How to Make More Money When Selling Your Manufacturing Business with Fran Brunelle

Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the Manufacturers' Network Podcast. I'm excited to introduce you to our guest today Fran Brunelle. Fran is the President and founder of Accelerated Manufacturing Brokers. She specializes in the sale of small and mid-sized manufacturing firms. To ensure the continuity of US manufacturing, Fran and her team help transition ownership to the next generation of entrepreneurs.

Recently Fran was named to the 2020 most influential women in mid-market mergers and acquisitions. Fran is also the host of WAM - Women and Manufacturing podcast. She writes on topics that helped manufacturing business owners prepare their companies for sale and navigate the sales process to ensure positive financial results supporting their retirement. So, Fran, welcome to the show.

Fran Brunelle: Thank you so much for having me. It's good to be with you today.

Lisa Ryan: Fran, please share a bit about your background and what path led you to work with manufacturers and get into the selling of manufacturing businesses.

Fran Brunelle: Sure, So, we just passed in April, our 27th anniversary. So, we started my career serving the manufacturing community as an industrial auctioneer selling the manufacturing equipment that the businesses use that I currently sell. Often, a manufacturer who needed an auction had some need for speed, usually because they were in financial trouble. But the companies that were buying equipment from us were growing thriving, constantly rotating out their equipment for newer pieces or better brands. Eventually, at their behest, we started our journey as M&A professionals. Those buyers said to us, "Hey, I need to retire. I was hoping you could sell my business or help me find a company to acquire to facilitate my growth. For a while, we ran both divisions, and we started to hit our stride in manufacturing M&A, and, at the point where we grew over 400% three years running, we said goodbye to auctions. Like the M&A practice, you're 

helping to transition ownership of manufacturing to a different generation of entrepreneurs, ensuring that the company goes on and the jobs go on.

So, it's a much different gig than auctioning. I remember very early in my career. I used to say, God, this cannot be my purpose in life; I'm the grim reaper. Over time, the skills that I learned in the auction industry and learning about manufacturers and machine tools. It was a process. I would never be able to do what I do today to help manufacturers retire in wealth if I had did not have that basis to understand manufacturing.

Lisa Ryan: From the standpoint of succession planning, there's a lot of my clients that don't have their children, or their children may have no interest in the business. There isn't a succession plan. In this podcast, we talk about employee retention, engagement, finding employees, and all these steps. As we were talking before the show, when you set your business up for sale in the future, now or in the future, you're going to have all those processes in place where you're going to have happy staff, and you've done workforce development. So, what you can do now to sell your company in the future, perhaps, or what you need right now, is attracting and retaining good employees. Would you please share a bit about the good things these companies do for their workforce development and create that culture?

Fran Brunelle: One of the things I enjoy talking about, and just an observation from traveling the entire country selling manufacturing companies, is that everybody talks about a skills gap. A lot of people complain about it, but not a lot of people do something about it. Manufacturing companies that are proactive in their communities, engaging with the high schools, and engaging with the trade schools are not having the same types of problems as others.

You have to be involved if you're waiting as a manufacturer for somebody else to do it, for the government to do it, it ain't gonna happen, sweetie. So we have to take action. We've just seen some wonderful things company that we sold down in Carolina. The owner was very involved with the local high school. They had a work-study program where the students could go and try out a career they thought they might be interested in. He would hire them, and the owner would start them doing some menial tasks. If they showed work ethic, he would move them to shadow a machinist, a setup guy, someone doing solid works depending on where the students' interests lie, and if they determined that this was a career path that they wanted, he would take them down to the local trade school. He would help them. The trade school would assist the student and applying for any grants that might exist. If there were no grants available for the student, my client would pay for their education to promise that they would stay with him for a short time.

I remember saying to him, "So, you're paying for these students' education. Aren't you afraid that they're going to leave and go to a competitor?" His response to me was, "Well, shame on me if they do because I've not created a culture that they want to stay in." He had a delightful program staff. It was such a wonderful mix of middle-aged guys, but some very young firecrackers came up through the process.

