Ask anyone that’s been through a merger or acquisition, and they’ll tell you there are many more moving parts on the inside than what you see from the outside. The companies that are successful with M&A make the execution appear flawless. Such is the case with Motion’s recent Kaman Distribution Group (KDG) acquisition.
In this episode of the podcast, we talked with Randy Breaux, President of Motion, about the acquisition—particularly, the reasons behind acquiring their number two competitor. We also discussed the benefits of merging the automation, fluid power and hydraulics, and repair services businesses.
Transcript
Food Processing: Acquiring your number two competitor, Kaman Distribution Group, was quite a surprise to the industry and a large undertaking for Motion. What was the rationale behind the acquisition?
Randy Breaux: As we looked at the competitive landscape and companies that we might want to acquire that could move the needle, so to speak, KDG fit the profile. Anytime we acquire a business, it must check three boxes. First is a strategic fit for our business, followed by a cultural fit that will blend well with Motion’s culture, and then third is the talent that brings something more to the existing high-performing Motion team. KDG checked all the boxes, and because they had been such a close and good competitor for so many years, we knew where their strengths were and where they were not. So that allowed us quick diligence and to bring the deal together in very short order.
FP: How do you see customers benefiting from the acquisition of KDG, both Motion customers and KDG customers?
RB: One of the things that made the acquisition attractive to Motion was that there was very little customer overlap between the two businesses. Motion tended to gravitate toward large, national customers while KDG focused on smaller, regional ones. The big benefit to all our customers is that the additional and very technical services that both Motion and KDG offer independently can now be offered collectively. This is particularly the case regarding our automation business, our fluid power and hydraulics business and our repair services business. The other benefits are the larger inventory of products now available to KDG customers that they didn’t have in the past.
FP: The duration from the time the deal was announced to the time the transaction was completed seems very short. Was this the plan all along, or did something expedite the deal?
RB: KDG was not being marketed by the private equity company that owned them. We approached the private equity company about selling KDG and worked out an exclusive deal. Because we knew KDG so well as a competitor, a lot of the due diligence work that would typically take months was already known. After the deal was reached, the process went very quickly, about 45 days. Nothing really expedited the deal other than we knew KDG well and had a great plan to acquire them—supported by our parent company, Genuine Parts. We wanted to get them on board with Motion as soon as possible in 2022 to take full advantage of the opportunities in the first year of ownership.
FP: From a market share perspective, KDG provides Motion with an additional $1 billion in sales. How do you see the KDG business meshing with the Motion business? And are there synergies that you expect to come from the deal to further expand your market share?
RB: We’re already down the path quite a way, integrating parts of the KDG and the Motion businesses. KDG was split into three businesses. The traditional bearing and power transmission business represented about 60% of the sales, followed by the fluid power and the automation businesses representing roughly 20% each. We almost immediately blended the automation businesses, which has gone quite smoothly—realizing expected synergies and opportunities along the way. We also merged KDG’s fluid power business with parts of the Motion fluid power business and created a new division called Motion Fluid Power Solutions.
This too has gone as expected, and the benefits down the road are huge for Motion and our customers. And finally, we’ve begun to co-locate and merge the more traditional KDG bearings and power transmission branches with the traditional Motion branches. This will allow the two teams to work closer together and eventually become one face to our customers. This is also the largest opportunity for synergy savings as we go forward. We believe these actions and activities will lead to greater market and wallet share capture in the months and years to come.
FP: Were there many surprises that Motion has uncovered or seen since the acquisition was completed?
RB: No, not really. I’d say the biggest surprise has been the excitement from the KDG team to join the Motion team. KDG had a lot of great and experienced people who have competed against the Motion team for many years. I don’t think the KDG team ever really felt like they were strategic being part of Kaman Corporation, then owned by private equity. Today, they are most certainly a strategic part of the Motion team and bring a wealth of experience to the table. I guess you could say that they found a home where they have an equal seat at the table and are valued greatly. We’re very fortunate to have them as part of the team, and their attitude in embracing the change has probably been the biggest and most pleasant surprise I could have expected.
FP: Will Motion continue to make acquisitions in bearings, power, transmission, fluid power and automation spaces in the future?
RB: Motion is always looking to grow the business through acquisitions. We will continue to make acquisitions in the spaces you mentioned when the right companies come along that meet the three criteria that I mentioned earlier: strategic fit, cultural fit and talent fit. We will certainly give them consideration. And we’ll also continue growing in the areas of conveyance, belting and repair services. Some of this will be through acquisition, and some of it organically. We like where we are. Our customers like where we are and the direction we are going. We believe the future is very bright for Motion.
