Exclusive: Grey Mountain talks strategy
In the span of three months, Grey Mountain Partners, the Boulder, Colo., private equity firm, acquired four glass and metal fabrication companies: Custom Components Co., Columbia Commercial Building Products, Global Security Glazing and Hawkins Architectural Products. Recently, Beth Lesniak, vice president and affiliate manager for Grey Mountain, spoke exclusively with Glass Magazine about what lies ahead, specifically for the fabrication companies now under the Grey Mountain umbrella.
Glass Magazine: Grey Mountain Partners had been looking to make acquisitions in the glass and glazing industry for some time. What makes the glass industry an attractive investment?
Beth Lesniak: Clearly, we are avid fans of the industry and have been looking for an opportunity to put money to work in the glass space for quite some time. We were introduced to the industry when we looked at Arch Aluminum & Glass, and we’ve been attracted to the space ever since. We further increased our understanding of the industry and the opportunities if offers when we endeavored to invest in Vitro America.
Fundamentally, we believe in the long-term, underlying demand for glass fabrication services and products, and see this demand continuing to grow and evolve as the economy at large recovers and the end markets we serve not only look for providers that can offer a comprehensive solution but also place an increased focus on more sophisticated solutions. [These would include] the highest standard in customer service, technical products that address both functional and aesthetic needs, and green products that speak to energy efficiency.
Taking a step back, Grey Mountain’s approach to investing is centered on finding opportunities where operational improvement will lead to the creation of long-term value at our companies. We do not try to time the economy and are not looking for a “quick flip”; we realize that what we are building will require patience and a long-term view of the market. We believe the glass industry has experienced upheaval and turmoil over the past few years, and thus there is a unique opportunity for a strong player with quality products and solid customer service to become a leader in the market. We also bring capital to the table, which will support upgrading equipment and facilities, increasing training and safety for our employees, and fortifying the balance sheet when appropriate. We are very excited about the future of the glass industry and will continue to invest in it as we build a leadership position.
GM: You announced the purchase of four glass and metal fabricators, in quick succession. What business model are you trying to build?
BL: Our strategy is to build a national presence as a leading glass fabrication and architectural metals provider with a comprehensive set of capabilities. We are doing this both by acquisition as well as green-fielding. This strategy includes possessing unique/niche capabilities, such as the security glazing expertise of Global Security Glazing. We aim to set a new, higher standard for quality and reliability, while also being innovators in the industry.
The cornerstone of our investment philosophy rests in finding good people to be a part of the companies in which we invest. Thus, in addition to supporting the talent we acquire and the operators with whom we partner, we are enthusiastic about building our talent pool with individuals who are motivated to be a part of a company with “best in class” standards. It’s been a rough time in the industry, and we are offering a fresh start at a well funded company that is on a strong growth trajectory. We are only as good as the employees that are on the floor at the plant making it happen every day.
GM: These acquisitions must present integration challenges; how do you plan to connect the acquired companies?
BL: We are the first to admit that integration is not easy, and a successful plan for integration can’t be designed in a board room and rolled out from an office. Many of the companies we’ve acquired have a strong brand or local leadership, or focus on a particular product niche. We plan on operating our network of glass and metal fabrication companies under a flagship name, while allowing the companies to maintain their unique identity and strengths.
As one might expect, much of the integration will be focused on the back office. Grey Mountain works very hard to find exceptional leaders for the businesses in which we invest. We are installing a CEO whose primary focus will be on affecting successful integration and setting the strategic direction for the entire network of acquired glass and metal fabrication companies. We are also working with industry veterans who have unrivaled knowledge of operations, the competitive landscape, and the industry dynamics. The experience and talent of such individuals are instrumental to our success on this front and ensure that the integration efforts are carefully planned and executed at a tactical level.
GM: Grey has acquired companies in the glass and metal fabrication segments, as well as the installation/retail sectors. How are you positioning Grey in the marketplace in relation to other national players such as Trulite Glass & Aluminum Solutions or Oldcastle BuildingEnvelope that also offer a variety of glass, metal, and products and services?
BL: You are correct in that we have made acquisitions in the glass and metal fabrication segments as well as installation/retail; however, these are two separate investments in our portfolio, being managed and operated separately.
In terms of our acquisitions in the glass and metal fabrication market, we will be direct competitors of players such as Trulite and Oldcastle BuildingEnvelope. … We… do not plan on competing in the market for monumental projects. Trulite will be a close competitor, but one that is clearly larger at this point in time. We believe we can differentiate ourselves by focusing on quality, execution, and long-term partnerships with our customers and suppliers such that we are the provider of choice. We embrace a culture of continuous improvement that will inure ongoing benefits to our employees and our business partners, and thereby allow us to fill a void in the market. In that regard, we will have the advantages of a national player combined with a local focus and service orientation that we hope will put us in a class of our own. Of equal importance, we are committed to creating an environment where employees are energized to come to work every day because they are excited about the future of the business and want to be part of a winning team.
GM: With the market and values down as low as they are, this is obviously the time to buy businesses. What’s next in your acquisition strategy to round out the portfolio?
BL: We are clearly looking to aggressively grow our footprint and product offering, and bring strong team members on board. Our next acquisition might add a geographically desirable location, introduce new capabilities and products, or increase our scale in general. However, we don’t take a vulture approach, even though the market is depressed, as you note. We aim to find good businesses (and that includes businesses that were formerly strong but are now encountering some challenges), pay a fair acquisition price, and partner with management (or provide an exit in cases where that is the goal of the sellers). There might be a business owner reading this right now who is excited about the prospect of being part of our build up in the glass space. We love getting those calls! By the time you are done with this interview, you’ll likely have another Grey Mountain glass deal to cover. Suffice it to say, we plan on keeping you very busy!