Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities.
“We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.”
The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations.
“We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
Patterson and his business partners did what many — maybe most — companies do when they are looking for new space. They went to a bank. But financing is challenging right now. And he kept hearing more and more about the possibility of moving to other towns outside of Waseca where the company started. Before long, he was getting overwhelmed with running the business and a building search simultaneously.
“It’s like creating a whole new job for yourself,” he says.
Enter Justin Erickson. City officials in Waseca suggested to Patterson that he give Erickson, vice president of site selection and economic development for The Brookshire Cos., a call.
He’s glad he did. Jointly, they started piecing together a plan. They discussed alternatives to financing, talking to multiple cities, potential incentives from the state and who he should call about his project.
It took a long time — though Erickson says it was shorter than it would have been going it alone — but the building was built. The company received new market tax credits from a program designed to attract private capital into low-income communities by allowing investors to receive a tax credit in exchange for equity investments in Community Development Entities as well as funding from the University of Minnesota
“The reason I liked him so much is, not only does he know what he’s good at, but he knows the industry,” he says. “It’s like learning a new language. It takes forever. There are all these rules and different hoops you have to jump through. You really need somebody that understands how that process works.”
Erickson has spent the last 20 years acting as something of a relocation consultant. His clients are typically larger now, but he started working with small businesses and still occasionally does smaller projects.
He says small business owners, who see headlines saying a large city provided significant incentives to a company like Google, can’t fathom that the same types of benefits could be available to them.
But they’re wrong, Erickson adds.
It’s on a different scale, but small business owners who play their hand correctly when they need a larger building or new location can find communities willing to step up and help out significantly. But they need to know they have to ask for them.
“All these incentives, whether it’s a low-interest or forgivable loan from the city on up to the main Department of Employment and Economic Development (DEED) incentives, every incentive and public finance tool is, in some form, a derivative of taxpayer dollars,” he says. “As a result, the edict that is set forth is don’t go and advocate to give these dollars away.”
Along with that, business owners must know who to call to find them.
“Most, it doesn’t even occur to them that this might be applicable,” Erickson says. “And even if it does, they say ‘Well, I don’t know who to ask.’”
As companies do explore these opportunities, Erickson cautions business owners to consider incentives after they’ve considered basic fundamentals like knowing where the company needs to be located and staying within budget.
That said, incentives are available at local, regional, state and national levels of government. And, often, rural and smaller communities will be even more aggressive than larger metro cities because they are looking to add jobs to their communities.
“If your expansion would entail at least $250,000 in new investment, that could be buying a building, it could be an improvement of a building, it could be capital equipment or some combination thereof … I use that as kind of a benchmark,” Erickson says, adding that the projected addition of double-digit-or-more jobs helps too.
A couple pieces of advice: don’t commit upfront to staying in your city or even your state, he says, adding that otherwise they have no incentive to help you stick around.
“The stock answer is going to be we appreciate your loyalty and consideration and you are no longer eligible,” Erickson says, adding that another key is the “but-for” rule — more specifically, “but for these incentives, this project won’t happen.”
While every municipality has its own entry point — it might be going through utility companies in one city or the public works department in another — Erickson suggests looking for people who have economic development in their title.
At the state level, that would be DEED, which has programs for start-up companies but also for established businesses looking to relocate or expand. Every few months, the state releases information on what incentives they’ve provided to which companies. And there always are some small businesses in the mix.
For example, in February of this year, DEED announced that Rion Inc. received $440,000 from the state’s Job Creation Fund (JCF) and $175,000 from Minnesota Investment Fund (MIF) for leasing about 10,000 square feet of additional space at a new location in Rochester. The regenerative biotherapy company scaled its production for its flagship innovation, Platelet Exosome, that heals a variety of hard-to-treat body tissues at a cost of $7.3 million with the expectation of creating 22 jobs in the first three years.
The company, established in 2017 out of the Mayo Clinic Employee Entrepreneurial Program, announced at the time that the move represents a “significant milestone” in Rion’s mission to bolster its manufacturing capabilities to support its Rion Aesthetics spin-off and its globally renowned skin and hair brand product.
The building spans 14,000 square feet and it equips the company with advanced industrial space aiming to ramp up its production of Skin Science, which has gained traction with plastic surgeons, dermatologists and upscale medical spas, according to the company.
“The expansion of our new facility in Rochester translates to job creation for Minnesota and increased capacity to meet the soaring demand for the Skin Science brand,” said Dr. Atta Behfar, co-founder, in a statement. “This facility marks a pivotal stride for Rion as we endeavor to realize Rion Aesthetics’ transformative vision: offering beauty from within while spearheading the industry’s shift toward more science-driven, innovative and transparent aesthetic solutions.”
Other state investemnts in small businesses during the past couple years include:
In August of last year, DEED announced that North American Foods in Lakeville, doing business as Sweet Harvest Foods, received $155,000 from the JCF program to assist in leasing a new 360,000 square foot facility with office, product storage and processing space, according to DEED. The $6.5 million project was expected to create 20 jobs in the first two years.
Rosemount-based Spectro Alloys Corp. got $750,000 from the JCF program and $400,000 from the MIF program to turn materials at the end of their lifecycle into EVs and solar panels by recycling aluminum. The project expanded an existing facility by 90,000 square feet and will include new equipment to recycle used beverage containers, extrusions and a variety of lifecycle scrap types. The nearly $77 million project creates 70 jobs in the first three years.
Catalina Valencia, director of business development at DEED, says the agency will deal with businesses directly or with their consultants. Potential partners must have capital and readiness to execute their project. They might need to fill a specific gap or technical support in identifying a specific location that has the utilities, the workforce and other infrastructure they require.
“That’s where my team comes in,” she says, adding that about 80 percent of her department’s time is spent on companies already existing in Minnesota while the remainder is focused on companies considering relocating here.
“We support the companies at any stage of that location and expansion decision process,” Valencia says. “They already have a better sense of a lot of the components that we try to sell companies that don’t know this.”
Real estate is a frequent component of such requests. Workforce recruitment, training and development also come up. The agency might be able to aid with permitting process.
Usually, the requests are seeking financial and incentive help. DEED has a set of tools available.
“They may come to us just for the incentives,” she says. “Or they may come to us because they need incentives and workforce support.”
The companies provide all the criteria they are seeking. DEED takes that information and works with its partners, the different stakeholders, to identify where in the state would be a good fit. And, to the initial point, they can help whether the companies are large or small.
“They already have a project,” Valencia says. “We are here to support. The only caveat is they need to be in the capacity to execute that expansion.”
As for Kamp, itself a recipient of such funds, its new location in Owatonna has worked out as hoped. The company picked its new headquarters due to location — it’s bringing in potential employees from the south metro area but also the Mankato and Rochester areas. The central location makes it viable for people in either direction.
Kamp broke ground in 2023, gained occupancy in December and moved in on January 1. Instead of having a total of 28,000 square feet spread across three buildings — one space for operating, another for storage and a third for spillover — it now has one building that’s almost 50,000 square feet.
“It’s a big change,” Patterson says. “We have room to move and do things efficiently, plus grow.”
And, another added bonus, the building can be used as a recruiting tool.
“We recruit and mostly hire engineers,” he says. “To get young engineers, they don’t want to come work in the back of somebody’s garage. They can go to work for Google or Tesla or whoever. You really have to have a nice place to work. And so having a state-of-the-art facility has helped us.”
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
