In this episode, the M&A Launchpad Podcast hosts, Feras Moussa and Casey Minshew, share the unfiltered story behind their acquisition of H&M Plating, an industrial chrome plating company with multiple locations and a large operational footprint. They walk through how the deal was sourced off-market, how the capital stack evolved after a significant appraisal gap, and what it took to operate the business post-close. This is a candid look at the realities of buying and running a heavy manufacturing business—and the lessons they learned the hard way.
Key Topics Discussed:
· Sourcing an off-market manufacturing acquisition
· Structuring a $20M deal when valuations change
· AR lending, seller notes, and earnouts
· Reps & warranties in equipment-heavy businesses
· Navigating the post-acquisition J-curve
· ERP implementation, culture change, and leadership turnover
Additional Resources
M&A Launchpad Conference:
M&A Launchpad Conference – Upcoming May 2, 2026 in Houston, TX. Get your ticket at https://www.malaunchpad.com and use code LAUNCH for $150 off.
Sponsored by O’Connell Advisory Group
Work with a trusted Quality of Earnings and Financial Diligence partner who focuses solely on business acquisitions. Schedule a discovery call with Patrick of O’Connell Advisory Group—your dynamic Quality of Earnings partner.
Visit: www.oconnelladvisorygroup.com
For all M&A Launchpad and podcast inquiries—or to connect with hosts Casey Minshew and Feras Moussa—email info@equity-launchpad.com.
Explore more at https://www.equity-launchpad.com
🎧 Podcast on YouTube: https://youtu.be/HBiXnkvACuk
🎧 Podcast on Spotify: https://open.spotify.com/episode/1q06V5J0n78IwihuXhoaqg?si=qQTNIq21TJ6iWnwNJVGEgw
🎧 Podcast on Apple: https://podcasts.apple.com/us/podcast/what-no-one-tells-you-about-buying-manufacturing-businesses/id1740382586?i=1000741421833
Transcript
21:47 invoices going out a month and it’s all
21:50
21:50 on paper. Yeah, it was insane. I mean,
21:53
21:53 it was insane. Here’s the thing, though.
21:55
21:55 It’s easy to say, “Hey, why wouldn’t we
21:56
21:56 just send out an invoice, right?” But
21:58
21:58 there’s just so much to it. you. So when
22:00
22:00 we brought uh Brad on um not being from
22:04
22:04 the industry but being very technical on
22:07
22:07 systems and processes around manage uh
22:09
22:09 managing um it was impressive to start
22:12
22:12 thinking about a system and so today we
22:14
22:14 use the time scale system which Brad
22:16
22:16 wrote a book about and go get it. It’s
22:18
22:18 excellent. We use the time scale system
22:21
22:21 that we’re building out today that
22:23
22:23 really allows us to look at, you know,
22:26
22:26 what does the each person do in the the
22:28
22:28 the minute, the hour, the day, the week,
22:32
22:32 and the month. And that system became
22:34
22:34 what we started talking about at every
22:36
22:36 location. On top of that, you know, we
22:38
22:38 built core values. We started getting
22:40
22:40 the teams to start meeting on a weekly
22:42
22:42 basis, which there were not consistent
22:44
22:44 weeks. Um and and then we then the
22:47
22:47 ultimately the goal is to get an ERP and
22:49
22:49 so we evaluated like four different
22:51
22:51 systems and we ended up going with one
22:53
22:53 and u it has been unbelievable
22:56
22:56 unbelievable to take the company from to
23:00
23:00 to paperless. It’s I mean lots of paper,
23:03
23:03 right? I mean I was going out there. I
23:04
23:04 mean you have stuff that is taped to
23:06
23:06 parts and that is essentially how people
23:08
23:08 track parts and things and there’s you
23:10
23:10 know we’re talking thousands of parts a
23:12
23:12 month, right? It’s not one or two parts
23:14
23:14 a month. It’s thousands of parts and
23:15
23:15 needing to know where it’s at in the
23:17
23:17 process and how it’s going. And you know
23:19
23:19 my favorite part was just really before
23:22
23:22 the seller knew he the business made
23:24
23:24 money. We knew the business made money.
