While M&A activity had been a key to the Lewis-Goetz business before and during its ownership under Audax, Eriks N.A. had been quiet in that area since 2015. But with the Luther King group purchase of the business, Crane said the firm once again has an owner that is supportive in a dual growth strategy that includes acquisitions.
So in early January, Eriks N.A. closed on the purchase of DeeTag Ltd., a distributor and fabricator of hydraulic and industrial hose assemblies. The business brought three facilities, two in southern Ontario, and the other in Conover, N.C.
The family business—owned and operated for 40 years by Dean and Lorna Gordon and Heather and Dino Mansi—focused on both OEM and MRO customers, and is exactly the kind of strategic deal Crane said Eriks is looking for. The Gordons, along with their son, Larry, remain involved in the operation of the business.
"Everything we've seen and done since reinforce the fact that we've got an opportunity to help them build that business even faster and incorporate some of the great things into our own business so it can grow faster," Crane said.
While the Eriks N.A. CEO sees the opportunity to accelerate organic growth, it's always been part of his DNA to couple that with the right kind of strategic acquisitions.
"I don't think we need to lean on M&A as much as we did in the past," he said. "I think we can be a little more selective in the companies that we want to acquire, but we have the capital and the support of the board to be as aggressive as we want to be in M&A."
The main criteria for acquisition candidates, Crane said, is companies that have demonstrated above-market growth in their history, or have the potential to achieve that. Ultimately, Eriks N.A. is looking to grow its business at a rate three to five time higher than the market.
Despite the fact that the fabricated rubber goods distribution market has been in consolidation mode for more than 15 years, it still remains a fragmented space with thousands of players, according to Crane. And there is competition for the acquisition candidates, causing the sellers to become more sophisticated.
"The best acquisitions are the ones where the fit is the best. Ultimately the kind of seller that we're looking for is someone who sees the benefit of the resources that we can bring to bear," he said. "And the fit with our organization, not just the financial consequences, but what will happen to the people in that organization. How well are they going to be taken care of? Will we invest behind the business to grow it, or will we consolidate it into existing locations?"
While price is always a consideration it's not the only factor. And as Crane and his team try to re-create at Eriks N.A. the culture of teamwork and collaboration it had about eight to nine years ago, they will look to these acquisitions to be an integral part of that growth strategy.
"And we're not always going to be the right partner. We're not always going to have the pitch for every seller," Crane said. "Some sellers have very different calculus, and that's OK. We're looking for the sellers who are looking to be part of something bigger, who want their organizations to be part of something bigger and with the resources to leverage to drive what they want to see happen with their business."