Be a good steward
However, with ADS’ strong execution around sales, margin expansion and cash flow generation, the company is generating more capital. Barbour says the challenge for the next three to five years will be determining how to deploy that capital.
“We’re very engaged with our board of directors in this,” he says. “We are looking at our core markets and our closely adjacent markets with some new eyes. We’re getting some outside help in looking at some of these things to work alongside our internal marketing and salespeople to find out what the potential is, what are the new growth areas in those markets. And that allocation of that capital is going to be a really fun and exciting challenge for myself and our management team over the next couple of years.”
Barbour can tell from the board’s reaction that the access to capital is higher than they’re used to, so it’s time to develop a structured acquisition process.
Acquisition have been integral to ADS’ strategy, even if there haven’t been as many deals in the last few years. In fact, about 40 percent of sales today are from allied products, and many of those came from deals.
“We spent a fair amount of time over the last year focused on the internals — the execution, the fundamentals, the organic growth — and now that we have that platform in place, a group of us internally is setting our sights on a very well-defined and process-driven acquisition methodology,” he says.
Barbour wants the company to consider a large number of candidates, so at the end of the funnel, a handful of strong targets drops out.
“You’ve got to buy at the right price with the right risk profile and integration plan,” he says. “Valuations can be high, but if you’re not doing it, then you’re not putting all your firepower to work.”
- Fundamentals and execution are difference makers.
- Communicate the context to your employees.
- Tomorrow’s workers expect very functional technology.
Name: Scott Barbour
Title: President and CEO
Company: Advanced Drainage Systems Inc.
Born: Pine Bluff, Arkansas
Education: Bachelor’s degree in mechanical engineering from Southern Methodist University, MBA from Owen Graduate School of Management, Vanderbilt University
You’ve spent most of your adult life in Ohio, except for three years in Hong Kong. What was that like? We lived there from 2008 to 2011, my whole family — my three kids, my wife and me. It was a fantastic experience, and I wouldn’t trade it for anything.
It’s not only the challenges of running an Asian business, especially through the great financial crisis that started a month after I got there and then came roaring back to China, but the challenge of living there, the experiences as a family that you have living in a different culture.
What was your first job, and what did you learn from it? I was a dishwasher and prep cook at Jesse’s Steaks, Seafood & Tavern in Hanover, New Hampshire.
I’m a 16-year-old dishwasher, but I took pride in my job. I got there on time, and if they asked me to do something, I did it. I worked hard, and then one night the prep cook doesn’t show up. That night, the manager came over and said, ‘Look, you’re getting a battlefield promotion. You’re going to go and do the prep cook work tonight.’ Zero training. I think the only thing he made me do was change my shirt.
Where might someone find you on the weekend? My middle child, my son who is 19, has Down syndrome. Most weekends, on Saturday mornings, he and I are at Buddy Up Tennis, a group founded here in Columbus. They have a United States Tennis Association-approved program for kids with Down syndrome. There’s probably 25 chapters around the country now, but this was the first one. Beth Gibson, the founder, started it.
We became involved in it very early and have been big supporters since. He loves it. If it’s not going on one Saturday, it’s a bad Saturday at my house. But I volunteer as his buddy, most of the time. I help put up the nets. It’s like being a dishwasher; I just do what I’m told to do.