Transcript

Michael Palumbos (00:01.51)
Welcome everybody to the Family Biz Show. I'm your host, Michael Palumbos with Family Wealth and Legacy in Rochester, New York. And today we've got a really interesting show. We're going to be talking about what happens when the family business is sold to an outsider, sold to somebody that's not a member of the family, wasn't even part of the business. So we're blessed to have Michael Bower from Eagle Metal Craft here.

Michael took over a multi-generation family business and we're going to talk about what that looks like and how that went. How do you keep it together? So welcome Michael. Appreciate it. One of the traditions that we have is that we ask people to talk about their journey. so, you weren't, you know, I can tell from your accent, you weren't born in Syracuse area.

Michael Bower

Yeah, thank you for having me.

Michael Palumbos (00:53.422)
And so, know, walk us through what was your journey to end up in Syracuse, New York, run an Eagle Metal Craft.

many hours are we going to go today? So just to try to make a long story short, I actually grew up in Arkansas. I left Arkansas as a high school student, went to Marine Corps, did four years, went back home, started working. And then throughout working, I ended up going to college at night and I started with an associate degree, then my bachelor's degree, and then I got my master's degree all in applied optics.

And I spent about 20 years in applied optics thinking that was going to be my complete career path. And then I finally got to this place where they started having me manage other things, things I wasn't familiar with. And so that grew into a plant manager position, grew into operation manager, plant manager, and then director of operations. And somewhere along the way of that, that whole career path, which was everything I thought I wanted was

At a certain point I was dealing with numbers, but I really wasn't dealing with people. And I've said this a lot over the last couple of years, but I really felt like I wasn't doing anything to impact anybody's life. And I didn't feel like I was doing a lot to impact the bottom line. I mean, I was talking people off cliffs and I was dealing with politics, but I wasn't doing what I thought was impactful at a personal level. And somewhere along the way I got this crazy

desire to go try to find a business. And I think I was struggling around age, you how old I was getting, you know, I have time left. I remember even hearing the Colonel Sanders thing at the Texas Fried Chicken, you know, everybody's in their own time and age. But I was really kind of pushing up against it because if I was going to buy a business or

Michael Bower (02:54.318)
start a business or do something on my own. I just felt like I was kind of under a time constraint. I, my wife is, is, you know, Syracuse been there forever. Syracuse is home for her. It's not where she was born, but Syracuse is home. Um, and so it's where we've settled and I was in a corporate job. So all my job was United Technologies, Eaton Corporation, know, big corporation stuff. Um, and then I started

down this desire to find a business, buy a business, start a business. So I did what a lot of people did. I started a 3D printing, doing that at night. And I was actually doing pretty well with it, going to work and doing that. But I needed to find a business because at a certain point you've got bills and you have family and you have expectations and you have a life that you need to sustain while you're figuring out this dream thing. So I ended up going to work for a guy that was buying smaller businesses.

And under the corporate umbrella, I had done a lot of &A activity. Like they would send me out as a operations person, engineering person, to assess or move or relocate or close. I had done a lot of that. So, but I had never done it on a personal level. There's an awful lot of things missing in a big corporate structure that comes to play at a personal level. And the other thing was, it's not like I was setting out a lot of money, you know, I was just paying bills and living life.

not doing anything really crazy, but I wasn't able to run out and buy a business. So I started working for a gentleman that was buying small businesses that got me more. I learned a lot at a more detailed level. Also, I think just really learned that it's possible, right? I've just,

But the whole thing of trying to build relationship with banks and attorneys and accountants and that whole thing in an area I didn't grow up in was probably my first challenge and that's where I started trying to build a network and then I found the business that I acquired.

Michael Palumbos (04:52.29)
That's awesome. So Eagle Metal Craft. What does Eagle Metal Craft do today? Let's take a little history of Eagle Metal Craft. What did they do when they started business? what are they doing? What are you doing today?

Love the history of every company, but I love the history. I love the buildings I love all that the so Eagle Metal Craft was started by a man by the name of Jack Helmer in 1953 him and another gentleman by the name of Lambert started welding and so when aluminum was a newer material and Welding of aluminum was more of a high-tech thing in the 50s. They started a business in it

In the same location we're in today, they just kind of kept adding on to the building and growing it, but they were, they started with aluminum welding, started getting into a little bit of metal, bending and forming, and it just kept growing over the years and adding on to be now a 30,000 square foot facility with precision sheet metal, machining, powder coating, silk screening, welding, grinding, hardware, spot welding.

Now we are 30,000 square feet or 26, 27 employees. Still have a lot of capacity and we're using today very modern equipment, very CNC, very lights out operation type stuff. But the cool part about the founder of the business, the culture that they put in place, it's still there because the, so I've got a lady at Works in Front Office that's been there 58 years.

Yeah, I've got a 43, 38, 35, some 20s, some teens, and then a whole big group of us that are all less than three years from when we really jumped. But it is a, we're in the niche of real high quality products. So we live in the semiconductor medical, high end electronic markets. And so everything we make is small and petite and pretty and really, really precise.

Michael Bower (06:53.938)
Okay. We're not in the industrial. so, but the culture that is instilled from had to be from the founder all the way through the very tenured folks have today. It is so quality driven. It's on the overkill side, right? There's a, there's a cost quality and you can overdo sometimes depending on, you in the eight waste given the customer more than what they asked for and need. We can, we can go over that, but

But on the other front of that, the quality in this facility is just incredible. And the personal responsibility that everybody has for it. And that was instilled by the founder. In big corporations, we all struggle with how do you get a good quality organization? But you build it and you build it through the culture of the people at the top and how they support and what they expect. And so there's a lot of cultural things still in the building. The good and the bad.

