they focused on where they wanted to go if they wanted to accelerate.
“If the market's growing 3 percent a year, and we want to double the business, we need to get market share,” Leon says. “We set ourselves aggressive goals. We went backwards, looked at what needed to be changed. We started making those changes, start driving that culture into the company. It was very important to have a good mix of leadership in the company to help drive that message into the organization and to win the hearts and minds of the employees. We call it professionalizing the organization. But we also kept, obviously, a lot of the employees there, just tried to retrain them, if you will, and tried to bring in talent. Turnover was very low, so we didn't have a lot of natural attrition. And as we moved along, we started to generate more enthusiasm for where we were going to go. Started to see success. Started to get 10 percent CAGR per year. In the end, shareholders were satisfied, and I think we found a good balance between family values, but also trying to drive a professional company forward.”
The company had a lot of knowledge in the industry and had been successful for a very long time. But, things change.
“The markets are always changing,” he says. “Your competitors are changing. You need to adapt to that. We tried to really bring a lot of data to the board meetings to try to really explain and teach what we saw and how we saw it. And step by step, we built trust, and I think it started to move the ball in the in the right direction. It became easier as we progressed forward.”
Still, there were issues. He says they had a lot of cooks in the kitchen. And, though it wasn’t a monolith, the family was not always in agreement on what they wanted when it came to priorities. So, he says they tried to spend time with each one of them to get a better discussion.
“Sitting in the boardroom with everybody around the table was not always the most productive,” he says. “So, we tried to, when we needed to make bigger decisions for the company, try to take it offline, try to spend time with each one of them, try to address every one of their concerns, try to argue our case. And we felt that was a good approach that we work with for the for the bigger decisions in the in the company.”
As they got more investments that they were looking for and the company started to generate more growth, they got more credibility, more access to capital. They worked to get the people that they needed into the business while still using the processes in place that the family had put in and been successful with for many, many decades.
Not only were there a lot of people involved, but every family member had their own set of experts and advisers. The decision ultimately to sell the company, was not an easy decision to come to. He says it took two years to go down that path and to try to determine the right priorities for the deal — whether it was price, jobs, finding the right partner.
“All those things were always in discussion the whole time,” he says. “It feels, looking back, that it was like a pretty straight line, but there was a lot of curves to that process.”