23:26
23:26 What we didn’t know was where it made
23:28
23:28 money, right? We didn’t know which parts
23:30
23:30 made money, which parts lost money. And
23:33
23:33 so with getting an ERP rolled out, which
23:35
23:35 wasn’t an easy task, right, for anyone
23:36
23:36 out there that’s looking at getting an
23:38
23:38 ERP roll, it’s a lot of work, right?
23:39
23:39 It’s going to take you 6 months to a
23:41
23:41 year. But, you know, coming out on the
23:43
23:43 back end of that, we now have a list of
23:45
23:45 each part that’s processed each week.
23:47
23:47 You can see which ones made money and
23:48
23:48 which ones lost money. And guess what?
23:50
23:50 With good data, then as a business, you
23:52
23:52 can start to make better business
23:53
23:53 decisions. the ones we’re losing money
23:54
23:54 on means we’re underpricing those or we
23:57
23:57 have a quality control problem we need
23:58
23:58 to go figure out, right? And then over
24:00
24:00 time you start to get more parts that
24:02
24:02 are making money because you start to
24:04
24:04 focus on the customers that are, you
24:06
24:06 know, paying better, the the types of
24:08
24:08 parts that are paying better. All of the
24:09
24:09 above, right? There’s a certain kind of
24:11
24:11 part that we maybe from a quality
24:12
24:12 perspective we constantly have to redo.
24:14
24:14 Well, we should do less of those parts
24:15
24:15 if we can, right? So, you know, that’s
24:17
24:17 where it’s good data in, good data out,
24:19
24:19 and allows you to start to make high
24:21
24:21 impact decisions on the business
24:23
24:23 directly around profitability.
24:24
24:24 >> And then here’s the downside. Um, at any
24:27
24:27 point you change the way you do
24:30
24:30 something, you change the culture. And
24:32
24:32 so, you got to know that. So, when you
24:36
24:36 are used to a high volume business that
24:38
24:38 needs to push out a certain amount every
24:40
24:40 single month, and you implement a step
24:42
24:42 like this, and this is a big step, it’s
24:44
24:44 a big change. um you know just to do one
24:47
24:47 of our mud rotors which is about a 30
24:49
24:49 foot long part that goes out of the
24:51
24:51 shoeer factory. It goes through nine
24:53
24:53 stages. So it’s going through nine
24:56
24:56 different stages to get to where it
24:57
24:57 needs to go. And so when you take
24:59
24:59 something like that and you now start
25:01
25:01 making people record every step
25:04
25:04 even though it’s a little step you
25:06
25:06 changed the way things work. So then all
25:08
25:08 of a sudden you have some slowdown. You
25:10
25:10 have slowdown in production. You have
25:11
25:11 slowdown in changes. you have slowdown
25:13
25:13 from your sales team on how to quote
25:14
25:14 because they you they’re used to sending
25:16
25:16 an email and just kind of winging it and
25:18
25:18 sending a quote. Now all of a sudden
25:20
25:20 they’ve got to put into a new system
25:21
25:21 which my god I mean you probably need to
25:24
25:24 go through it at least 30 times before
25:25
25:25 you’re good at it. So now you got to
25:27
25:27 change that culture which creates
25:29
25:29 friction. I mean it’s the ERP change is
25:32
25:32 beautiful when it’s out and it’s rolling
25:34
25:34 and man we’re we’re starting now. I mean
25:36
25:36 we’re we we rolled this thing out last
25:38
25:38 year this time. Um, we’re just now
25:40
25:40 starting to see the benefits of it,
25:42
25:42 right? We’re starting to see where it’s
25:43
25:43 not even an issue. Everybody’s rolling
25:45
25:45 through it. We’ve got all of our SOPs,
25:47
25:47 NCRs, and everything being tracked. Um,
25:50
25:50 we’re not utilizing it to the full
25:51
25:51 extent, but man, it’s it’s it’s very
25:53
25:53 impactful.