The good is the work ethic, the quality, the attention to detail. People are honest. You could leave a hundred dollar bill laying somewhere and no one would touch it. The responsibility side of if the last person out, they'll turn the lights off. There's a good sense of all that in the facility. The owner, the founder that started it ended up with full ownership.

Probably in the, I'm guessing in the 70s, I don't really know. And then the lady I was telling you about that's been there 58 years, she remembers when his children would come in and play. Well, they ended up running, the two brothers, there were two brothers, the gentleman I bought the business from, he had been in there for 40 years and his brother had retired a few years before I got there, but he must've been there 35, 40 years himself. And I think the...

Sure.

Michael Bower (08:47.308)
The cycle of the business I find really interesting too, the growth, because as I watch, as I look at the history of the building and the add-ons and I look at the maps and where they put stuff and trying to think about why they were doing what they were doing, because it's just cool to me. At the same time, the sales as it was growing, because I've got all that history.

And the lady Phyllis who works in there is Phyllis Smith is a sweetheart. She's been there 58 years. She still works. She's part time now locked onto everything and remembers everything and all these stories. A lot of them can come from her. so, um, you know, sales was growing over the years and they, they spiked in the eighties. Um, when the father was really the guy running and pushing and growing, it dropped.

probably fifty percent over the next several years and then when the sons both were in their place of growth it grew back up not as high as where the father had it and then it started dropping over about a ten year period getting worse and worse and worse is up to the point that i bought it so it was when i bought it it was a i don't know the right term but i would call it a declining business a

low energy, you know, he was ready to retire and didn't have a succession plan to deal with it. And he had responsibility for customers and employees. And so he didn't know what to do. So he tried to sell it, but ran into, was living out of the business. And so his financial numbers did not reflect. Sales is dropping. He's living out of the business. And so he had it listed with a broker for a few years, spent a lot of money to drive through all that.

But nothing, it didn't reflect. didn't, the books didn't reflect. So when I went into it, I would happen to be, because I was doing the same exact situation, except for I started my process in probably December of 2019. So I had attorneys and accountants working on it when they did the

Michael Palumbos (10:52.856)
OK, so.

Michael Bower (11:01.262)
Slow, you know two weeks to slow the curve and I had to call him and say I got to stop my offer Because his his sales have been declining for years. The banks were already challenging me and Now all of a sudden the world's going crazy You know the number of times I said who buys a business in this kind of thing. I'm gonna try right but But I think looking at the business because he was living out of it that most people do He couldn't sell it

Sure. Lifestyle business. Yep.

Michael Bower (11:31.606)
And so if, if for me, because I believe in sweat equity, I'm, you know, I've kind of grew up that way. And so for me, it was, it was the right fit, but anybody looking at it as a real, you know, that's it. You know, I knew I had to raise you and I knew that. And so I needed a job though, that would pay me a salary that my family and I were used to, but I could also pay the bill on the loan when I buy the business. So

job to begin with.

Michael Bower (12:01.326)
You know, I personally went in and scrubbed the books on where all the waste was so I could put it in front of the bank and show them. That doesn't happen very often. So they didn't situate themselves, you by the time he was in his mid-60s and tired, he hadn't situated himself right.

Let me talk, I wanna unpack that a little bit and then we'll go back to the family dynamics and some of the other pieces and then.

I definitely want to pick up with the where did you take it? What did you do? I think there's a lot that people can learn from your situation here and for you know, people may not know this but you and I know each other. Another Vistage member and we do that and that's we've gotten gotten to know each other and I've gotten to you know, really respect what you've done. That's why I asked you to be on the show. So we're dealing with

Someone who didn't do the exit planning they didn't have a succession plan and this is a really important point that you know I want to share with people so that they get this exit planning or succession planning is identical to growth planning

It's the two sides of the same coin. And so, you know, what was happening for this person is just classic, is because they weren't doing their succession plan, doing their exit plan, and what, you know, the idea behind succession planning or exit planning is that you're leaving at the top of the curve so that, you you've done everything that you can and you're maximizing the value before you sell the business.

Michael Palumbos (13:37.454)
And growth planning is all about how do I ensure that, you know, I have all my ducks in a row. I have a business continuity plan behind me. I have backups for things in case anything goes wrong as I'm trying to build this business and I have the right strategy for the right time. those two things are just hand in glove.

You know, the lesson that I learned and I'm probably the real blessing in all this. lesson that I learned is that I did buy a business a little bit later in life. So being in my fifties, my retirement is around the corner. If I want it to be right now, for all I know, made work telling 75 who knows, but I know that I want to be prepared to be able to exit. So

The blessing for me was by going into this business and getting all the rejections from the banks and hearing all the things from all the outsiders that would tell you if you're buying a business, because it's easy if business is highly profitable and got 20 years shot and got leadership team in place and apps and all that, but those businesses are going to cost just that much more. Sure. The reality.

for one second because it's what you just said is key. If you're not transitioning it to a family member and you're not going to be gifting the business somebody, you're trying to get those highest multiples. That's right. So making sure that you're

you know, attention to getting all the fluff out of the business and running it like a business and professionalizing it, making sure that you're hitting all the value drivers, super important. For someone like yourself, the very opposite is like, thank you so much for not maximizing value in this business because I gave you an opportunity.

