Press: M&A Best Practices: How To Ensure A Successful Transition

There are two different approaches to mergers and acquisitions, according to Chris Anderson, CEO of Boston-based HPG, which has been aggressively scooping up fellow suppliers, such as Handstands, Origaudio, Debco and Webb Company, which has rebranded to Mixie.

“You can buy whatever comes your way if it means adding to your scale, but I call growth like that a tumor,” Anderson says. “It’s growing, but without any sort of purpose or predefined shape. Alternatively, if you have a well-laid out architecture that from the very beginning stipulates not only what you’re looking for, but also what you’re seeming to avoid, it makes it all the easier to strike quickly and with deep conviction when you see an opportunity that fits within that architecture.”

From mid-2021 through mid-2022, HPG – ranked the No. 8 supplier in this year’s PPAI 100 – was given the opportunity to look at more than 30 businesses, Anderson says. Ultimately, it didn’t acquire a single one.

“When you have discipline around the architecture, it makes it easy to say that even though I like the size of the business, it doesn’t meet with this strategic objective we’re trying to fulfill or doesn’t check off the box our board has given us a clear mandate on,” Anderson says.

However, Garden Grove, California-based Evans Manufacturing, which specializes in plastics and fabric products, checked all the boxes.

• HPG’s board of directors had asked Anderson what he was going to do to decrease the company’s reliance on Chinese imports. With manufacturing facilities in Southern California and Nogales, Mexico, Evans provided a solution.
• Plus, the supplier’s focus on tote bags, water bottles and other daily use items meshed well with HPG’s product strategy.

Perhaps most important was the cultural fit: Alan Vaught, co-founder and then-president of Evans, passed Anderson’s “barbecue test,” meaning he was like the guy down the street you’d want to hang out with.

“It was immediately clear that Alan built a great business and that he’s a high-caliber individual,” Anderson says. “At HPG, we’ve learned that you better check both of those boxes. If you buy a bad company from a great person, well, you’ll all be stuck in a tough situation. But if you buy a great company from a bad person, typically, you don’t end up getting what you paid for because there are skeletons in the closet.”

Approaching retirement age and with no plans for either of his children to take over, Vaught had begun considering his options. Initially looking for expansion capital, he talked to private equity firms who were interested in acquiring a larger percentage of the company than he had planned to give up. Then, after receiving offers from fellow firms in the promotional products industry, he landed on HPG.

“My wife and I met Chris and we really hit it off,” Vaught says. “As a seller, you want someone who’s had recent success with companies similar to our size and who are in a similar space. We had a huge level of trust in their team. As we got to know them better, we realized they looked at things similarly to the way we do.”

Kicking off The PPAI Expo in January, Anderson announced the acquisition to the industry. Both HPG and Evans employees were already briefed, armed with answers to potential “frequently asked questions” from clients. The last thing HPG wants, Anderson says, is for an employee to hear about the acquisition through the media as opposed to hearing it directly from those they look to for internal guidance.

“The key to any good communication strategy is to plan it in advance and start with those who would be most impacted, having one-on-one conversations with the senior leadership team,” Anderson says. “If you do things in the right order, when a customer hears about it and calls their point of contact at HPG, they’re speaking to someone who doesn’t say, ‘I don’t know. I just read the release myself.’”

As part of the transaction, Vaught continued to lead Evans as division president until retiring last month. “The acquisition cleaned up a lot quicker than I had thought it would,” Vaught says. “My exit was planned, but it was just a matter of how long it would take. But their team is good. It didn’t take long to realize I could still be involved at some level, but I wasn’t needed at the day-to-day level that I was previously at.”

Vaught, who remains a significant HPG shareholder, has shifted from the “father of Evans” to now being the “cool uncle,” Anderson says. “He’s still very much in the family, and his advice and presence are value added, but in this case, if he decides to go on vacation for two weeks, it’s not disruptive, which is a testament to the depth of the HPG team and the business he created. This was a marriage of two strong and profitable enterprises.”

“My number-one rule is if the business is doing well, let’s not fix what isn’t broken,” Anderson adds.