At its second annual Reinventing Your Business Through Innovation conference, the Association for Corporate Growth brought together experts in mergers, acquisitions and strategic alliances to discuss the importance of picking the right partner, and developing mutually beneficial relationships, for businesses looking for growth opportunities.
“The whole point of ACG New Jersey is to bring together people that are doing things in the area of corporate growth,” said Mark Kuehn, president of ACG New Jersey and attorney with Gibbons P.C. “In these economic times, it’s very hard to shake the trees and get things moving.”
Kuehn said ACG promotes blending external and internal growth, but Tuesday’s two roundtables, at the Palace at Somerset Park, in the Somerset section of Franklin, addressed the dances done by companies to grow through external additions.
“Smart external growth can lead to good things, and bad luck and uninformed external growth can lead to huge traps and can actually destroy a business,” Kuehn said.
Speakers addressed topics like motivations for acquisitions, identifying the proper partners and using strategic alliances to vet deals and build value.
Joseph Dunning, vice president of mergers and acquisitions for JM Huber Corp., of Edison, explained how he has arranged deals that included letters of intent to acquire where JM Huber could operate the company in question and make “all the unknowns known.” Dunning called the experience valuable, because it is impossible to mitigate gaps in due diligence through contracts.
Govi Rao, president and CEO of Branchburg-based Noveda Technologies Inc., said learning about the “extended family” of a possible target company is important, and using strategic alliances gives interested parties the chance to learn about the legacies of the parties involved.
Strategic alliances are how Tumi Inc. built itself into a world leader in luggage and travel accessories, said Michael Mardy, chief financial officer, particularly through foreign distribution agreements. Mardy said it would be foolish and expensive for the South Plainfield company to open a shop on its own in expanding Middle Eastern markets, but by using a well-connected partner, the company can increase its geographic footprint in a mutually beneficial way.
“McDonald’s built 30,000 restaurants, 40,000 restaurants largely through partnerships, and that’s kind of the way Charlie Clifford, the founder of Tumi, the way he built the business,” Mardy said. “You have to pick the partner, and you have to be indefatigable about defending your brand — but it’s a model, and it’s a model that usually doesn’t cost too much financially from an investment perspective.”