Michael Bower (15:25.262)
So, you know, the blessing for me and the lesson that I learned and maybe, like I say, being in the age, I know that if I'm going to retire, let's say 10 years, I know, and the lesson that I learned, and by the way, still look at, because I'm still trying to grow, so I'm looking at other businesses all the time and I still see the exact same thing. People that are living out their business,

Michael Bower (15:51.694)
For number one, these are just my opinions, right? an invested, know, I don't throw my opinions out a lot, but I'm gonna throw them out here. Number one, if you're gonna retire or try to exit in the next five years, you've gotta call it and stop living out of it and maximize your profits. You're gonna get them on the front end or the back end. But the problem that I see is most people, like the guy that I bought from,

was getting them all the way along and he still was a headset on getting them at the end and he couldn't get them. And the other businesses even recently that I've looked at are the exact same thing. And I'm talking some, you know.

business do you think you've looked at recently?

10.

Okay, and of those ten businesses, they're living a lifestyle business, taking the profits out now, and not prepping themselves for retirement.

Michael Bower (16:35.918)
They're all doing it.

Michael Bower (16:44.814)
was in a business, this is real story, was in a business within the last few months. The sellers are in their mid-60s. When he's talking to me, he's tired. I'm ready to retire. Get me out of here. I'm one accident or one sickness away from going bankrupt because he's the only person that knows how to do a lot of it. But they have brand new vehicles. There was a brand new tractor sitting in the back of that shop getting stuff modified on it.

Yeah.

Michael Bower (17:15.404)
all this stuff. And at the same time, their books are all messed up because all this is in it and they're wanting to try to negotiate harder about what the value is. And for me, I'm just going straight at value now because I'm not, can't run the one I have and go work the hours that I would in a new one. So it's gotta be offset. and so it, I find it sad.

Yeah, I think that's a great word.

And it's sad, you know, these people, you know, all these folks spend either their family started and they spent these lifetimes in them and all this work to get to this place that God forbid they don't have children that don't want to come into it. And then two, don't have their books in order so they can exit. Now, I have a I have a quick story that that probably bases me in all my fundamental views.

25, 30 years ago, somewhere in there, I'd gotten out of Marine Corps, I'd worked 10 years at this job. Applied optics, I was learning a lot, I was really doing a lot. I got this job offer to go, it was a private owned company that I worked for. There was a gentleman that owned it, didn't have any kids in the business, it was just him. He was probably in his 50s, I think, 50s, somewhere in there.

Michael Bower (18:37.24)
But I remember I got this job offer to go somewhere else and it was a really good job offer and it was also to help me get, you know, going bachelor degree program stuff. Anyway, I turned in my notice and the guy came and talked to me and said, Michael, what would I do to get you to stay? I have to admit it wasn't money. was, by that point, they should have gave that first. was, but I remember I said, you know what? I have one question. What happens to all of us if something happens to you?

And his answer was very polite, but it was still saying, that's not really any of your business. I took the offer and left. Now as an owner, if somebody asked me what happens to the business, I tell them, I'm trying to build the team internally to self-run, but until then the accountants know to put a general manager in here. Insurance pays off the business so you don't have debt, but it's going to continue to run because we have customers and employees. It's going to continue to run. And now it needs itself.

driven team, but I have to have a plan.

Yeah, I want to take that point one step further because I really like what you just said is if you're running a business, it has an EIN number.

an employee identification number, you know? You have your social security number. so it's fine if you're a sole proprietor and you're doing business ads and everything's coming to your social security number. If you have an LLC and you have your own EIN number and everything's coming to you individually. But the moment you start having employees and customers and outside of yourself, you've got to be thinking about what's best for the business. Just like, and treat the business

Michael Palumbos (20:15.34)
like you would treat your children or your wife or your employees, individuals.

You know like me I'm all of us we're trying to hire employees and we want to hire people that will carry our business forward Why would they if we don't make sure they're secure and now a lot of them don't think to ask? But I think the presence of it needs to be there. And so for me, that's a big thing. And so it also impacts me on how I run and how I deal with the business like like me because I know

Like I'll go ahead and you I'm 54 so I know in the next four to five years I at least want to be prepared to do something so Maybe I won't I'm still trying to grow right now. But but if in five years I want to sell I want my business clean so Amazing that there is zero Argument or negotiation around with financials are we can argue about multiples? We can argue about all those things but but as far as real value and profit making business

because I only have five years left. Now if I had ten, I'd look at it a lot different. Probably. I had twenty, that's another different. But I couldn't, you know, I was thinking about the other day, even if I only had two years left, or if tomorrow I decided to sell, I don't have to do anything different. And I intend to keep it that way. I think about, you know, the lifestyle business, and I get it. I do get it.

Okay.

Michael Bower (21:45.142)
And I, you know, if I was younger person, I would have went into that probably differently. But I think there has to be the knowledge to what you said. If there's not a person in your family going to take it over. And even if there is, how do you establish so that they don't?

You know over do the overshoot some of that stuff, you know Yeah,

Let's talk about the family for a second. here, and that's why I wanted you in here, is you've taken over a business that you didn't start, it was started many, many years ago. Talk about what was that like, one, from the negotiation standpoint, what were the family dynamics when you started?

talking about the, you know, this, how much did they lean on history and legacy and those things. And then, you know, talk about how you bought the business, if I'm not mistaken, the owner was stayed around, if I remember that, for a while.

Yeah, mine's even a little bit more complex, think, because I had said I'd stopped the offer during COVID. Yeah. And his business was still dropping. We were still talking. But every month the bank was getting further and further away from me. They were not going to finance it. And every month that got a little further away. He called me, the seller called me in probably May.

Michael Bower (23:24.576)
and asked me if I would be interested in coming working for him, getting sales back up so the would finance it. So I actually went to work for him in basically the end of June of 2020 and walked in and just started driving it, which we can talk about, but I didn't close on the acquisition until February of 22. And I can tell you at the time, patience wise, it was brutal.

Okay.

