2 MN-Based Manufacturing Companies Attract Buyers From Across the U.S.

Minnesota-based manufacturing companies have become focal points for mergers and acquisitions in recent years, attracting interest from buyers across the country.

Two of the most recent sales in the state involve TS Products in Dundas and BP Metals in Isanti. Both were facilitated by Jon Tichich, who is a manufacturing mergers and acquisitions expert with Calhoun Companies.

“I’ve noticed that buyers are particularly interested in Minnesota manufacturers due to the state’s location, workforce, and diverse ecosystem of manufacturers compared to other states,” Tichich said. “Nearly half of the buyers in my network are out of state. Buyers see a lot of opportunity here.”

In the past, many shop owners simply transitioned the business to the next generation. Today they are negotiating with private equity firms, high-net-worth individuals, family offices and other strategic buyers. The sales have become more complex. 

SINGER INDUSTRIAL ACQUIRES TS PRODUCTS - SEPTEMBER 29TH, 2023

In 2023 Steve and Tammy Schultz decided to sell TS Products after 22 years. Although Steve Schultz had compiled a short list of potential buyers, he had never sold anything worth as much as his business and didn’t want to try navigating the transaction himself. He knew he would need help from an experienced advisor to ensure a successful outcome.

Over the years Schultz grew TS Products from a one-man shop to a multimillion dollar operation – all without a website, social media or marketing budget. In the last decade alone, the shop was growing by 20 to 30 percent each year.

As word of mouth spread, the company earned a reputation as a high-quality designer and producer of hydraulic power units. Some of those units are used to lift 2,000-pound manhole covers in the middle of the street. Others are used to trigger safety valves in dump body trailers carrying tons of material. Both AC and DC units can be customized for a variety of needs requiring 1 to 50 horsepower. They are sold to OEMs around the world.

However, Schultz wasn’t interested in continuing to “feed the monster.” He knew the only way to keep up with rising demand was to hire additional people, add more warehouse space, implement a costly ERP system and continue working a grueling schedule.

The only alternative was to sell the company and allow someone else to take it to the next level.

Schultz chose the latter.

“I interviewed four business brokers and wasn’t impressed with any of them except for Tichich at Calhoun Companies,” he said. “After one meeting, it was obvious Jon was the best option and I knew his expertise would pay off.”

Within three weeks, Tichich was able to secure a letter of interest from a company that had expressed possible interest in the past: Singer Industrial, based in Dallas, Texas, is America’s largest industrial rubber, fluid power and automation value-added distributor with over 1,300 employees and 90 locations nationwide.

“Finding a buyer was the easy part in my case,” Schultz said. “What surprised me about the rest of the process was the level of complexity, due diligence and legalities involved. Jon helped me analyze every decision and coached me through the entire process. Without him, the end result could have looked much different.”

Three months after receiving the letter of intent, Schultz signed the closing paperwork to sell the company and handed over the keys. He chose to remain involved as a sales engineer. That way he can continue to help grow the company, but not necessarily be responsible for it.

“My passion is engineering, not management,” he said. “Selling the company has freed up my time for the things I enjoy most, like working directly with customers to help solve problems. I would highly recommend Jon to any manufacturing owner considering an exit.”

GENERATION GROWTH CAPITAL ACQUIRES BP METALS - OCTOBER 25TH, 2023

In 2008, Blake Pendzimas purchased a struggling sheet metal fabricator for less than the price of a used car. The business came with no employees, one piece of equipment and generated $160,000 in sales in the first year. By 2023, however, it had grown to 35 employees and eight figures in revenue.

Based in Isanti, BP Metals fabricates custom parts for store displays, agriculture products, restaurant equipment and other applications for OEMs. Over the years, it gained an edge over competitors by focusing on price and turnaround time.

Like many business owners, Pendzimas was so wrapped up in dayto-day operations that he hadn’t thought much about selling until he realized what the business might be worth. Then he started dreaming. He wanted to spend more time with his partner, Cara Knapp, who helped manage the company. He also wanted the flexibility to take more vacations and work on his own terms.

“I realized I had taken the company as far as I could,” Pendzimas said. “It was time for us to do something different with our lives and the future of the business. We just had no idea how to make that transition happen, so we leaned on Jon to guide us through the entire process.”

Tichich’s process and robust network of highly motivated and qualified buyers generated substantial interest, resulting in nearly a dozen formal bids within a matter of weeks. Most were from established private equity groups and family offices.

“Jon’s connections in this industry gave us more options than we thought possible,” Pendzimas said. “We received a great bid within the first few days of interviewing buyers and wanted to accept it, but he told us to wait and trust the process. I’m glad we did.”

Ultimately, Pendzimas and his partner didn’t select the highest bidder.

Instead, they chose to sell to Generation Growth Capital, a private equity group based in Milwaukee that is building a portfolio of complementary metal fabricators. They also negotiated part ownership in the private equity fund, which was a win-win for both parties.

“Whatever decision we made, we wanted it to be in the best interest of our employees and customers,” Knapp said. “Generation Growth Capital is fully equipped to lead BP Metals toward the next stage of growth and we’re excited to continue to play a role in that.”

Many shop owners are in similar positions – they’ve spent years building their business and know they need to transition out some day, but aren’t sure where to start. Tichich’s advice is to talk with an expert who is familiar with the company’s industry instead of a generalist that serves a variety of industries.

As a member of the Minnesota Precisions Manufacturing Association (MPMA), Tichich is recognized as one of the most trusted, experienced and knowledgeable advisors in the industry.

Since July 2023, Tichich has sold six MN based manufacturing companies.

“Even if you don’t plan to sell for five or more years, it’s best to be proactive and to have a conversation about what you can do now to begin preparing,” Tichich said. “My expertise is educating owners in the manufacturing community on how to best position their companies for the right buyer at the right time. In more cases than not, the sooner we start planning, the better the results.”