Plaskolite LLC has done three acquisitions since January, doubling its employee count to about 1,200 people. While the company is experienced with dealmaking — more than 15 acquisitions over the past decade — this year’s activity has taken the pace to another level.
“We are drinking from a fire hose right now,” says Mitchell Grindley, president and CEO.
Plaskolite is the largest privately owned North American manufacturer of acrylic sheet products. Grindley says the strategy is to acquire companies that add to what Plaskolite does.
“We try not to get into new areas we don’t know much about; try to stay to our knitting,” he says.
Plaskolite is a sizable company, but not compared to its competitors — some of which are $3 billion corporations. Therefore, it remains nimble. Many of those chemical manufacturers want to get back to what they do well, which is making chemical products. Hence, the carveouts that Plaskolite has taken advantage of.
“We try to build our basket with products that our customers need … and we try to be the one-stop shop for them. Again, playing on the big guys’ weaknesses. They only want to deal with their product, the one product. We invest and buy companies where we fill the basket and the distributor can buy the products and combine what they need,” Grindley says.
Each acquisition is a little different, but the blocking and tackling are the same, he says. If you know your numbers, invest time bringing the workforce into your culture and ensure a smooth transition of the systems, you have a good chance of success.
Sometimes, though, the timing is out of your control.
Taking advantage of opportunities
Plaskolite didn’t expect to do three acquisitions so quickly.
Early in the year, Plaskolite acquired the lighting sheet business of Rotuba Extruders Inc. Less than six months later, it added the company’s profile lighting business, too, as part of an aggressive strategy to acquire the largest profile manufacturer in North America.
Plaskolite has always been the largest producer of prismatic lighting panels, Grindley says. But the growth of LED lighting is shrinking the need for those panels.
“We could see that the product wasn’t going to go away right away, the prismatic, but we had a hole to fill,” he says.
The approach, then, was to find a profile manufacturer to fill that weakness. That way when a lighting manufacturer called, the company had both products. Rotuba proved to be the answer.
The acquisition of Lucite International Inc. was a carveout that was initiated when Mitsubishi Chemical Corp. called about divesting its sheet business. Lucite makes acrylic sheets that are used for bathtubs, developing a product that has a higher molecular weight and can deal with harsher chemicals.
The third acquisition, the polycarbonate sheet manufacturing business of Covestro, was another carveout. But Grindley says they put out feelers first, in case the German headquarters wanted to sell the Pittsburgh business, which does $170 million in annual sales.
“We were patient, and it took a year and a half and then we got the phone call that they’d like to look into divesting the business,” he says.
When Covestro called, Plaskolite was still working on the Lucite and profile deals. But this would be the first time that distributors could buy polycarbonate and acrylic sheets together. Grindley says they saw it as a game changer, regardless of the timing.
“It depends on the opportunity, but you can’t always decide how to space them out,” he says.
While multiples are high in today’s deal market, Plaskolite is the obvious buyer as corporations leave the sheet business, so it hasn’t had to overpay. Grindley says they aren’t competing against a lot of buyers, and they try to be patient with a long-term outlook.
“The hardest thing to do is say no,” he says. “We have said no and when we look back on it, that sometimes is the best thing that’s ever happened to Plaskolite. It’s the best decision. It would’ve been very easy to say yes because we all want to grow.”
Experience pays off
The company also considers how the acquisition will fit into its culture. Even with its growth, Plaskolite is holding as tightly as it can to its family culture. This can be attractive to the acquisitions, such as Covestro, it brings into the fold.
The Dunn family established Plaskolite in 1950. While the family sold its controlling interest in 2015 to Charlesbank Capital Partners, it’s not uncommon to see the nonagenarian founder, Donald Dunn, in the office. Plaskolite’s new headquarters also has a lot of space dedicated to the history of the family and the company.
“We really, really try hard to keep that culture a family feeling. We are not naïve to think that it’s going to last forever, but we do work hard at that,” Grindley says.