Michael Bower (23:52.846)
because we're grinding and I'm thinking I'm in my 50s I gotta get closed in the world, you know. But again, I was blessed again because I got all that time to learn the customers, employees and the products which helped stage me to try to be at least better off once we got closed. So everything happens for a reason in my mind and those things did but so that detail of the acquisition was kind of an odd one.

So talk about, know, like, again, this is a family business, there's a culture there, and then Michael comes in. What is that like?

So it was kind of, and I'll try to be somewhat sensitive here just because I don't want to overshare about people's personal stuff, but the gentleman that I dealt with at the time had become the sole owner. He was the oldest son, had taken over the business, and his, I say his younger brother had worked there 40 years as well. So by the time I got there, there was only the older.

brother because two years before they literally had a knockout drag out physical altercation in the building and the father who was still alive but very aged mediated for them to buy out the younger son and go away. Now it broke that family. So my experience walking into it was those things were still kind of there and raw.

because I guess some of us who's been there fifty eight years was very close they were like her own children kind of thing she very close to a moment all these very tenured employees they knew all this stuff and they also knew at the time they thought the business was would be closing because it was declining and so there was a lot of low energy when i walked in the energy was low i don't know what i'd call morale because they were just very long tenured employees but

Michael Bower (25:54.52)
but the energy was ultra low. People did, I wish I had a better way, but it was a dying business. It was dying. If a customer went away, didn't back vote. It was just, and so it was, know, like you said, for me it was, there was a benefit, but for the poor business, it was sad. And I think probably that family dynamic,

Definitely distressed.

Michael Bower (26:20.904)
hurt them more culturally than they understood because it is a family business and it does impact people.

Without going into detail, what do you think was, you know, after all the years of working with Phyllis and the other people that are out there, what would you surmise was the cause of that? Yeah.

It really was, and I don't really know that, you know, I know the owner very well and I the guy who bought the business from him very well and I don't know the other brother, but of all the things and stories and the surroundings, it was ego, know, fighting over things that are, there was no structure, right? There were family, there were brothers, and one was the president and one was, you know, the title, but there was not clear,

structure to who's responsible for what and who changes and or mediates a disagreement. There was none of that and so it came to the cuffs right it came to the wrong level over something trivial. But it had probably been building but I think the you know their business to me would even be more complex in family because there were two sons or two siblings that taken over the business you know in their own

Sibling jealousies and whatever goes on and all that like I have I have brothers and sisters and I don't want to work inside of a building with my siblings every day right I darn sure don't want to have to work for my brother, right? so I don't know how I would deal with that either, but that added a complexity that I Think you know, this is outside eyes Because I've wondered it why didn't that father the founder why didn't he demand the structure?

Michael Bower (28:07.96)
for the future of his company and his children.

It's real simple. They just you're not taught that it's you get together as a family We just everything has always just worked and we work through it and we battle through it and that's so we take our family dynamics and then we bring them into the business and I've written about this before it's you know, is this a family running a business? Which is what you ran into or is this a business that just happens to be run by a family?

You know, I can't, definitely would not want to overly simplify the family dynamic, but I deal. So for example, here's the structure we go by as a team and I try to ask myself and Vista just helped me with this kind of thought. But you know, the old question is, is, the person running the business, can they take vacation? Could they take a month off? Could they take a few months off? Right. And then would the business run without them? That's a,

Absentee owner kind of a question, right? But for me the question is would my business continue to grow without me and so

much better question. That is the question to be asking yourself.

Michael Bower (29:18.07)
And so for me, what it does is it makes me focus on how I'm building that team. So it's overly simplified, but if my kids were working in my business, I still have to train them so that the business grows without me because I started off with saying I can see in the history where the business grew and it goes along with, you know, I, I analyzed everything, right? So I've, I've compared it to who is the president when the sun came in, when this sun came, when was

And I've got them plotted off in this graph and I can tell stories with what the sales were over the last 48 years at least of data I've got of a 70 year old business. And so, again, I have children. I know I would be too hard on them if I brought them in the business. My expectations would be high because you have to lead by example and you have to

Wow.

Michael Bower (30:15.702)
serving leadership. So one, I'm lucky in that my kids don't have interest. They have their own careers and their own lives. And the reason I say lucky is because I would hate to do that to them because it is tough. But I can also see why a seller or an owner, it would be easier to transition it to your children and the business run and the way you pay yourself out and you build a future for your children. So I can definitely see how that's why people do it.

Yeah, well, I think that the other part of that is when you've poured your heart and soul into this entity, that's another kid. And the last thing that, you you identify as the owner of that business. And so if you can't identify as the owner of that business any longer, it's nice that a family member is in there and there's that legacy aspect that happens for people.

Yeah, because you also have somebody now you can instantly trust. Yeah. Yeah. So, you know, the family dynamic is one that I won't, I guess I won't experience, but, I can say from being, you know, acquiring one and talking to others, you know, another story of a father bringing his son into the business.

Father was in his 60s, brought his son in from a different career. They went out and borrowed a bunch of money and bought a bunch of new equipment ready to tackle the world. And a few months later, the son decided to leave and go become a barber. Now the father's later 60s and now has a whole bunch of debt. Can't buy the business that way. And so I hope, at least personally, that as I get to experience these things, to learn these lessons,

so don't get myself into it. It's kind of interesting to get to share the stories here in this environment. But yeah.

Michael Palumbos (32:14.072)
Talk about, you know, how were you received by the employees? know, so it's been a family business, you know, since the 50s and now Michael's coming in. What was the story? You know, what was when you were first hired, what was talked about? And then how did that transition and that baton handoff happen for you?

So it was, even though I came in only with intent to buy, I was not going there for a job, the employees, as they knew, I was brought in as a general manager. So there was a lot of positivity around it because I think for employees that were really worried about what the future was going to bring because they knew that the owner was in his mid to later 60s. You can see it around them.

