April 25, 2017

HWSC's Client, Lee Industries, uses Proprietary Research Tools and Methodologies to Accelerate Organic Growth

Many family controlled manufacturing companies sell products on a B2B basis. Often, they serve customers in mature industries and, therefore, struggle with revenue growth. Among the capabilities offered by HWSC are services to support improved organic growth. We have demonstrated thought leadership when it comes to assessing whether a business's revenue can be increased materially through the use of enhanced technologies and methodologies that can drive marketing and sales management improvements.

We have developed propriety research tools; processes and methodologies that can help transform market research and analysis, historic customer revenue and profitability analysis, target customer research, and related analytics, which can be used to transform organic growth initiatives. We can provide both the people and proprietary research tools to:

  1. Help a business develop a more robust understanding of its historic revenue driven by end-markets and customers,
  2. Improve external research to better quantify future market and customer opportunities,
  3. Utilize such digitized data and analysis to build robust and proprietary databases to align and improve marketing plans and sales management, and
  4. Use such evidenced-based analytics to support future marketing plans and sales management practices designed to generate improved organic revenue and profitability growth.

Our work with one of our clients, Lee Industries, Inc. (“Lee” or the “Company”), is but one example of how we have used such capabilities to generate better results for our clients. Lee is a leading manufacturer of custom process equipment. It serves customers in the Food, Pharmaceutical, Personal Care & Cosmetics, and Lubricant industries. The Company was founded in 1927, and was acquired in 1986 by Robert Montler through a management-led buyout..

When we first met the owners in 2013, the Company was profitable with good operating margins, however revenue had been leveling-off for a number of years because many of its customers operated in mature, slow-growth industries. The owners felt that since growth seemed to be limited for the Company, they should possibly consider allocating capital to a new direct investment in an operating business to drive growth. Prior to encouraging the owners to seek a new direct investment, we first suggested examining whether improved organic growth could be achieved for the Company.

During the past four years, HWSC has partnered with Lee to develop a long-term business growth and corporate development plan, exploring both organic and external growth opportunities. In constructing the foundation for the growth plan, HWSC performed a "Go to Market Assessment," which sought to understand the Company's revenue channels and sources of profitability, in addition to understanding historical relationships with customers, key buying decisions, and identifying primary industry competitors. This helped HWSC isolate certain industry sub-segments and product categories, and past and target customers operating within such industry niches served by Lee to help assess each sub-industry's dynamics, trends, structure, and demand drivers.

Born from this research, HWSC developed a highly focused Target Customer Database identifying over 1,600 U.S.-based prospective customers/ purchasers whose products could be enhanced through the use of the Company's process equipment. This was a market and prospective customer universe roughly six-times larger than the Company had historically estimated. Included in this research and database were the product brands controlled by Target Customers, the location of their manufacturing plants, the unit volumes of products they produced, and their key officers' and employees' direct contact information. After the construction of the marketing database, HWSC involved two of its BGA affiliates (www.bgallc.net), The Pursuit Group and ASHER Strategies, to develop an integrated marketing and sales platform to further incorporate the Target Customer database into a direct marketing and sales campaign.

The collaboration between HWSC and its BGA Affiliates has produced measurable results. To date, the Company has grown its revenue and EBITDA by over 35%, which represents a compound annual growth rate (CAGR) of nearly 8%. Further, given the success of the organic expansion plan and continued positive outlook for additional opportunities, Lee is currently doubling its manufacturing facility to aide in further product expansion and development, which will be operational in fall of 2017. This will position the Company to achieve further revenue growth over the next few years. In all, it is estimated that the Company's revenue will increase by over 200% within roughly six years; representing CAGR of nearly 12%.

A growing and dynamic company is typically one that shareholders wish to own longer-term. Therefore, during the past few years, the Montler Family has also been working on a generational transition plan, another area of core competency for HWSC. While Mr. Montler continues to serve as Executive Chairman of Lee, in 2016, his son, Joshua Montler, became President & COO.

Moving forward, HWSC will look to further expand future growth opportunities for the Company by expanding its Target Customer research to other industry segments, and to begin incorporating an external direct investment strategy. Along with support from our BGA Affiliates, we expect to continue to Power Business ResultsTM for the Lee Industries and the Montler Family.

For more information on Lee Industries, please click below:

Lee Industries'
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Lee Industries

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