Things like this workforce engagement, not just doing things to address the skills gap and pulling them in but then creating an environment where they want to stay in those companies. I've been doing this for 27 years. As a result, those companies sell faster and at better prices. Suppose a buyer walks into a manufacturing company and sees everyone has gray hair, and half are walking around with a cane because they're about to croak. In that case, your buyers and acquisition lenders see danger in that.

You cannot wait as a manufacturer until you are right up at that point to start to address it. It takes years to handle these things.

Lisa Ryan: It's interesting. Many manufacturers don't know that you can work with the workforce development sections of your local community college or tech schools and design the exact employees you want to put together the programs to customize those employees. Building those relationships, you're going to have a one-up on the competition because they're already there. But the fact that he's paying for the education, he's creating that culture. He's taking any of the competitors out of the market right there because this employee has shadowed. They have followed the management. He's already invested in them. He's showing them that he sees something in them that maybe nobody else has ever seen before.

There's that fear of, "Well, I'm going to spend all this money to train these people, and then they're going to leave." Good for him for realizing the fact that it's still up to you. You still create the type of culture that keeps them there, but this is not something that happens overnight for the people listening. This is something he's invested in that time. He's invested in those relationships. I'm sure that whenever he is ready or was rated to sell, that company probably went rather quickly and at a reasonable price.

Fran Brunelle: We had four different offers - all over list price. That man got to choose who he wanted to sell to. The company that bought them is fabulous. It was to individual buyers leaving corporate America. One had been CEO of a publicly-traded company. These staff members are now exposed to educational opportunities that they would never have otherwise been exposed to. Fabulous company.

Lisa Ryan: When you look through when you talk about what these buyers and lenders are seeing as they're walking through an organization. Do you have a wide range of people? Do you have a diverse staff? Do you have a diverse team of all different ages? Those young kids are coming up and bringing that energy to it. You can feel culture. You can walk into a plant, and you can feel if people want to be there or not versus the people that are just about to retire. Who would want to buy that? You have people in that retirement mode who might be thinking, well, why should I make friends with these young kids? They're just going to be gone in six weeks anyway.

What have you made friends with them, and built those relationships, and like that owner connected with them, and made them feel valued that's what keeps them there.

Fran Brunelle: One other thing I would say about involvement with schools in your community. Everyone thinks it's difficult to do this. Schools are struggling. I've had clients that have donated machine tools to the trade school. As a result of that, one particular client got to have his banner placed upon the wall of the machine tool school. Who do you think students are going to call? He gets the cream of the crop because he shows the Community school that they care about this student's development. I'm sure he gets the best employees before his competitors.

Now you do strategic planning in every other area manufacturers. So I'd like you to have.

Lisa Ryan: Exactly. What are some of the biggest mistakes that you see companies making?

Fran Brunelle: It is an interesting subject, because what makes a manufacturer successful also makes them incredibly easy to sell, and they sell it at a higher price. There's any number of things. We talked about workforce development.

Another topic would be modernizing your equipment. Manufacturing had a bad reputation for several decades for a reason. Hopefully, we can get the message out that it's not a dirty old machine shop. Some of the places we visit are like cleanroom hospitals. They have modern work environments, and I just took a deal under contract in the Midwest. They have done fabulous things with continually modernizing their equipment and bringing robotics in. Everybody is afraid that robotics is going to take away jobs. In this particular instance, a job was the least favorite job in this machine shop. It had to do with the weight of the metal piece that had to be put into the CNC machine. My clients said, "Okay, let's see what technology we can apply to this." So we don't have this issue of anybody wanting to do this job when you walk into their facility.

It's funny you talk about atmosphere, how you can sniff a good atmosphere instantly. Well, that was this place. They instituted robotic cells, and that's the first thing you see when you come in. My client said that it was the best recruiting tool they have. Young people come in, and they're like, wow, this is amazing. I didn't expect this. It's a wonderful clean environment. They have documented procedures. Everyone knows what to expect. There are bonuses relative to performance, and they treat their people right. Those are all things that make a difference.