They also didn't want to go find another job. so, you know, so I think it, it, was, um, I had the benefit of that brought a more positive aspect. Great. You know, and so literally, you know, this is crazy, but literally, um, fixing all the light bulbs. So it's brighter, um, to clean it up, to get rid of, you know, just started a refresh. And so I think somewhere,

I went in there in June, July of 2020. By the time we got to Christmas time, was a lot going on. lot of new work was coming in. We were starting to hustle. We were starting to bring in new employees. We started having one-on-ones with the people that were there and where are going to go and how are they going to develop. So it kind of started this up. So I had the benefit of walking in with fresh energy.

somewhere around that time they had figured out that i was there to buy the company which by that point was pretty positive they didn't realize what kind of change they were in for at time but at the time it was i really think it was it was considered more positive

Michael Palumbos (34:20.206)
What did you do to, you know, enhance the culture? What did you do to, you know, there was a culture there already that was, like you said, there was a lot of good things. How did you keep the good and let go of the bad?

Yeah, I think there was and so another description of what was kind of going on the the owner had been doing this for 40 years. So don't say any of it is a negative at all. It was he put his time into it, but he on Saturdays he was not coming in. If they work, he was he came in at 10 and kind of left at 430 and the place just ran by itself with no boss. Right.

So for me coming into it, think, you know, on one hand you could think that people were worried about having a boss, but most people need a good boss and they want leadership and they want direction. so I had the benefit of that. At the same time, when we were at Saturdays, I make breakfast. got a big grill and we do pancakes and eggs and sausage and hash browns and started doing lunches and starting to just try to liven it up.

That's probably the biggest thing was just being present. know, going by and asking people, know, does your back hurt at end of the day? You're standing on this concrete all day and you don't even have a mat. I could buy a mat. The goodwill out of a $40 mat was unreal, right? By the way, my first three months there was all safety. My first three months was fixing lights, emergency exit signs, getting rid of chemicals, trip hazards.

But trying to do it as much as I could with the involvement of everybody. I'll be honest, there were some people that it's been that way for 40 years. would you, know, doors that had been jammed, exit doors had been jammed closed. We brought in the OSHA folks to come in and do an assessment because then you don't get in trouble, but they help you find everything, right? So the first three months was safety and I believe in it as much as everyone else. And so

Michael Bower (36:27.392)
I everybody understood that. So I think there was good positive stuff going on even with those changes because we all know we're supposed to have working emergency exit lights. We all know we should have doors. We all know we should be growing and seeing new work and potential.

Right. What about, you're talking about going through this transition again, what was negotiations like when it went to, know, all right, we're real, we're going to sell the business. Michael's been in here for two years now at that point.

So the way that was playing out, when he asked me to come to work for him, we made an agreement that he can't change price. And I took it as a huge kind of gamble to say, you know what? I mean, I remember even calling the bank and saying, this guy's offered me a job to come in and help drive the business forward. What do you think about that? And the bank said, that's the best thing you could ever do, because you'll learn the business. Holy mackerel.

I took this job to buy this business not knowing that nothing's written in stone except for we made an agreement he wouldn't change the price.

Michael Bower (37:49.07)
I don't even, if I had a door again, don't know that I'd have made the same choice, right? It was a, it was a, must have been destined to happen because I took it and went. The transition as the, as buying it, cause I didn't have a timeframe. I didn't have a goal from the bank. I just knew the bank wasn't going to finance it at where it was cause it was a dying business. So I literally did things, you know, I I was working ridiculous hours even then because I would,

try to grow operations, work in operations, do all of those things at the same time, grow sales, at the same time, I was scrubbing the books. I'm looking through every filing cabinet of every bill and understanding that we've been paying for the last 10 years for these aprons that have been building up and lockers in the back, crazy stuff. There were cell phones for people that had passed away 10 years ago. You know, I got fined it all. Right.

At the same time, I didn't share it all. Right? But I got to find everything. So I got to work through that due diligence to try to make this as successful as we could. So I got to do due diligence while I was working there. Now what happened in the big picture was we started just ramping. We started having record months. We were celebrating with pizza parties for record months. He started getting, he was enjoying it.

And so then when we would try to get back to the table to re-engage everything, that's why it took two years. And it literally did lead to the point that I had to say at every point, the APA, know, to get the renew the LLI, then they get to the APA and then they get to closing. Even the closing, I started getting very kind of contentious just because the time had drug too long. We were making really good profit for it, know, which was great.

And it was staging us for the bank to believe now that I had credibility that I could do it And even myself, you know, which was a blessing, of course So again everything happens for a reason but it was the negotiations in that situation became it could have fallen apart at any point It was very risky what I did But if I hadn't of the business would probably be closed today and

Michael Bower (40:17.326)
I mean it was, the way it was declined, it would have had to have. Because at a certain point there would have been not enough employees, not enough work to carry all of it, and it would have had to have closed by now.

Talk about what is your vision for the future now and maybe before you get into your vision for the future talk about you know the period from the sale to today what are some of the other things that you did to professionalize the business to to start building that team?

Michael Bower (40:53.902)
From the time that I closed, by the way, up to closing was all not really sales, but calling current customers and trying to get more work and just pushing and quoting. And all I was doing was quoting and driving more work and driving efficiencies, quoting more work. That was current. Because I used to know quote a lot. So the day of closing and kind of going forward, a few things. One was,

Michael Bower (41:23.894)
I really knew that I a mentorship in a, a, in a lesser way to say it. I knew I needed a boss. I needed somebody to help keep me thinking the right way and not get tunnel vision. And so I started seeking mentors and mentorship started, started reading completely different books, you know, to educate myself, but around this new position of being an owner. But really it was,

trying to build the team. Now, we were at that time, we were going through the post COVID boom.

