Mark Lewis is a man with a plan. The president and CEO of Visual Edge Technology Inc. has filed a five-year growth plan with his company’s board to grow the $40 million business to an initial public offering next year, then to grow revenue to more than $500 million by 2010. It may seem like a daunting task, but Lewis’ plan is already under way. The North Canton-based imaging solutions company serves as the parent company for three subsidiaries, and at press time, Lewis was preparing to acquire companies in California and South Carolina. These acquisitions will increase VisualEdge’s staff by 140, and Lewis is involved in acquisition talks with more than 20 other companies, representing about $425 million in combined revenue. Smart Business spoke with Lewis about how he manages the ups and downs of acquisitions.
Build a solid infrastructure.
When you grow a business and you grow those employees, it’s absolutely critical to have operating management that has the decision-making power to continue to run their businesses. The typical mistake is integrating the companies and creating operating pressure on the parent company.
When I buy a company, there’s an operating president. He reports into me, but he’s still responsible for managing his 100 employees, even though they’re ultimately employees of the parent company as well.
Maintain consistency.
When we acquire the companies, we don’t change their culture, their name or their management structure. When you buy a company and change the entrepreneurial attitude and what the employees have been accustomed to for so many years, it makes employees uncomfortable, and they don’t have the proper buy-in.
It’s important that these employees feel that they still have local management and leadership after an acquisition takes place.
From a financial standpoint, we’re acquiring solid revenue and profitability. From a people standpoint, we’re investing in good people — management and employees — who can continue to perform their individual responsibilities.
Encourage teamwork.
Make sure employees feel comfortable, that they’re part of one team, and that the cultures of the different organizations are not changed just to improve the bottom line. It’s a balancing act of making sure you get continued revenue growth and profitability while ensuring that the continuing management has the motivation to participate in a much bigger company and strategy.
The process that you go through to accomplish that balancing act is getting comfortable with the people you work with and having fun with what you’re doing. I have a lot of passion, and I try to extract passion from everybody else, because if you get out of bed in the morning and don’t like the place where you work, it’s not the right company for you.
When you’re making money, and you’re growing, it sure helps. Our plan, by going to a public offering … provides an incentive that each employee has the opportunity to participate in the ownership of the company. That is the game plan.
Establish the rules.
You need to make sure the rules of the game are established, and everybody understands the rules. In the acquisition business, when you don’t explain those rules of the game and then you try to establish rules after the company joins you, surprises happen, the people don’t feel comfortable with the new team, and then you have to deal with the culture change after a deal takes place. If that’s not clearly defined up front, with both managements and employees of the company, it doesn’t make sense.
Promote open communication.
Open communication within your team is part of the leadership responsibility of the CEO. It’s absolutely critical that all your employees understand the vision of your business and understand the performance of the company.
Whether it’s sharing the company’s triumphs or challenges, they have to understand where the company came from, where the company is today and most importantly, where the company’s going, from a financial performance standpoint and from a strategic standpoint.
There are various communication tools that the company can provide to its employees to show how the company’s doing. We have a quarterly newsletter that goes out to all the employees of all the companies. We’ll send out a DVD to our employees in the field.
We send out monthly communications on our performance. These are examples of continuing efforts to maintain the highest level of consistent information and active communication to the employees because your employees and your customers are your biggest assets.
Without your customers, you don’t have employees; and without employees, you don’t have customers. So it’s really a balancing act to make sure that our customers and our employees are being supported.
Ask for advice.
I won’t do an acquisition until (the executive team has) recommended and authorized it. I may like an acquisition but if the rest of the team does not like it, we won’t do it.
It’s a team decision. The company is run as a team. At the end of the day, I just force the decisions to be made.
Make timely decisions.
I never want to lose the capability of making timely decisions with our customers, our vendors and our employees by a growth strategy that takes the company over $500 million. One way of doing that is to make sure you have people involved in details and you have operating management.
When management isn’t involved, the ability to make decisions is uneducated and takes too long. Then there’s typically an effect that happens in the decision that’s being made.
Remember the five key elements.
What I’ve learned over the years through networking and direct experience is that in the acquisition strategy, it’s got to be a win-win for the shareholders, the management, the employees, the vendors with whom we do business and the customers. Those five elements are my litmus test before I will approve a deal. If you’re not comfortable with that, then typically the deal’s not a good deal.
So many times companies will merge with another company or acquire another company because of the financial benefit, but the way the process is implemented, three of the most important things are not looked at in how the business gets run moving forward. So after they buy the business, they end up spending the time that should have been done upfront to try to make the deals work.
On your checklist, if all five are checked off, then you’ve gone through a part of your due diligence that you are responsible for as the CEO. Those five elements have to be clearly understood and defined when you bring companies together.
HOW TO REACH: Visual Edge Technology Inc, (800) 321-9874 or www.visualedge.com