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.
Chris Plantan founded Russell + Hazel (named for her grandparents) in Minneapolis in 2001, and started turning out good-looking office supplies that sell for high profit margins through gift boutiques and even museum stores. With 10 employees, the shop reached about $1 million in annual revenue.
Sharon Lee Avent is owner of Smead Manufacturing, founded in 1906 in Hastings and now a $497-million manufacturer with 2,750 employees. She was worried that the office products it made were becoming a commodity. Profit margins on some items were declining as big-box retailers pushed for lower and lower prices.
The two firms have teamed up, signing a revenue-sharing agreement to launch M.O. Inc., a complete line of office products aimed at fashion-conscious consumers. Plantan and her team supply the time, ideas and branding savvy. Smead Manufacturing supplies the capital to produce, market and distribute the line. Forty percent of profits from the line, launched January 15, will go to Russell + Hazel; 60 percent to Smead.
“It’s pushing us into the big time,” says Plantan about the arrangement. She expects her firm’s share from M.O. to top $1 million in the first year, which would double her firm’s revenue.
An architect and engineer by background, Plantan says she wanted to take office products to a much larger base of consumers but lacked the capital to do so. Smead was producing one of the company’s designs, and the Smead rep invited her down in the fall of 2003 to present her ideas. “By March of 2004 we were in full force,” she says.
She believes the partnership works because each company plays to its strengths. “I think what Russell + Hazel does best is thinking outside the box. What Smead does best is distribution, manufacturing and fulfillment. They have a traditional management structure, and ours is loosy-goosy. As opposite as the companies are, there was a great middle ground,” Plantan says.
Two managers from Smead attended all the meetings that Russell + Hazel conducted to develop the line. There was frustration on both sides as the cultures clashed, but it ultimately worked, she says: the big company would pull back on some wilder ideas, and the small company would keep the project moving.
Chris Plantan, Russell + Hazel and M.O. Inc.: 612.313.2715; cp******@*************el.com; www.russellandhazel.com; www.yourMO.com