Work was crazy. mean, literally people had never heard of coming in people we hadn't heard from in years coming in. It was, and so we were just rocking with all the work when we couldn't hire enough people. Lead times are growing. All these things are going on and on time delivery performance is dropping across the whole country, us included. And I'm coming from a manufacturing background that you drive on time delivery. You live and die on time delivery. So.

I remember watching this and customers would call and I'd say, there is no way can take the job. I can't, you know, and get it. Look, if you'll just take the job and get on your books, we'll set the date, you know, but we'll, we understand. It was, it was a weird time. So we, here's the way it rolled out. We went through 20, I closed on it in 2022, February. We got to the end of the year. had crazy backlog. We had

The floor was covered in whip. I had lots of openings open. We're interviewing all the time. We're trying to hire. We're starting to talk new equipment. On-time deliveries were bad enough. I don't even want to share them, but they were, it was inappropriate. And our lead times had grown. So over the holiday of that Christmas, everybody went home and I went home and I'm looking at my backlog and all that something.

Michael Bower (43:28.504)
And I'm seeing the work dropping off and it's scaring me to death that our on-time deliveries are off, our lead times had grown, but the future out there, I don't have it. It's not booked. I don't have sales. I don't have a good strategy. And, you know, this is going to end and the acceptance of these unstellar performances are going to change. It's going to go back to normal. So I literally over that holiday,

kind of came out with a whole plan of how I'm going to attack it. employees came in on first day back. I did this presentation and went through what I saw and where we were. And I told them we can't get sales while we have long lead times and this stuff. And really kind of rallied the troops, if you will. And we went from January, February, March. On March, we celebrated 100 % on time delivery and our 70 year anniversary.

and then we started going after sales. Now, during that time I had joined Vistage and I remember even sharing at the Vistage one of my presentations at the end, said sales and I used a picture with a guy with his hands in this. Because I have a clue, literally not a clue. And it's another one, if I look back on it think, holy mackerel, I bought a business and didn't know sales. I was operations engineering kind of. If I knew that now, it scare me to death, right?

But I've had a lot of people around me with Vistage and Scott and all them giving me different tools and I've run a really strong consultant that helps me kind of build a... So about now we have... We drove on two fronts. We drove on sales and we drove on capacity. So we have implemented CRM, I've got people doing sales, this whole idea of how many cold calls you make in and all that, that's all activity going on.

At the same time we brought in automation so we brought in a new laser that runs lights out. We still have a lot, but we spent quite a bit in CapEx last year of implementing. Because the building and the facility was 70 years old and over the years as they would add on they would put equipment where they put it. Good reason at the time, but my flow, spaghetti diagram, was miles long. So we did this whole big plan.

Michael Bower (45:53.09)
where we, and we're not done, we have four phases. Phase one where we removed all the major equipment, electricians unhooked it in the morning, riggers moved it all, electricians hooked it back up. That evening we went back to work the next day. I love lean and that whole path. so, so we're, know, even that one thing gave us back two people per year of just pushing carts. We still have a lot to go, but we're driving capacity.

while we're driving sales. Now the whole sales side, now we're in this place that we're trying to narrow. We're trying to focus on what we do, not to be a job shop and not to do all things for all people, but get really good at the things, the product niche that we're in and narrow that. And that's our current state. So as of right now, I've got a lot more capacity than I have work.

which is a great place because it really is to plan. I wish, you know, I've got five openings, the biggest and most important position I need to hire as a salesperson. And when I say that, I want an animal. I want an animal salesperson, right? That'll help elevate our energy across the board. But the employees that were there when I came in, some of them are in leadership positions now. And if they're not in leadership, they're in a much more technical role.

I'm really proud of the fact that they're making a lot more money. The ones that have been there, I mean I've got one in particular over the two year period is making 23 % more than when we started with her and then her bonus was 70 % higher than what she'd ever gotten. Because again, I would

Congratulations. I mean that is and I also want to give creedence to the fact that that was important to you.

Michael Bower (47:47.022)
Well, know, it's, it falls back to me when I, when somebody asked me about it, I always say, I'm playing the long game. That's why I don't live out of my business. I don't do any of those things. And my, my thing is to buy the right capital, capital equipment, get the right employees and incentivize them the right way and get a sales team place, right? And a leadership team. I didn't mention that, but now I have a manufacturing manager, a sales leader. got a team that's building it so that one, I can.

be gone more. And over the course of the years, I get to go to the gym now and I get to, you I'm not working the hours I was. Definitely don't have the same stress that I did because I'm relying on people to do it. And me for, in my view, the business will be worth more money when it has a leadership team that runs it. So I'm driving it all for the long game. Right. And so, you know, I've got employees in there that, eh.

there's, could talk a number of them, but have been there for a long time and have a loyalty and a desire to grow and desire to be part of it. so we're, you know, my entire view of this is to put everything into it so that when I get to 59, 60 years old, then I can say, because by the way, then my business will be paid for. So a lot of things will happen for me around that time that it'll, you know, hopefully that debt.

stuff will be off and now we can figure out what we're going to do for for the longer term future but with good foundation.

That's very, very exciting. And you're using the tools, you're thinking the long game, you're, you know...

Michael Palumbos (49:30.964)
not trying to do it all yourself, you're relying on consultants and Vistage and you have, that's what I love about Vistage is, and it doesn't have to be Vistage folks, it could be YPO or EO or some other, you can put a group together yourself if that's what you so choose, but having that CEO advisory.

