1. In the Eye of the Beholder… Transforming an Underperforming Business Jason P. Premo ADEX Machining Technologies

2. Discussion Topics Introduction Finding & Acquiring the Right Business
Transitioning with the Owner
The Critical First 90 Days
Quickly Capitalizing on Hidden Wastes
Lessons Shared

3. Introduction Jason Premo ADEX Machining Technologies
Engineer to CEO, Serial Entrepreneur
ADEX Machining Technologies
Formerly M.C. Tool, Inc., Greer SC
Roots as a “Tool & Die” Machine Shop
Founded 1987 – Acquired Oct 2007
Previously 19 people, $3million sales
Results in 12 Months
Precision Manufacturing: Prototypes to Production for Aero, Energy, Defense
Now 56 People, 24x7, $10million sales
Growing Strong in Down Economy

4. The Search Business Plan First Create a Search Criteria Matrix
Write a business plan as if you already had the company and were running it. Insert name later.
Create a Search Criteria Matrix
What are the Must Have’s and Would like to Have’s
Industry? Processes? Niche? Size? Geography?
Jealously qualify prospects against this criteria
Due Diligence Examples
Looked at over 34 businesses in 5 states
Typical: Last 3 years sales declining, health event, no exit strategy, owner is a micro-manager, no customer relationships, no niche, no value-add

5. The Search

6. The Seller Seller as an obstacle What the Seller is Thinking
Most business owners not prepared and will be obstacles to completing the transaction
Building a relationship with the seller is crucial
What the Seller is Thinking
Before the transaction: Shall I sell my business? What is it worth? How can I find a buyer?
During the transaction: How much shall I tell this guy about my business? Will he raise his offer? What terms shall I insist on? Will they fire my employees?
After the transaction: Should I really have sold? I wonder if I could have got more money. I wonder how the business is getting along.

7. The Choice Why We Picked This Business Strengths Opportunities
Strong fit against our Search Criteria
“Hit it off” with seller – built trust quickly
Weaknesses were really opportunities
Strengths
Good customer relationships and track record
Beginning experience in niche processes
Talented employees and skills sets
Opportunities
Underutilized capacity (and employee talent)
Zero marketing. Huge upselling opportunities with existing customer base and expand niche capability.

8. Owner Transitioning Keeping Skin in the Game
You aren’t as smart as you think
Will take you years to turn over every rock
Structuring a seller’s note not only helps with financing the deal, but ensures a smooth transition
Defining Owner Role is Important
Don’t expect the owner to assume a coaching role
Clearly define expectations for Owner
1 year plan to introduce all sales relationships
Involvement in RFQ analysis and quoting
Be careful not to make owner look bad as you make process improvements and changes – Be humble!

9. First 90 Days Build Employee Relationships Avoid “Savior Syndrome”
Employees first reaction is fear about their job
Seller introduce new owners, conveys confidence
One-on-one time (90% personal / 10% business)
Avoid “Savior Syndrome”
Don’t make big promises...Clearly communicate the vision and specific (simple) goals for the business
Operational Opportunities
Teach everyone about the “8 Wastes” (Lean Mfg)
Sales Opportunities
Spend time with customers & learn how to add value
Quickly FIRE CUSTOMERS that are not a fit!

10. The 8 Wastes

11. Order Processing!

12. Pareto’s Law: 20% of customers account for 80% of your business
Pareto Your Customers
You will find that many of your customers are draining your resources and time away from taking care of your most important customers!
Pareto’s Law: 20% of customers account for 80% of your business

13. Opportunity Summary Made Execution Our Specialty
Making small promises and keeping them builds a huge amount of trust (employees & customers)
Opportunities Implemented in 1 Year
Shotgun approach to laser target market (Re-Brand)
Quotation response from 2 weeks to 3 days
Order Processing from 1 week to same day
Reduced lead time to customers by 60%
Leveraging employee ideas and empowering them reduced turnover from over 40% to less than 2%
Firing no-fit customers made room for new customers that tripled sales on existing assets

14. Lessons Shared Stand on the Shoulders of Giants
Form a board of advisors who will challenge you
Maximize Line of Credit Early
Hyper-growth can quickly strain working capital
Don’t Plan on the Owner Hanging Around
Tough to give up control. Seller lasted 4 of 12 months
Consistency is Key with Employees
Eliminate favoritism. Hold everyone to same standard
Quickly deal with employees that are not on board
Create a Leadership Team
Enlist and empower employees, give them goals and boundaries and let them make decisions without fear

15. Questions?

16. ADEX Machining Technologies
Thank You!
ADEX Machining Technologies
54 Concourse Way
Greer, SC 29650
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