Beyond that, we have blog articles. A recent blog article I did had 15 different points that help a manufacturing company to sell well. There are things like customer concentration and sector concentration. In some industries, that's very hard to avoid. For instance, if you're in the aerospace sector, you will have a customer concentration if you're doing anything of relevance because there are only so many big players in the industry.

In other areas, buyers and lenders will look for less customer concentration. There's a whole host of things that matter, but the workforce development and the skills gap are among the largest.

Lisa Ryan: When you're seeing these companies investing in that workforce development, what are some of the best ideas or the best tips that you would give to somebody listening today as far as focusing on that area?

Fran Brunelle: I think one of the things that I would say is exposing someone coming in a student say do it on a Work Program. Expose them to any number of things. I had two different clients in the past, would start workers out in high school, as I described earlier, but they would rotate them around the entire shop. Then, once they were trained on everything, the person could gravitate to what they most were interested in and where they had a fit. The manufacturer ends up with a whole team of people who are cross-trained. If people are going out sick, you're not afraid of that because you have a fully trained team that skill did in every type of machining. That's probably the most important thing, I would say.

Lisa Ryan: Not only from a cross-training standpoint, but there you're also giving your employees opportunities to find the job that light them up. They may have applied for one particular job that they thought would be okay, and that job might have kept them there for a little while, but by having the opportunity to go around the shop, and having a say in what they do, because that is not a common practice. So when you can differentiate yourself over what everybody else is doing - when you're all competing for these same employees in a lot of cases - all of these little things that you can do, and cross-training is such a win, win.

Fran Brunelle: it's funny you just said you reminded me of an interview that I did for the women and manufacturing podcast with a woman from Koch industries. She told me a story about what of their workers whose job was loading tractor-trailers every day with paper products toilet paper shipped all over the country. This gentleman had an interest in technology, and today, he designed the computer programs that the entire process in that plant is now automated. That man wrote the program to accomplish all of that. They gave him the autonomy to work towards what he was most interested in. I just found that touching in a great story and a good example for other companies. Sometimes you have talent, and you hire a person for one thing, and they end up being fabulous in something else. You've got to give them the room to discover that.

Lisa Ryan: Exactly! Well, that is such a great tip. As we're coming to the end of our time together, tell us a bit about how you work with your clients and what's the best way to get in touch with you.

Fran Brunelle: Sure. In the M&A sale process, we represent the seller. We don't represent buyers. We get that request a lot, but our goal is to help with the manufacturer. Often the buyers are private equities, much larger corporations. Sometimes they have teams of attorneys. My interest is in assisting the manufacturer in protecting them through the process and ensuring that the jobs stay in the community. So that's how we work.

We will run a potential client through an evaluation process. So before we ask them for a listing, they will know we will have provided them with an opinion of the value of their company, and we will do that without charge. Now some people come into the process, and they are perhaps smaller than I have an audience for, and I'll tell them that up front. But again, my industry is interesting in that many work where you're paying 10s of thousands of dollars upfront to find out what is my manufacturing company worth, and how long is it going to take you to sell it, and what are you going to do to sell it, and what is the whole process like.

We will work with you to understand these things upfront and walk you through an educational process. So you are completely prepared for anything that's going to happen in the M&A process.

Lisa Ryan: Wonderful, and what's the best way for people to get in touch with you?

Fran Brunelle: best way you can visit our website acceleratedmfgbrokers.com, or you can call us 908-387-1000.

Lisa Ryan: Well, Fran, it has been an absolute pleasure to have you on the show with me today thanks for being here.

Fran Brunelle: thanks for having me. It was a joy.

Lisa Ryan: I'm Lisa Ryan, and this is the Manufacturers' Network Podcast. We'll see you next time.