25:54
25:54 >> But that change of culture, and that
25:56
25:56 change of process changes your revenue,
25:58
25:58 it changes things. So, there’s a
26:01
26:01 tradeoff. And so, those of you that are
26:02
26:02 thinking, hey, I’m going to get into the
26:04
26:04 business. I’m going to change ERPs. I’m
26:06
26:06 going to get into systems and do all
26:07
26:07 this stuff. Just remember that every
26:10
26:10 everything you change will have a
26:12
26:12 there’s a pendulum. It swings and those
26:15
26:15 things can can also swing against you
26:17
26:17 and and it kicked our butts. I’ll be
26:19
26:19 honest with you. But it’s things that
26:20
26:20 had to be done and uh you know it just
26:23
26:23 had to be done.
26:24
26:24 >> Yeah. And so then maybe you know
26:26
26:26 ultimately what kind of impact did that
26:27
26:27 have on the business, right? You know
26:29
26:29 from a culture perspective and
26:31
26:31 ultimately where are we at today as a
26:33
26:33 business? Yeah. Well, there’s two two of
26:35
26:35 these uh I always call them the Murphy’s
26:37
26:37 laws. And and so for our listeners, you
26:39
26:39 know, as soon as you as an as an
26:42
26:42 entrepreneur step out, right? The Murphy
26:44
26:44 laws hit, right? The first one is
26:45
26:45 friends and family. Your friends and
26:47
26:47 family are going to come to you and say,
26:48
26:48 “You are crazy. Like, you’re nuts. Why
26:50
26:50 are you doing this? Who are you? You you
26:52
26:52 you’ve always had a job. What do you
26:53
26:53 think you can go and be an an
26:55
26:55 entrepreneur? Oh, you can’t buy a
26:56
26:56 company. You don’t know how to do that.”
26:58
26:58 You know, that’s Murphy’s law number
26:60
26:60 one, right? That’s always going to do
27:01
27:01 that. Then Murphy’s law number two,
27:04
27:04 right? You do it and then everything
27:08
27:08 that could go wrong goes wrong.
27:11
27:11 And it it’s the universe’s way of saying
27:13
27:13 to you, hey, how bad do you want this? I
27:15
27:15 have not done a venture yet where it’s
27:18
27:18 all been easy.
27:19
27:19 >> No, nothing’s easy. I mean whether you
27:20
27:20 go from zero to one or one to two I mean
27:22
27:22 you know mo not most but I want to say
27:24
27:24 all businesses require a lot of work and
27:27
27:27 it’s easy to see the finished product
27:29
27:29 and neglect all the things that had to
27:31
27:31 happen along the way. So you know as an
27:33
27:33 entrepreneur you’re constantly you’re
27:35
27:35 really just trusting and having the
27:37
27:37 confidence in yourself to solve the next
27:38
27:38 problem. I mean each time I mean you’re
27:40
27:40 constantly living you know you’re you’re
27:42
27:42 you’re trying to reduce risk while also
27:46
27:46 having a lot of uncertainty around it
27:48
27:48 and giving yourself the confidence that
27:49
27:49 you could solve both at the same time
27:51
27:51 right before a bigger problem arises and
27:53
27:53 that’s entrepreneurialism at its cart.
27:55
27:55 >> Yeah. And then in and you guys had done
27:57
27:57 some really large apartment complex
27:59
27:59 acquisitions. So you you of course were
28:01
28:01 attracted to doing a bigger deal. I had
28:03
28:03 not closed a bigger deal before and we
28:05
28:05 had none of us had ran a acquisition
28:08
28:08 company with all these people. So the
28:09
28:09 Murphy laws number one, we’re just
28:11
28:11 stubborn enough. We we were like, “Yeah,
28:13
28:13 whatever. We’re running right over that.
28:14
28:14 There are no Murphy laws number one.
