INDUSTRY FACES Merger & Acquisitions Expert Sees Keys to Profitability
Jim Folk has spent his fair share of time onsite with metalcasting companies of various shapes and sizes. Early in his career, he worked his way through 11 different positions in the industry, assuming roles from industrial engineer and superintendent to machine shop manager. Folk then founded the Folk Group, Doylestown, Pa., a merger and acquisition firm focused primarily on metalcasters, in 1996. As a consultant, Folk has managed the sale of 32
metalcasting facilities and overseen 38 valuations. He usually operates as a general advisor for the seller and provides a general structure for a transac- tion. Overseeing dozens of deals in his nearly two decades in the industry, Folk can easily recite the most important factors when it comes to packaging a facility for a potential sale. “In real estate, it’s location, location, location,” Folk said.
Jim Folk
“With foundries, it’s profitability, profitability, profitability. Beyond that, it’s the size of the foundry. Larger foundries have a bigger market than small foundries. Te potential buyers tend to be more in tune with acquisition as a growth strategy.” But no matter the operation’s size, it’s how the facility
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shows. Poor housekeeping, which also includes how well an owner has maintained capital investment, is a killer. Metalcasting is a very capital intensive business. If a potential sale includes investing a lot of money and time, that’s a big negative. Whether working with a metalcaster looking to sell or turnaround business, Folk notices a subtle difference between those facili- ties that are profitable and those that aren’t. “It’s rare when owners don’t know what they’re
doing wrong,” he said. “Often it has to do with the failings of people. You have to know what the expec- tations are and hold people accountable. Owners gen-
erally know what they need to do, they just might not have the courage to do it. Successful companies have expectations and standards, and they expect people to work to those standards.” Struggling metalcasters also face problems over price and
the pressure to hit the lowest possible number. “In a majority of companies that aren’t profitable, they
could’ve raised prices,” Folk said. “For the other 25%, the problem was poor management, improper maintenance or high costs. But more often than not, pricing plays a major role, especially with smaller operations.”
New to Industry Faces: Each month, a discussion between the profile subject and metalcasting marketing expert Mark Mehling will be available for download as a podcast or online listening at
www.moderncasting.com.
18 | MODERN CASTING November 2014
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