Family Business Challenge III

In the May issue of GAWDA Edge, two generations from five different GAWDA member companies were asked what advice they would give to peers about working with family in a family-owned business. This month, we asked each multigenerational team how they would respond to a hypothetical business scenario to see the differences between the Young Executives’ responses and those of their upper-management parents. Here is what they had to say. 

You’ve just learned that one of your competitors is going out of business. How do you react?

Ken Linnenbringer, President, & Todd Linnenbringer, Vice President
Delta Gases (Maryland Heights, MO)

Family Challenge: Delta Gases

Todd Linnenbringer: I’d want to see if they have cylinders to sell at a better price than new ones. I’d also want to see if there was anyone worth bringing on board for us—a salesperson or other individual with a good reputation. I would be interested in any assets we could buy or employees we thought were good. Would I buy the business? I would be interested in that—crank some numbers and see if it would be worth it for us. But my idea would be, instead of buying their business, to go out and try and get it on our own. I think that would be a much less expensive way to do it. Get their business, buy their assets and recruit their good employees.

Ken Linnenbringer: I would look at their territory and we would be all ears and eyes for the next two months trying to locate their customers and round them up. However, I like competition; it’s the reason why we’re around. Without competition, customers wouldn’t need our salesmen. I’d be the only one in here. I wouldn’t like that. Competition makes you a better businessperson.

Amar Kapur, President and CEO, & Jay Kapur, General Manager
AIM Welding Supply (Auburn, MA)

Family Challenge: AIM Welding Supply

Jay Kapur: We would see if there were qualified people we’d like to bring into our business. Or we could simply let the market run its course. Inventory would be the last thing I’m interested in. Chances are, if they are going out of business, they’ve gone through their good inventory and don’t have any high-moving inventory left.

Amar Kapur: If the competitor’s business comes to you, you are not really prepared for that growth. You also don’t know what type of business it was, what the pricing was, or what the service requirement of each customer was. The emotional reaction is that there will be less competition. But that usually is not the case. My first assumption is that this competitor’s gross margins were not good enough for him to sustain a long-term business. Acquisition of assets is interesting, because you can get a fair deal on that.

Marvin Lampton, Chairman and CEO, & Doug Lampton, Vice President
Lampton Welding Supply Company (Wichita, KS)
Family Challenge: Lampton Welding Supply

Doug Lampton: If they’re going out of business, the wheels are likely already in motion and most of the customers have switched over to another supplier. But if it was early, we might approach them and see if they would be interested in selling. Of course, a lot depends on why they’re going under. If we were going to buy the company, we certainly would want to look at their people, their assets and their customer base.

Marvin Lampton: I would immediately call him [the company’s president] and sit down and talk with him. Since 1988, we’ve purchased 16 different companies. If I got wind that a company was closing for whatever reason, I would explore the opportunity to buy their assets and acquire their customer base—as long as it fit with what I was trying to do financially and geographically. The biggest thing is the customers. If we acquire the company quickly and smoothly, we find that 99 percent of the customers will stay because they don’t want to shop around. 

Robert Garner, President, & Tracey Akers, Human Resources Director
Oz-Arc/Gas Equipment & Supply (Cape Girardeau, MO)

Family Challenge: Ozarc GasTracey Akers: Lots of times our competitors will have contracts with certain customers in the area, and those contracts may become void. We will then try to scoop up their customers. We might also be interested in looking at assets and seeing if there wasn’t something there of use to our business.

Robert Garner: Number one, I would canvas his current employees to see if there’s talent there that we can bring over to our company, which would lend itself to bringing their customers over to our company. Second would be to call on their customers and explore the possibility of picking them up before they start a relationship with new ownership or a competitor. We may be interested in their inventory if it is discounted, but that’s not likely. They may carry a different brand, and we differentiate our product lines from our competitors. 

Bob Thornton Jr., President, & Andrew Thornton, Branch Manager
South Jersey Welding Supply (Vineland, NJ)

Family Challenge: South Jersey Welding Supply

Andrew Thornton: I would actively try to target their accounts. I would look to possibly expand our business by acquiring their assets, their inventory and maybe even the business itself. I would also be interested in the building and whether it would suit our business. Of course, there’s been a tremendous amount of consolidation in the industry in recent years, so the dynamic is a lot different for a smaller company like ours to be able to acquire another company.

Robert Thornton Jr.: I’d be looking to approach the customer base that he’s vacating or we might be interested in doing an acquisition. If the inventory was in sellable condition at a price that would be advantageous to us, we’d certainly be interested.

Gases and Welding Distributors Association