Exclusive: Grey Mountain talks strategy

In the span of three months,GreyMountain Partners, the Boulder, Colo., privateequity firm, acquired four glass and metalfabrication companies:Custom Components Co.,Columbia Commercial Building Products,Global Security Glazingand Hawkins Architectural Products. Recently, Beth Lesniak, vicepresident and affiliate manager for GreyMountain, spoke exclusively with GlassMagazine about what lies ahead, specificallyfor the fabrication companies nowunder the Grey Mountain umbrella.

Glass Magazine: Grey MountainPartners had been looking to makeacquisitions in the glass and glazingindustry for some time. What makes theglass industry an attractive investment?

Beth Lesniak:Clearly, we are avid fansof the industry and have been lookingfor an opportunity to put money to workin the glass space for quite some time.We were introduced to the industrywhen we looked at Arch Aluminum &Glass, and we’ve been attracted to thespace ever since. We further increasedour understanding of the industry andthe opportunities if offers when weendeavored to invest in Vitro America.

Fundamentally, we believe in the long-term,underlying demand for glassfabrication services and products, andsee this demand continuing to grow andevolve as the economy at large recoversand the end markets we serve notonly look for providers that can offer acomprehensive solution but also place anincreased focus on more sophisticatedsolutions. [These would include] thehighest standard in customer service,technical products that address bothfunctional and aesthetic needs, and greenproducts that speak to energy efficiency.

Taking a step back, Grey Mountain’sapproach to investing is centered onfinding opportunities where operationalimprovement will lead to the creation oflong-term value at our companies. We donot try to time the economy and are notlooking for a “quick flip”; we realize thatwhat we are building will require patienceand a long-term view of the market. Webelieve the glass industry has experiencedupheaval and turmoil over the past fewyears, and thus there is a unique opportunityfor a strong player with quality productsand solid customer service to become aleader in the market. We also bring capitalto the table, which will support upgradingequipment and facilities, increasing trainingand safety for our employees, and fortifyingthe balance sheet when appropriate. Weare very excited about the future of theglass industry and will continue to investin it as we build a leadership position.

GM: You announced the purchaseof four glass and metal fabricators,in quick succession. What businessmodel are you trying to build?

BL: Our strategy is to build a nationalpresence as a leading glass fabricationand architectural metals provider witha comprehensive set of capabilities.We are doing this both by acquisitionas well as green-fielding. This strategyincludes possessing unique/nichecapabilities, such as the security glazingexpertise of Global Security Glazing.We aim to set a new, higher standardfor quality and reliability, while alsobeing innovators in the industry.

The cornerstone of our investmentphilosophy rests in finding good people to bea part of the companies in which we invest.Thus, in addition to supporting the talentwe acquire and the operators with whom wepartner, we are enthusiastic about buildingour talent pool with individuals who aremotivated to be a part of a company with“best in class” standards. It’s been a roughtime in the industry, and we are offering afresh start at a well funded company that ison a strong growth trajectory. We are only asgood as the employees that are on the floorat the plant making it happen every day.

GM: These acquisitions must presentintegration challenges; how do you planto connect the acquired companies?

BL:We are the first to admit thatintegration is not easy, and a successfulplan for integration can’t be designedin a board room and rolled out froman office. Many of the companies we’veacquired have a strong brand or localleadership, or focus on a particularproduct niche. We plan on operating ournetwork of glass and metal fabricationcompanies under a flagship name, whileallowing the companies to maintaintheir unique identity and strengths.

As one might expect, much of theintegration will be focused on theback office. Grey Mountain works veryhard to find exceptional leaders for thebusinesses in which we invest. We areinstalling a CEO whose primary focuswill be on affecting successful integrationand setting the strategic direction forthe entire network of acquired glass andmetal fabrication companies. We are alsoworking with industry veterans who haveunrivaled knowledge of operations, thecompetitive landscape, and the industrydynamics. The experience and talentof such individuals are instrumentalto our success on this front and ensurethat the integration efforts are carefullyplanned and executed at a tactical level.

GM: Grey has acquired companies in theglass and metal fabrication segments,as well as the installation/retail sectors.How are you positioning Grey in themarketplace in relation to other nationalplayers such as Trulite Glass & Aluminum Solutions or Oldcastle BuildingEnvelopethat also offer a variety of glass,metal, and products and services?

BL:You are correct in that we havemade acquisitions in the glass and metalfabrication segments as well as installation/retail; however, these are two separate investments in our portfolio, beingmanaged and operated separately.

In terms of our acquisitions in the glassand metal fabrication market, we willbe direct competitors of players such asTrulite and Oldcastle BuildingEnvelope.… We… do not plan on competing in the market for monumental projects. Trulitewill be a close competitor, but one thatis clearly larger at this point in time. Webelieve we can differentiate ourselves byfocusing on quality, execution, and long-termpartnerships with our customers andsuppliers such that we are the provider ofchoice. We embrace a culture of continuousimprovement that will inure ongoing benefits to our employees and our business partners, and thereby allow us to fill a void in the market. In that regard, we will have the advantages of a national player combined with a local focus and service orientation that we hope will put us in aclass of our own. Of equal importance, we are committed to creating an environment where employees are energized to come to work every day because they are excited about the future of the business and want to be part of a winning team.

GM: With the market and values down as low as they are, this is obviously the time to buy businesses. What’s next in your acquisition strategy to round out the portfolio?

BL:We are clearly looking to aggressivelygrow our footprint and product offering,and bring strong team members onboard. Our next acquisition might adda geographically desirable location,introduce new capabilities and products,or increase our scale in general. However,we don’t take a vulture approach, eventhough the market is depressed, as you note. We aim to find good businesses (andthat includes businesses that were formerlystrong but are now encountering somechallenges), pay a fair acquisition price, andpartner with management (or provide anexit in cases where that is the goal of thesellers). There might be a business ownerreading this right now who is excited aboutthe prospect of being part of our build upin the glass space. We love getting thosecalls! By the time you are done with thisinterview, you’ll likely have another GreyMountain glass deal to cover. Suffice it tosay, we plan on keeping you very busy!