Succession Planning: Large Company

Transcription

1 Succession Planning: Large Company Aaron Jagdfeld WEDA Fall Conference September 2015 My Background Born and raised in the Milwaukee area Received a BBA in Accounting from UW Whitewater Began career in the Milwaukee audit practice of Deloitte & Touche Hired as a staff accountant at Generac in May 1994 Held progressive positions in finance including Accounting Manager, Corporate Controller and Chief Financial Officer Was CFO at the time of the sale of Generac to private equity in 2006 Promoted to President in 2007; CEO in Broad Product Offering Residential Products Product Chore Related Outdoor Power Equipment Portable & Inverter Air cooled Home Standby End Markets Served Wide variety of property maintenance applications residential, light commercial, municipal and farm Emergency home backup, construction, recreation & other light duty uses Emergency backup small to medium homes Industrial Products Product Light Towers, Mobile Pumps, & Heaters Larger kw & Container Gensets Larger kw & Container Gensets Commercial Stationary End Markets Served Temporary lighting, power and heating for construction, energy and other rental equipment co s a key channel Prime & emergency backup regulated markets Prime & emergency backup non regulated markets Emergency backup small to mid sized retail, telecom, municipal Liquid cooled Home Standby Emergency backup larger homes & small businesses Industrial Stationary Emergency backup large healthcare, telecom, municipal, manufacturing 3 1

2 World Class Manufacturing Facilities Headquarters: Waukesha, Wisconsin (24,619m²) Built 1965, expanded 9 times. Corporate HQ, R&D center. Watercooled genset and transfer switch production. 2012: Office & Engineering Lab. Whitewater, Wisconsin (45,987m²) Built 1997, expanded Vertically integrated air cooled engines, residential, commercial stationary production. 2007: Added distribution & logistics facility Jefferson, Wisconsin (23,690m 2 ) Built in 1992, sold in 1998 and repurchased in Engine Powered Tool manufacturing and warehousing. Berlin, Wisconsin: Magnum (18,581m²) Expanded most recently in HQ and manufacturing facility for mobile light towers, generators and pumps Eagle, Wisconsin (22,297m²) Built 1995, expanded Watercooled genset production & sheet metal fabrication; < 200 kw Commercial & Industrial Stationary Gensets. Oshkosh, Wisconsin (24,000m²) Acquired on November 1 st, Manufacturers and testing for stationary and container gensets from 200kW to 2MW for the US and Canadian market. Bismarck, North Dakota: MAC (4,645 m²) Acquired in October 2014, manufacturer of industrial heaters ranging in size from 200,000 to 4,200,000 BTUs per hour Marietta, Georgia: Powermate America (4,535m²) Acquired in September 2014, Commercial Operations for portable gensets and water pumps under the Powermate brand. Ottomotores: Mexico City, Mexico (15,000 m²) Smaller and Larger kw gensets assembly. Curitiba, Brazil (1,200 m²) Sales, generator assembly, storage Europe Tower Light: Villanova d Ardenghi, Italy (10,000m²) Manufactures and sells the largest range of mobile lighting towers in the world; distributes products to over 50 countries. 4 Unique Omni-channel Distribution RESIDENTIAL DEALERS Network of over 5,000 dealers Installation and after sale service support for residential & commercial products Over 4,000 technicians trained every year INDUSTRIAL DEALERS Network of ~90 Industrial Dealer Locations Work with professional engineering firms to develop customized solutions Support for national account sales ELECTRICAL NATIONAL CATALOG AND PRIVATE LABEL DIRECT TO NATIONAL WHOLESALERS RETAILERS E COMMERCE PARTNERS ACCOUNTS Broad access and exposure to electrical contractors Broad exposure for brand & category Broad exposure for brand and products Increased points of distribution & awareness Direct sales approach for large customers 5 Track Record of Innovation & Growth ~12% organic revenue CAGR $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 History of Innovation Driving Organic Growth Commercialized affordable home standby generators and lightcommercial generators Differentiated distribution model Over 250 engineers on staff as of 12/31/14, over 170 U.S. and international patents and patent applications Natural gas and Bi-Fuel expertise Modular Power System (MPS) approach for industrial applications A.M.P. targeted marketing process and PowerPlay in-home selling solution for home standby generators Continued focus on new product introductions $0 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 LTM 6/30/15 Note: $ amounts in millions. Represents gross sales excluding freight revenue. Excludes Portable Product sales prior to the division s divestiture in Figures include results from acquisitions completed during ; see slide titled Summary of Acquisitions for further details. 6 2

3 Summary of Acquisitions Oct 2011 Dec 2012 Aug 2013 Nov 2013 Sep 2014 Oct 2014 Aug 2015 MAGNUM OTTOMOTORES TOWER LIGHT BALDOR PRAMAC MAC CHP POWER Larger kw and container gensets Mobile light GENERATORS AMERICA Expands mobile Expands chorerelated products products PRODUCTS towers for EMEA Expands Expands portable for Latin America and other domestic offering generator offerings platform with line up and Mobile products market international of standby and for consumer value addition of provides including light Mexico City, markets prime duty and premium commercial and additional scale towers, mobile Mexico & Milan, Italy gensets up to 2.5 contractor industrial heaters to the residential generators and Curitiba, Brazil Bismarck, ND engine powered MW categories pumps tools platform Oshkosh, WI Marietta, GA Berlin, WI Vergennes, VT 7 Represents relatively smaller acquisition of Gen Tran completed in February 2012 (manual transfer switches for portable generators Alpharetta, GA) Powering Ahead Strategic Plan 8 Succession Planning All organizations go through transitions some can be planned for and others cannot There is a difference between entity and individual succession planning but both are necessary Entity level succession planning is about business continuity generally from a family business to another generation or to an outside investor A good plan is about more than just a new capital structure that s actually the easy part A good plan must consider the deeper issues of a change in ownership or a leadership transition 9 3

4 Robert Kern, Generac Founder Founded Generac in 1959 Innovation based approach Entrepreneur led for 47 years Retired in 2006 at the age of The Generac Journey 11 Original company, EMC founded in 1955 EMC liquidated in 1958 Generac founded in 1959 experiences 20% CAGR for next 4 decades Portion of business sold in 1998 to private equity significant reinvestment occurred Remainder of business sold in 2006 to private equity Initial public offering completed Feb 2010 Private equity sponsor exited in late 2013 Individual Entrepreneurship Creating new business from an idea usually focused around commercialization of a product to solve a particular problem Entrepreneurs personally risk their own financial and intellectual capital to start a business Informal structure allows for speed & agility Resources are generally thin necessity is the mother of all invention Failures can be catastrophic 12 4

5 Corporate Entrepreneurship Creating new business from within an existing business through product and process innovations Corporate management structure with limited personal financial or intellectual downside Structure is more formal generally leads to slower rate of development Resources are more developed and generally more available Failures are confined to projects/programs 13 Staying Entrepreneurial How have we stayed entrepreneurial moving from a sole proprietor based business model to a larger company? Clearly defined growth oriented strategy Empowered organizational structure Communicate the importance of innovation Challenge teams to find new ways to solve customer problems make work easier to do Encourage appropriate risk taking not all projects will look great from an ROI perspective 14 Other Considerations Have a firm view on valuation of the business going into a transition In particular, understand tax implications and the impact on valuation How will leadership and key employees be impacted? What are the financial and career path ramifications? Are there other things that are important to the company that must be preserved in a transition? 15 5

6 Thank You! 16 6