You know, there is the term I used when I first went into Vistage and we all probably do is, you know, we, we all use the statement or a lot of us use the statement of we want to learn how to work on the business, not in the business. Right. I think for me, I'm starting to see that one, you've got to work on it or it's just not going to grow. And I think there's, there's a conscious decision that you have to make. It's kind of like, I don't know.

horrible analogy, but people that smoke and decide, I'm gonna quit smoking or I'm going to start working out or I'm going to start eating right. There has to be a conscious decision. Otherwise you will literally work yourself to death and then you don't have any energy left and you don't have a plan. Right. And we stop. Yeah. And I think that's, you know, again, I love the history. I love the buildings. I love the, all these people that you must get to deal with that, that especially the ones that founded their companies or that is carrying on.

It's a horrible statement I'm about say. My grandfather did not draw the logo to my business. Some people's did. If my grandfather drew the logo of my business, I would cradle it. And so the idea around those things, the planning and the strategy, I don't know why we don't. Same reason we still eat the bag of chips.

People will probably tire of hearing this phrase, we, being in upstate New York, this is Iroquois country, and the Iroquois Indians had a phrase that talked about seventh generation thinking. It's misinterpreted a lot of times, but real quickly, it's when you are making decisions, give honor to those that came seven generations before you.

Michael Palumbos (51:44.6)
but think about the impact of seven generations in the future. And so, you you talked about grandpa's logo and I have a friend who's in branding and she does branding for family businesses. And that's an awful lot of times where people will get stuck. Grandma created this logo, grandpa created this logo.

What are we doing to it? So she goes in and takes all of the good about the brand and the logo and then the stuff and then revitalizes it for the 2020s and brings it new life, but still gives honor to where we were. I think that's important that people need to understand it's okay if grandma or great grandpa created that logo and you want to honor that. We love that.

but you also have to be thinking about the generations in front of you. Times do change, so finding somebody that can help you with that is important.

Yeah, absolutely. I hadn't heard that before, but that'll stick with me. The seven generations.

And I say that to people all the time because I'm that weird duck who's a business coach and a wealth advisor. And so when we're making decisions about the business and the family, we're also bringing in and saying, should we be thinking about generation skipping trusts? And should we be thinking about different things that it's like, are we growing the business for?

Michael Palumbos (53:16.194)
the government and the IRS, or are we growing the business for the family? And then if we're going to grow the business for the family, then how do we get communicating and how do we build leaders in the family when they're still teenagers or younger? And there's ways that we've injected into families to do those things.

We don't I've seen there's another business in Syracuse that I know I'm just a little bit but they had two sons had taken it over for their father. Now and they're doing fantastic as far as I can you know sure from outside that you know looks like they're fantastic but they have they have swim lanes. Yeah you know it's obvious when I when I've interacted with them I know who's doing what.

And that shouldn't be any different in any business. If you don't have swim lanes, we call them function and code abilities.

So yeah, I literally am spending time and money to develop my team to understand our roles and responsibilities in SwimLink. You're right, it is no different, even not family.

Right. So we utilize the function accountability chart and it helps because you know anything with two heads is a freak and so if you if you look at this I have done this with people where it's like okay let's let's go through head of company who is it sometimes I've had two people in the head of company seat okay who's in charge of marketing well that's Laurie and Jasmine and Pete

Michael Bower (54:48.686)
And unless it's this customer, then it's...

Right, and so you start to look at that chart. I had one where it was, you know, one of those great big giant sticky papers and we lit, you couldn't see who was doing anything by the time you had all the names on it. And they're like,

So it's a good point. It's no different than any business. The family dynamics has their dynamics, but the structure still.

has to be the same. that goes back to what we said earlier, is this a business run by a family, or is this a family running a business? And so, to your point, the business you bought was a family that ran a business, and with all the dynamics, they didn't do the work. And it's hard work. It is hard work to talk about, you know,

who's doing what, why are we doing it, how do we make decisions and do those things versus the other business that you mentioned where the brothers are in their swim lanes, they're doing the right things and they have their function and accountability.

Michael Bower (55:49.996)
And I don't know how many people can do it on their own. You can't see the forest in the trees kind of thing. So I don't know how, you know, it's too close. And so I don't know how they can do it without help. Yeah.

Yeah, that's the big thing. Well, you know...

Michael Palumbos (56:07.31)
The number of businesses that get to the point where they get doing a million dollars of revenue is tiny. It's I can't remember the number off the top of my head. It's like under 90 percent. OK, I'm sorry, under 10 percent that break a million to get to the point where you're doing 10 million dollars in revenue. It's you're in the top three percent of companies and I think it's even the top one percent at that level. And so where I'm going with this is you're still.

a small to a medium sized business at that level and there's just so many things to know compared to a Fortune 500 company that have MBAs all over the place and they have specialists in all these different areas because there's hundreds of employees to pull from. We don't have that. So the way to do that is exactly what you're saying is to bring in some outside help, join an organization, be part of a group and just

Be okay with the fact that you don't have to know everything. It's where the American philosophy, especially for a founder, is that of, you know, that manifests destiny. I've got to go across. I've got to do it myself. I'm a cowboy. And I have to have it all on my shoulders. I can do it. And if I don't, I'm a failure. And the absolute opposite is true. It's those people that invite outsiders to help them look at this stuff, make a difference.