That’s why as Plaskolite builds a staff for its newly enlarged company, it’s proceeding cautiously.
“Yes, we’re spread thin right now, but with a family culture, you want to make sure whomever you’re hiring fits,” he says.
The culture is bolstered by the fact that while Grindley became president and CEO three years ago, he and the three top managers who run the business as a team have been together for decades. Grindley was in charge of sales and marketing for nearly 30 years and he’s been part of the executive board since the late 1980s.
“We have good teams, good bench strength and we don’t get too far out of our comfort zone,” Grindley says.
The leadership team has been through acquisitions before — they’ve seen it and done it. Yes, it’s more work, he says, but it’s manageable because of their experience.
It’s still difficult, though, to integrate the technology and accounting systems of those acquisitions, which is why it’s critical to have a strong chief financial officer and IT leader.
“We have both and they’ve seen the movie before, so there’s not a lot that surprises them. But they have to be very, very strong and we are lucky to have that,” Grindley says.
But as much experience as you have, there will always be surprises, both good and bad.
“In almost every one of them you find the diamond in the rough — you find something that you didn’t see going into the business,” he says.
For example, in the late 1990s, Plaskolite purchased a mirror manufacturer, which had a coating line just sitting in the back corner. A TV manufacturer came to Plaskolite and asked it to develop a coating for big screen TVs. Grindley says the company ended up using the coating line.
“That TV business was worth millions of dollars. And we had no idea what we were going to do with that coating line. We thought we were just going to put it in the back corner again, but it was an asset that we used very successfully,” he says.
A diamond in the rough isn’t always a product. It can be on the human resources side, too.
“There’s always a few people who are very, very strong who can teach you things that you do not know. You have to be open minded to that,” Grindley says.
On the other hand, when an acquisition requires more work than you expected, experience again helps you make the necessary adjustments, he says. It may take you longer to get to your end game, which is to make your stockholders or company stronger, but you can still get there.
Investing in relationships
When Plaskolite integrates its acquisitions, which it typically tries to do within a year or less because its strategy is to have all products under one umbrella, honesty is crucial. The employees want to know what it means for them and their families.
Grindley says if owners sell their companies because they’re not doing well, you, as the buyer, cannot make promises you can’t keep. The employees will see right through that.
You also want to spend time with the new employees. Bring them to your company, to your headquarters. Invest in them.
“Every acquisition is different as far as the people. But at the end of the day, you have to get them comfortable with where they’re going and show leadership,” Grindley says.
You have to work hard at the relationships with your employees — both old and new. The four top managers at Plaskolite visit plants every quarter to help them feel like they’re a part of the company.
Plaskolite also takes the same approach with its customers. It might bring in 90 customers to its headquarters one week, while still having the ability to pick up the phone and call a single manager or owner.
“It all started with the Dunn family. They really valued the relationship and quite honestly again it gets back to — we compete against major corporations, they change people very rapidly and never really get close to the customer,” Grindley says.
- Grab on to your opportunities — or make your own.
- Experience is critical in M&A. Value it.
- A strong culture and relationships don’t just happen. It takes work.
Name: Mitchell Grindley
Title: President and CEO
Company: Plaskolite LLC
Education: Bachelor’s in economics from The Ohio State University
What was your first job and what did you learn from it? I worked at a Fotomat in a parking lot where people would drop off their film to be developed. As a teenager, you would get bored, so you’d look at the pictures. It was like Facebook. When they would roll up, I would know exactly what’s going on in their family. A lot of people take some really interesting pictures. That was a great job.
What was the hardest management skill for you to learn? At times I’m a very positive person so I tend to move ahead. I had to learn to take a deep breath before you charge ahead.
Where might someone find you on a weekend? I’d say with my grandson or on a golf course — although not too much the last two years. I sure haven’t had a lot of time lately for golf. (According to the USGA’s Golf Handicap and Information Network, his handicap is 12.8.)
Do you have a favorite local course? The Golf Club
Is there anything people might find surprising about you? I’m an identical twin and he works here as the COO.