In this article for Automation World, Clint Bundy interviews automation expert and former owner of Ultimation, a control system integration and automated material handling solutions company, Richard Canny. Within, the pair discusses the process of creating a first-class management team, understanding when it's time to approach a business sale, hiring an investment banker, and adequately assessing the buyer pool and selecting accordingly.
Clint Bundy: Tell us about the history of Ultimation and your ownership of the company.
Richard Canny: Ultimation is based in the metro Detroit area, serving customers throughout North America and some in South America. The firm has a heritage of being an industry-focused company that provides material handling and conveyor solutions.
In terms of my history, I was an executive with Ford Motor Company in Australia, the U.S., Malaysia, Argentina and Brazil before returning to oversee corporate strategy at Ford. In 2011, we purchased Ultimation, which was a turnaround opportunity. The company had been founded by someone in the machinery industry, making equipment for commercial truck tires and conveyors. The business was on a decline by 2011 and we saw potential to grow and make something of the organization
Bundy: Discuss the core offerings, including your unique e-commerce segment, and its client market that it services.
Canny: Ultimation has a legacy system integration business which we were able to build upon. We embraced digital, diversified out of the cyclicality of the automotive market, and looked at geographic expansion. Our big inflection point came in 2016 when we started selling online, which became a major business segment for us. It’s more than half of Ultimation’s business now.
Bundy: Another great decision you made was to build a first-class management team beyond you and Jackie. When did you start to form that team?
Canny: Around 2018-2019, we started adding department managers and made some really good hires. The management team has been together for five to seven years now with virtually no attrition. They've been fabulous and will take the company forward to the next stage.
Bundy: What convinced you that the time was right to explore a sale?
Canny: I had some involvement with mergers and acquisitions during my Ford career, which included really big decisions like selling Volvo or Jaguar. However, I'd never done the nuts-and-bolts piece of business sales. At Ultimation, we started growing so quickly after 2016-2018 that we didn't have time to reflect on what we were doing with that growth.
Around 2021, we realized we probably should have had some M&A component to our growth, either to be acquired or to acquire other companies. We started looking at it through both lenses and we realized we didn't have the runway, the capital or the risk appetite to be a platform acquirer.
That led us into thinking about investment bank advisors and the sale process. I wanted to retire in my early sixties rather than my late sixties. I assumed that it would be a multi-year process to sell the business and not something you wake up and do in two or three months. You really need to get your ducks in a row before going down this path, and the sooner you start talking with an investment banker, the better.
Bundy: Describe your thought process on why you decided to hire an investment bank rather than working without an advisor.
Canny: Once your company reaches a certain size, you'd be foolish to try and do it yourself or reactively. The purpose of doing it proactively is to create competitive tension to maximize the return. While people can sell companies by themselves or handle a one-on-one buyer discussion, that's not the way I work. I'm a process-oriented guy. I looked at it as two major steps: Who's going to represent me best in bringing the company to market? How do we do that process to maximize the outcome for the shareholders and the company?
We started identifying bankers in 2022 and, after careful consideration, we chose Bundy Group because of the team’s industry focus, size and recommendations.
Bundy: Discuss the outcome and why you selected the buyer you did after reviewing numerous offers.
Canny: We had a preliminary valuation completed by an outside appraisal firm before we hired Bundy Group, which gave us an initial number. With the interest we received during the competitive sale process, we ended up with a value more than double what we initially expected. Motion & Control Enterprises (MCE), our new parent company, was a perfect fit based on what we learned through the process and talking to multiple buyers. MCE is moving into higher technology and e-commerce offerings, which aligns well with Ultimation. Jackie and I now have an equity stake in MCE, which offers us the chance for future returns. Furthermore, MCE’s platform offers great opportunity for our staff and management team to grow.
Bundy: What steps would you recommend to an owner to: a) improve the value of their business and b) best prepare the company and themselves for a sale?
Canny:
