MIDDLEFIELD, Ohio—Universal Polymer & Rubber Ltd. has made a business of collecting smaller ones.
The company completed four Northeast Ohio acquisitions in the past nine years, and is planning more for the future, said Joe Colebank, UPR president and CEO.
It started with acquiring ACL Custom Rubber Inc. of Ravenna in 2008, followed by Dybrook Products Inc. of Warren in 2012. It then expanded its own Middlefield plant by 36,000 square feet in tandem with its acquisition of Universal Rubber and Plastics Corp. of Tallmadge in 2014. The most recent purchase was the assets of Crest Rubber Co. of Ravenna earlier this year.
Though internal growth through the sales department is important, acquisitions are opportunities to bring in new processes and experienced employees.
"In today's market, it's very difficult to get talented people," Colebank said. "Most people are already working."
Colebank and his team start by looking for companies in the polymer industry.
"We want to make sure it's in our area of expertise as far as polymers go in rubber and plastics," Colebank said. "We really don't look at steel or anything like that."
He aims for companies located geographically close to UPR, partially because Northeast Ohio's history with the rubber industry created a business environment favorable to a company looking to grow through acquisition. When rubber companies began to leave Ohio in the 1970s, they left behind talented people who needed a place to work, Colebank said.
"So they started some smaller companies, and have been with and grown those companies," he said. "Now they're in the 70+ range, their sales are anywhere from a couple million to $15 million to $20 million. And they have no succession plan, and no relatives in the current business. We look at that and say that's an opportunity for us."
After spotting those opportunities, Colebank looks for what that company would bring to UPR.
"What kind of value does it add to our current customer base? Does it get us into some other markets we'd like to get into?" Colebank said.
For example, ACL Custom Rubber was primarily an extrusion company for concrete pipe gaskets. UPR already had products for pipe gaskets, but not specifically for concrete pipes.
"It was very advantageous to go after that side of things for ACL," Colebank said.
Universal Rubber and Plastics brought microwave extrusion and die-cutting to the larger organization.
"Those are two things we didn't do at Universal Polymer & Rubber," Colebank said. "That added to our being a more full-service company to our customers."
For some of the companies Colebank works with, the owners have never even had the companies valued before. He keeps a steady line of potential acquisitions coming, with eight possible candidates on his desk at the time of his interview, narrowed down from about 50 to start. All of them could fall through, he said.
"As you talk with a lot of entrepreneurs, they're thinking with their hearts, and not looking at it from the business side of things," he said. "They've got blood, sweat and tears in their companies. But it's not me or UPR that dictates what the price of the company might be worth. It's the market."
But the price isn't the point that most owners want to ensure. Colebank said most often owners are looking to make certain their employees will be taken care of.
"That's very high on our list," Colebank said. "We treat our people like we want to be treated. We believe in the Golden Rule. We have a very high value for those people. They're our largest asset. You can take the brick and mortar and machinery out of a company, but without the people, you've got nothing."
In each of the four acquisitions made by UPR, Colebank has offered positions to every employee in the company. Some didn't accept because of driving distance or opting to retire, but an offer was still made. When Crest Rubber was acquired, each of the six employees, who combined for more than 50 years of industry experience, was offered a job.
UPR may not continue that trend moving forward, but he takes pride in being able to bring as many experienced people on board from each acquisition as possible. Incorporating employees from other companies helps keep UPR running lean. UPR now has about 150 employees.
"We don't just have a bench of people we want to plop into a company and run it," Colebank said. "We're pretty lean, so we're looking for the type of company that can continue with our support and continue to grow."
Integration and growth
Once the acquired company is part of UPR, Colebank and his management team looks into how the new acquisition fits into the current facilities, and what they take on with the company. UPR integrates the employees and systems, manages certification levels and looks at each process to find the best way to incorporate it into the company.
"It's broken down to each functional area, and we split that up to each (management team member's) experience, and support them to get that done," he said. "If we need to go outside to get that support and can't do it internally, we do that."
Leading his management team is John Zielinski, his executive vice president, who Colebank had worked with at a previous company before bringing him on to run the entire UPR sales team about 12 years ago. Keith Knight, vice president of operations, has worked with Colebank for about 30 years across two different companies as well. Chief Financial Officer Donna Umbrazun was working in an accounting position at UPR and advanced to controller before her current position.
"These are people we've all worked with, who had good recommendations from other people, or who have come through to us from acquisitions," Colebank said. "I can't emphasize enough getting good people and treating them right."
One major area Colebank pays attention to is the company's cash flow, and its activity, which also plays into the investments UPR might have to make as it integrates the company, he said. It also can serve as a warning sign of possible problems going forward.
"We're not experts, and every company has some skeletons in the closet. The thing is, as the skeletons pop up, we make sure we have the capability of handling them and moving forward," Colebank said. "We get a little better each time."
Another guideline he and his team work by is to only take on one acquisition at a time, waiting until the new employees and processes have been acclimated before starting over, he said.
"We understand it would be very difficult for us to try to do two acquisitions at one time. We're not that big. We don't have that large of a team," he said. "It's all hands on deck when we do something like this."
Colebank also has UPR's parent company, Cypress Companies of Akron, to work with in developing and integrating acquisitions. Cypress bought UPR in 2002, more than 30 years after it was launched in 1970 under the name Polymer Raymond.
When it comes to looking for advice on acquisitions, he leans heavily on the Cypress Companies team, he said.
"We also have the advantage of having the Cypress Companies to bounce things off of. They have a lot more experience with acquisitions than we do," said Colebank. "They're a small group of people, but they're great to work with."
Colebank doesn't have a specific size in mind for UPR as a goal, but he might become more picky about which companies make the cut as growth continues, he said.
"It takes the same amount of effort to acquire a company that's worth $3 million as it does ones that are worth $25 million. You go through the same due diligence. The banking relationship might be a little bit different, but it's the same process," he said.
With that kind of growth in mind, Colebank has to make choices about how to spend his time to get the most out of an acquisition for the company.
But even if UPR doesn't do another acquisition, the company is steady as it is, said Colebank. Of the eight he has on his desk, he and his team have already started with contact and building a strategy around what each could bring to UPR.
"Growth is healthy for a company. As we go forward, I don't want to say we'll ever stop," he said.