You mentioned before, and I didn't pick up on it, but you mentioned before that you changed reading the books that you were reading. If you go back and say, from the time that you started looking at buying businesses to the times, what were some of the impactful books? I always love to share those with people.

and I still am, because I love the lean world. And it's not just manufacturing. Lean is right across every function of a business. you know, I'm very much into the, even the goal, Elijah Golerat, the goal, that book's still very prevalent, but Lead with Respect, Lean Manager, all them kind they're all Fred and Michael Ballet stories, but they're very,

Michael Bower (58:19.85)
It's hard to not read them and not say we do that. We do that. my gosh. It's very hard in any business. So I went from those because I just that's where my passion tends to love the

world. And for people that don't know what lean is real quick, it's just how do we make everything better, faster, stronger, and remove as many items that trip us up as we possibly can in a nutshell.

And so I transitioned really into, I read a lot of books about buying businesses and selling businesses because I was looking to buy for a few years.

any of those?

I don't remember the names. probably watched every podcast and every YouTube video and every thing I could get my hands on. you know, what sticks out in my mind is, is some of the videos of, for example, the people that, just buy businesses for a living, they just buy a lot of business and they have all these easy answers of how they negotiate them out, which is not really true.

Michael Bower (59:24.974)
because there's hearts and minds and a more involved. But what really struck me was through it, and that's maybe why I'm so opinionated now about how I'm going to operate till I get to the end of my career path is that all these people that said, know, sellers that are not ready to sell five years, that don't start five years before they're ready to sell, they're missing out on all this opportunity.

And so I was looking at them and reading them and studying it on aspect of trying to acquire and how to leverage some of that. But at the same time, hard lessons about, my gosh, don't ever do that to yourself. Don't end up with, you know, all this crazy personal in there and not, have it up to the day when somebody studying your books and trying to have an arguments about discretionary earnings, you know, all this kind of stuff. I don't remember any of the names of them.

but then I really have transitioned more now to sales, sales training, sales rings, so, anything around it. and I'm probably leaning on the Vistage tools and the people within that to help me around seeing the bigger picture and the longer term view. Now, like I have a, literally a five year plan that's in the business and the sales and the, that.

but I have five-year timeline that's me. That only me and my wife know that this is my plan and by this date I want to be ready. All these goals need to happen in time for me to be ready here for us to say I either want to keep going to work or I can exit. I picked up those tools really through Vistage.

even even the the manifesting what you think is going to be but again i think it really boils down to if you don't you have a plan you got the best shot of getting it yeah but if you're just winging it it ain't going to happen the just like in the in the manufacturing lean world you can fight fires all day and it turns into a year and then 10 years or you can build a plan and you can operate to it so you know we run our business to a policy deployment

Michael Bower (01:01:47.928)
fairly strict for me, meaning we get together once a year, we figure out our goals and objectives and we set them and then we march to them and we adjust the next year and we'll keep getting better. But all of it really is to drive. Because again, I bought the business and wanted to get into it because I wanted to impact positively and pay my bills. I now see there's a bigger dream that I can have with it.

Michael Bower (01:02:17.026)
But I didn't understand before. really didn't. But I can see a bigger dream in that I think I can still impact people's lives. I think I can create opportunities for people that they never thought they had because there's a lot of people out there that don't really know how good they are. Right. And I think I can do that. And I think I can hopefully get my wife retired earlier than what we're thinking and myself at some point too.

love it. Here's a question. Last one. If you look at what you paid for the business, okay, and now working on it and bringing in the things that you've done, if you had to sell it today, would you say it's, you know, what kind of mark would you put on that doing that work?

That's a great question because it's something I hold to very closely because I walked into this talking to my wife about how much can we use in savings and how do we get this money and get enough for a down payment on a business? Sure. Are you with me honey? Right, right. We did it to got through the first year and made, well we made a million dollars the first year.

Who hell's that happened to, right? I was like, no, we didn't make it and take it out. We put it all right back in and it invested and course drum forward and paying. But that was, it's still shocking to me. But I have our accountant rerun the valuation because he's the person that did it when I bought it. We are about four times higher than where we were.

Yeah, so here's my point and why I wanted to ask that question. If you have a lifestyle business, and that's what you want, it's perfectly fine. There's nothing wrong with that. But in a number, in less than two years, and really it's probably closer to three years, because it was you working there and now where we are today, but in under four years, Michael was able to come in and make the business about four times more valuable in a really

Michael Palumbos (01:04:27.276)
short period of time. So if you're running a lifestyle business and you're not taking advantage of, you know, working with a CEO roundtable group or hiring a business coach or utilizing metronomics or scaling up or EOS or what, know, the different things, YPO, and I'm not going to go through all their names, but if you're not getting involved in those things, you're leaving money on the table. And, and, and then once it's gone, that money's gone for generations. That's never coming back.

And so it can be captured out there.

You know, the, I, know, cause I reflect on this stuff a lot. I'll be very curious to see how I look back on the last, you know, three and a half years. And by the time I get to retirement, I'll be very curious to reflect back on it. But I can tell you through my entire career without the mentors, without outside help and an open heart to listen.

I wouldn't have ever have gotten my first promotion probably, right? But, and so, you know, I say a lot more in joke, but I'm too scared to fail. And so I'm going to ask and I'm gonna have people look at my stuff. And I like, I liked it when people look at it and beat me up. Just like when, when the accountants do the valuation, I make sure that they're not fudging me a number. I want them to tell me what's, what's the buyer going to say I'm worth?

because at least if I'm there, I'm not misguided and I'm not expecting something at the four or five years from now that's not gonna happen. And that reality is a lot of mis- having reality will keep me from missing opportunities.

Michael Palumbos (01:06:17.656)
Great. Michael Bower, Eagle Metal Craft, thank you for joining us today. Thank you for having me. Really appreciate it. My name is Michael Palumbos. I'm with Family Wealth and Legacy in Rochester, New York, and you've been listening to the Family Biz Show. Can't wait to have you on a future episode, folks. Really appreciate you listening. Have a great day, everybody. Take care!