Acquisition and Succession Planning in Manufacturing
German highlights a concerning trend: over 65% of manufacturing companies in the U.S. are owned by baby boomers who are now retiring without a solid succession plan. This situation presents a significant risk to the industry, as younger generations show less interest in taking over these businesses. The potential fallout could lead to a widespread collapse of manufacturing capabilities. In response, German’s company, BC Tools, has been proactively acquiring manufacturing businesses, such as Allied Tool Products, to safeguard their continuity and preserve essential manufacturing skills. They discussed the story of a 120-year-old family-owned chemical distribution business that had to shut down because there was no one to take over when the owner retired.
German’s Background and Journey
German is originally from the Dominican Republic and moved to the US 13 years ago, not knowing any English. He started working in a restaurant kitchen, then studied English and obtained licenses to work in the financial sector. Over time, he gained experience in finance, business acquisitions, and private equity, which led him to the manufacturing industry. German sees the manufacturing sector as a challenging but impactful industry where he can make a difference, given the looming succession crisis.
Challenges and Lessons Learned as President of Allied Tool Products:
One of the key challenges German faced was working with engineers, who tend to be more analytical and resistant to change compared to his previous experience in finance. He had to develop more patience and a collaborative approach to guide the engineers through process improvements and new equipment implementation. German’s strengths lie in his resourcefulness, problem-solving abilities, and unwavering confidence in finding solutions, which he attributes to his past experiences and resilience.
Advice for Manufacturers Considering Acquisition or Succession Planning:
When considering an acquisition, German emphasizes the importance of evaluating the company’s culture, systems, and processes to ensure a smooth transition. For manufacturers looking to exit or sell their business, he advises them to focus on structuring the company in a way that allows it to continue growing without the current owner’s direct involvement. This includes documenting processes, developing a strong management team, and cultivating a culture that can thrive beyond the current leadership.
The interview offers valuable insights into the challenges and opportunities within the manufacturing industry, especially regarding succession planning and strategic acquisitions. German’s personal journey and leadership at Allied Tool Products provide inspiring lessons for other professionals in the field.
Links:
https://www.bluesapphirecapital.com/
Topics discussed:
1. “Navigating Succession Planning in Manufacturing: Insights from German Sanchez”
2. “From the Dominican Republic to President of Allied Tool Products: German’s Journey”
3. “Overcoming Challenges as President: Lessons Learned from German Sanchez”
4. “Acquiring Success in Manufacturing: Herman’s Strategies for Growth”
5. “The Looming Crisis: Addressing the Succession Gap in Manufacturing”
6. “Engineering Change: German’s Approach to Process Improvements at Allied Tool Products”
7. “The Impact of Private Equity: German’s Perspective on the Manufacturing Industry”
8. “Preparing for the Future: German’s Advice for Manufacturers on Succession Planning”
9. “Culture and Continuity: German’s Key Factors for a Successful Acquisition”
10. “Lessons in Leadership: German’s Resilience and Resourcefulness in Manufacturing