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Rick Blum and his siblings were looking for a way to create a smooth succession plan and boost the capability of their family-owned business, Kirk & Blum Manufacturing Co. They were looking for new ways to invest in and expand the company, and they came up with the answer in a kind of upside-down arrangement that found a small company taking over the ownership of a larger one.
CECO Environmental Corp., a publicly traded company, acquired Kirk & Blum in 1999 and left Kirk & Blum's management group in place to run the company.
"When CECO acquired us, they were the buyer, but the next morning, I was their boss," Blum says, now president and chief operating officer of CECO, an environmental systems provider. "The old president was reporting to me, the people in Pittsburgh were reporting to me, the people in Rhode Island, in a business we no longer own, were reporting to me. So it was an odd situation because normally the acquiring company comes in and says, 'Here's what we're going to do, here's how we're going to do things,' but in this case, the acquiring company had to step back and say, 'This guy we acquired is now in charge of us.' "
The acquisition has accomplished what Blum and his family intended. CECO has acquired or launched several new business-es since acquiring Kirk & Blum. This year it issued a secondary public offering that eliminated its debt. Last year's net sales were $135 million, up from $78 million in 2002, and the company expects to surpass the $200 million revenue mark in 2007.
Blum faced the prospect of running a public company that was highly leveraged, but his experience to that point had been only with the private and debt-free Kirk & Blum. He says his biggest challenges were to keep Kirk & Blum together through an acquisition and to align the interests of the companies' cultures.
"It's all people issues," Blum says. "You just have to get all the people on the same page. When a company's acquired, there's a lot of fear and trepidation on the part of the people there."
Preparing to be acquired
Blum had prepared Kirk & Blum for a sale long before CECO...