These partners specialize in the acquisition and turnaround of manufacturing companies Frédéric Albert and his partner Frédéric Chabanne are not the type to rest on their laurels. Having completed a first acquisition of a struggling company, the partners quickly got back into search mode for a new acquisition target.
“We needed a new challenge,” says Frédéric Albert, who has known his partner since primary school.
It must be said that these entrepreneurs have a knack for spotting good business opportunities. Their investment company, Fredac Corp., specializes in acquiring companies to promote their growth through capital injection and implementing effective management methods.
This is what they did notably with Fibrobec, acquired in 2010. At the time, the company specialized in manufacturing fiberglass truck boxes and was experiencing financial difficulties. A few years later, thanks to optimizing operational processes and improving productivity, it recorded record growth in sales that allowed it to return to profitability.
Following the turnaround of Fibrobec, the partners sought to acquire a new company to repeat this success.
Laurin Conteneurs then appeared on their radar. This SME from Laval, Quebec, which specializes in manufacturing steel containers, had been experiencing a certain stagnation in sales for a few years. However, the two partners quickly realized the strong development potential it offered.
In addition, the company met all its search criteria. It must be said that their list is not very long. “We target manufacturing companies that own their brands, have in-demand products, and have a unique competitive advantage. The rest, the manufacturing process, management methods, marketing strategies, we can always improve,” explains Mr. Albert.
The analysis was positive, and the duo began discussions with the owner, Michel Laurin. He had taken over the family business in 2009 following the sudden death of his father. After nine years at the helm, he wanted to find a buyer capable of growing the SME of about fifty employees and ensuring its sustainability.
The transaction was completed with the help of a mezzanine loan from BDC Capital in February 2019. To ensure a smooth transition, Michel Laurin agreed to continue working in the company for a year as executive vice president.
Start with a re-investment
Frédéric Albert and his team quickly took action. They completely reorganized the 30,000 square foot (2,787 square meters) factory and implemented a $1 million investment plan to automate certain activities, measures that quickly generated productivity gains.
They also rebalanced the product catalog to focus on those that offered the best sales potential, which improved inventory management. Finally, they set up an ERP system for better data control.
It was also crucial for them to solidify business relationships with key customers and suppliers. “We must reassure them and explain our vision,” explains Frédéric Albert. “This also allowed us better to understand the needs of a diverse customer base.”
He adds: “We took the opportunity to change the brand image and launch a one-year marketing campaign. Our products are already recognized for their superior quality. Our competitive advantage is being the best execution to deliver our containers to our customers on time.”
Frédéric Albert acknowledges that some decisions are more challenging to make than others. There have been some personnel changes, and the collective agreement clauses will have to be renegotiated. “Any restructuring requires adjustments,” he says. “It is important to always keep in mind the goal of taking the company to a higher level. We must be transparent, essential in establishing a truly collaborative atmosphere with the team.”
The results speak for themselves. In less than six months, Laurin Conteneurs has increased its production volume by 25%, which has allowed it to increase its profit margin, thus paving the way for future investments.
However, there is still much to do for the company to make a real leap forward. During a restructuring period, patience is necessary.
Frédéric Albert estimates it will take about two years to achieve the growth target he and his partner have set. In the meantime, the new owners remain looking for exciting investment opportunities and have manufacturers in the steel industry on their radar “to increase our production capacity.” A story developping.