28:15
28:15 Friends and family already know we’re
28:17
28:17 crazy, right?” But Murphy’s law number
28:19
28:19 two happened, right? Anything and
28:21
28:21 everything that could have gone wrong
28:22
28:22 went wrong. So starting in the 24 um
28:26
28:26 equipment started breaking down and it
28:27
28:27 started very early at our shoe marker
28:29
28:29 location which is the money maker
28:31
28:31 >> which goes back to the reps and
28:32
28:32 warranties comment you made earlier in
28:34
28:34 the podcast right which is really
28:36
28:36 understand what you’re putting there and
28:37
28:37 how do you protect yourself
28:38
28:38 >> and make sure if you’re buying equipment
28:40
28:40 you get an inspection like you need to
28:42
28:42 have somebody review your your PMs
28:44
28:44 >> they they they give you an evaluation on
28:46
28:46 the equipment and they tell you that
28:48
28:48 because not only should the that
28:50
28:50 discount the business um it should also
28:52
28:52 set what you were going to hold back in
28:55
28:55 reserves post closing, right? These are
28:57
28:57 the things we learned. Uh but equipment
28:59
28:59 started breaking down, kept going and
29:01
29:01 then we had hit with the Dret. It was
29:03
29:03 the first little sneeze, but it was in
29:05
29:05 May and there was this kind of like
29:06
29:06 boom. We had a little bit of a
29:07
29:07 hurricane, quick quick little weather
29:09
29:09 occurrence that knocked the power out um
29:11
29:11 at a couple of our locations for a few
29:13
29:13 days. Okay, not a big deal. But then
29:15
29:15 right when July hit and our shoeer
29:18
29:18 facility was having breakdowns that were
29:19
29:19 trying to catch up, um we got hit with
29:22
29:22 hurricane. So barrel came through. Um
29:25
29:25 didn’t really do physical damage, but it
29:26
29:26 knocked out all the power
29:28
29:28 >> and most of Houston. This was all over
29:29
29:29 the news at the time. It was not just
29:30
29:30 the facilities, but it was a huge wide
29:32
29:32 problem. I mean, my house had no power
29:33
29:33 for a couple days,
29:34
29:34 >> right? It just ended up being 13 days by
29:37
29:37 the time we got everything turned on.
29:38
29:38 And then once once with with with these
29:41
29:41 uh the chrome tanks, it’s driven by
29:43
29:43 electricity. And so when you have old
29:45
29:45 chrome tanks and electricity goes out,
29:47
29:47 guess what happens when you flip the
29:48
29:48 breakers, you flip everything back on,
29:50
29:50 things break. And then all of a sudden,
29:52
29:52 Shoeacher had nine rectifiers go
29:54
29:54 completely just kaput. So we’re sitting
29:57
29:57 there, we’re burning cash, we’re burning
29:59
29:59 money, we’re just like, “Oh my god.” We
30:01
30:01 had been ramping up. We had a lot of
30:03
30:03 people that we had hired. Uh we ended up
30:05
30:05 having to let go of about 35 people in
30:08
30:08 the month of October. Uh we had to scale
30:11
30:11 down cost. We had to renegotiate things
30:12
30:12 with the seller. Luckily, he’s it was
30:14
30:14 easy to easy to renegotiate a few
30:16
30:16 things, raised a little bit more
30:17
30:17 dollars. We took on some loans. I mean,
30:19
30:19 guys, you do whatever you got to do to
30:21
30:21 make it work, right? And then
30:24
30:24 election time and uh in our business 20
30:27
30:27 November and December was just ghost out
30:29
30:29 like business just stalled and it was
30:31
30:31 during the election year and that just
30:33
30:33 happens when you’re dealing with
30:35
30:35 infrastructure, oil and gas, energy, all
30:37
30:37 these things. Uh budgets kind of change
30:40
30:40 due to a big election change like that.
30:43
30:43 Um, so that 24 was a total ball buster.
30:47
30:47 It was it was very difficult. But as a
30:49
30:49 team, you know, working together on our
30:51
30:51 first big transaction, it really made us
30:53
30:53 stronger.
30:54
30:54 >> Um, with that culture change, we also
30:56
30:56 lost GMs. We’ve lost management. Uh,
30:58
30:58 this year we’ve really almost revamped
31:01
31:01 most of our leadership in the company.
31:03
31:03 Um, just because of change, shift
31:05
31:05 change, all these things. and uh you
31:08
31:08 know, but very bullish and optimistic
31:10
31:10 for 26 because we’ve just got an
31:12
31:12 incredible team. We’ve got a great
31:13
31:13 leadership. I feel like we’ve gotten
31:15
31:15 through the chasm.
31:16
31:16 >> Yep.
31:17
31:17 >> Right. Which is that third part of
31:18
31:18 Murphy’s laws which is like, hey, why,
31:21
31:21 you know, it’s going to take longer than
31:22
31:22 you think, you know, and all of us want
31:24
31:24 it to happen overnight, but it starts to
31:26
31:26 to to play out. And so all of the work
31:28
31:28 that we did, the reinvestment, the cost,
31:30
31:30 all these things, I believe has put us
31:32
31:32 in an incredible position for next year
31:34
31:34 to to really take advantage of of a
31:37
31:37 great opportunity to take this company
31:38
31:38 from 26 million in revenue to 35
31:41
31:41 million. I think it’s very doable. Um,
31:43
31:43 and we’ll we’ll hopefully be able to
31:45
31:45 report back next year and say give it
31:47
31:47 give us some updates.
31:48
31:48 >> Absolutely. I want to reiterate, right?
31:49
31:49 I mean, it’s really spending, you know,
31:51
31:51 we’ve revamped the entire leadership
31:53
31:53 team, right? And the more you spend on
31:55
31:55 that and that’s maybe some of the
31:56
31:56 mistakes that we made. We could have
31:57
31:57 done some of that sooner and get a lot
31:59
31:59 more methodical about it, right? Because
32:01
32:01 you do need to, you know, people get
32:03
32:03 comfortable the way they are, right? And
32:04
32:04 so some people don’t like change and you
32:07
32:07 need to really have a vision for what
32:08
32:08 are the goals that we have for this
32:10
32:10 company and get everybody marching
32:12
32:12 towards them. And if somebody doesn’t
32:13
32:13 want to march towards them, then they’re
32:14
32:14 just not a fit, right? They’re, you
32:16
32:16 know, they’re comfortable where they
32:17
32:17 are. They don’t want to make the change.
32:18
32:18 That’s fine. That’s not just that’s not
32:19
32:19 going to go to the success of the
32:20
32:20 company. And so really spend a lot of
32:23
32:23 time on getting the right people around
32:26
32:26 you right as an entrepreneur the problem
32:28
32:28 we have is we tend to want to roll up
32:29
32:29 our sleeves and do it ourselves but that
32:31
32:31 also doesn’t grow that doesn’t scale and
32:33
32:33 so again there’s a phrase that I love
32:35
32:35 which is you know micromanage the hiring
32:36
32:36 process so you don’t micromanage the
32:38
32:38 person right and if you get the right
32:39
32:39 people in to the team they are going to
32:41
32:41 do things much better than you would
32:43
32:43 right and help take it to them another
32:45
32:45 level and so really that’s that’s you
32:47
32:47 know kind of Casey’s story is really how
32:49
32:49 we you go through what’s called the J
32:50
32:50 curve Right? Things get worse before
32:53
32:53 they get better, but then you start to
32:54
32:54 pick up and, you know, get real
32:56
32:56 tractionable improvements month over
32:58
32:58 month once you kind of spend the time
33:00
33:00 and effort and lay that foundation and
33:02
33:02 go through that pain.
33:03
33:03 >> Yeah. There’s been a common theme on our
33:05
33:05 podcast. We talk to people, they say
33:06
33:06 this, and I have to agree like every
33:08
33:08 person that has left, we have filled it
33:10
33:10 with a better person. And I’m not
33:12
33:12 talking about better person in like
33:13
33:13 their life. I’m talking about better
33:15
33:15 quality at that job and that talent.
33:17
33:17 >> Better performer.
33:18
33:18 >> Better performer, not person as a whole.
33:20
33:20 They’re all good people. It’s just
33:21
33:21 someone that came in and and stepped up
33:23
33:23 and wants to work. But it’s very fe it’s
33:25
33:25 very scary. Um I don’t care how many
33:27
33:27 times we have the conversation. I get
33:29
33:29 nervous when someone leaves because I
33:31
33:31 believe people don’t leave because of
33:33
33:33 their their they don’t leave because
33:34
33:34 they don’t like the company. They they
33:36
33:36 leave because they don’t like the
33:37
33:37 management. They don’t like the
33:38
33:38 strategy. They don’t like something
33:40
33:40 there. Um it’s usually rarely about
33:42
33:42 compensation. It’s rarely about all that
33:44
33:44 stuff. It’s really about personalities
33:46
33:46 and stuff. And so when you’re changing
33:48
33:48 culture and you have a change of culture
33:50
33:50 of something that’s been around for a
33:51
33:51 long time, that person’s probably going
33:53
33:53 to leave um and and you do your best to
33:55
33:55 retain them. And so I want to keep them
33:57
33:57 all. But the truth is, you know, we are
33:59
33:59 in the acquisition business and private
34:01
34:01 equity firms that come in with big large
34:02
34:02 capital that aren’t our independent
34:04
34:04 sponsors. What do they normally do? They
34:06
34:06 normally come in and knock out
34:07
34:07 management. They they they replace it
34:09
34:09 with their own teams. So it’s very it
34:11
34:11 does happen and there’s a reason we
34:13
34:13 don’t want that to occur. But you as a
34:15
34:15 new buyer, you got to know that that’s
34:17
34:17 probably likely going to happen. That
34:19
34:19 the people that you’re working with
34:20
34:20 today are going to move on uh because of
34:23
34:23 change. And change is a doozy.
34:26
34:26 >> All right. And you know, and I know
34:27
34:27 we’re kind of at the 30 minute mark. We
34:29
34:29 know we’re not going to do the
34:30
34:30 rockaround since obviously everybody
34:31
34:31 already knows Casey, but Casey, maybe
34:33
34:33 just what parting wisdom would you have
34:35
34:35 for anybody that’s looking to go out and
34:38
34:38 buy a manufacturingoriented business?
34:40
34:40 Yeah, I would say, man, make sure and I
34:43
34:43 thought we did the best due diligence
34:45
34:45 process. I mean, we I thought we did
34:47
34:47 everything. We did the quality earnings.
34:48
34:48 We did all these things. Um, really what
34:50
34:50 you want to do is make sure, especially
34:52
34:52 when you’re dealing with heavy machinery
34:54
34:54 and things like that that you write in
34:56
34:56 your reps and warranties or get that rep
34:59
34:59 and warranty insurance because the
35:02
35:02 machines are going to break down. The
35:03
35:03 seller does not he’s not doing it to
35:05
35:05 hurt, you know, being neg negligent. it
35:08
35:08 just stuff breaks and that stuff of that
35:11
35:11 should be warranted and then instead of
35:13
35:13 trying to fight and argue with the
35:14
35:14 seller, you could always fall back on
35:15
35:15 that rep warranty insurance, right? And
35:17
35:17 that’s a critical thing. Now, you can’t
35:19
35:19 do it on the super small bit small
35:21
35:21 deals. Um but but in the super small
35:23
35:23 deals, what you can do is you can do a
35:24
35:24 hold back. Um what you can say is is
35:27
35:27 hey, the inspection came back. It’s
35:29
35:29 basically saying, you know, the PMS were
35:31
35:31 not done accurately or whatever it is.
35:34
35:34 We’re going to set a hold back for the
35:36
35:36 first 18 months. based on the reps and
35:38
35:38 warranties and that hold back allows me
35:41
35:41 to pull from it if something breaks or
35:43
35:43 something goes down and there’s really
35:44
35:44 no question answer asked, right? We’ll
35:46
35:46 just follow through the attorney.
35:48
35:48 Another great way to do that to mitigate
35:50
35:50 your downside on the equipment.
35:52
35:52 >> Yep. Awesome. So, the Casey, thank you
35:55
35:55 very much. That’s story of
35:57
35:57 >> H&M. Yeah. Good luck to everybody. Thank
35:59
35:59 you for listening to the M&A Launchpad
36:01
36:01 podcast. If you’ve enjoyed today’s
36:02
36:02 podcast and would like to support us,
36:04
36:04 please leave us a rating and a review
36:05
36:05 after you listen. I’m Casey Menchu and I
36:07
36:07 look forward to talking with you next
36:08
36:08 week.
