Having done eight acquisitions in 10 years and grown Grote Company Family of Brands from a regional manufacturer to a global network with 11 locations, I can tell you this: Building market dominance through serial acquisitions isn’t about being the most aggressive buyer or having the deepest pockets. It’s about thinking in decades rather than quarters, and building something that compounds over time.
Over the years, I’ve learned what actually works versus what just sounds good when it comes to acquisitions. Here are a few of those lessons.
1. Start Building Relationships Now, Not When You Need Them
The biggest mistake most CEOs make? They treat relationship building like it’s a deal-sourcing activity. It’s not—or at least, it shouldn’t be. The best acquisition targets are profitable, well-managed companies whose owners might consider succession planning if the right buyer comes along at the right time.
I’ve been cultivating industry relationships for 25 years. Many of my best acquisitions came from conversations that started a decade before we signed papers. One of our recent acquisitions was a company I’d known for years. When we actually got down to negotiating, the whole process took two or three months because the relationship foundation was already there.
Begin the process immediately, even if you won’t be acquiring for several years. Commit to attending the same trade shows, conferences and industry events year after year. I’m not hunting for deals at these events—I’m genuinely curious about how other people have built their businesses, what challenges they’re facing and where the industry is heading. People in our industry know I’m acquisitive, but they also know I’m not aggressively pursuing them. That distinction matters enormously.
I work with a buy-side banker now who helps accelerate this process by making cold calls. When he reaches out to companies and leads with “This is Grote Company, Bob Grote’s looking,” that existing relationship—even if it’s just having met at conferences a few times—gives him credibility and gets meetings that pure cold outreach can’t achieve.
Be intentional about developing your reputation. Word travels fast in specialized industries, and your reputation for integrity and fair dealing will become your most valuable competitive advantage against financial buyers.
2. Position Yourself as the Alternative to Financial Buyers
I’ll be honest: When we compete against PE firms, we usually lose. They can outbid us, and if maximizing the sale price is the seller’s primary objective, we’re not winning that deal.
But what I’ve learned is, many business owners, especially baby boomers, care deeply about what happens to their companies after they exit. We won one deal against private equity solely because it was a priority for the seller to find a good custodian for his business.
I position Grote Company Family of Brands as an alternative to the middle-market PE firms and all the buyers that will roll up the acquisition and maximize every penny. I’m upfront that I want to keep brands alive, keep facilities open and steward companies rather than optimize them for resale. We have done some rollups where we consolidated operations, but I told the sellers before we closed the deal: “I can’t keep that facility open. It just doesn’t make any economical sense.” That honesty has become a differentiator because sellers know I won’t promise everything just to win the deal.
Our company operates from what we call “agapé capitalism,” or “capitalism of love.” No one ever says “love” in business, but I do. You’ve got to find sellers who understand that’s what you’re doing: You want to be profitable because you have to be, but the money’s going to good causes and good people. You’re raising people up, helping communities and helping the people who are part of your organization.
If that philosophy doesn’t resonate with the owner you’re trying to acquire, it’s probably not a culture fit, and I wouldn’t even go through the steps of trying to buy them. That’s my due diligence before I even say, “I think I want to buy you.”
I’ve also walked away from several deals because I couldn’t trust the seller during negotiations—they were hiding debt or knowingly concealing problems. If I can’t trust you in the negotiation process, then I can’t trust what you’ve built.
3. Think Globally from the Beginning
If you’re in manufacturing or any industry with global customers, make international expansion central to your acquisition strategy from day one. My general philosophy is that I ultimately need a manufacturing presence in every currency I do business in. I’ll never fully achieve that because I’m not going to plant facilities in every odd currency out there. But it’s the guiding principle.
One of our big markets is Europe, and my next acquisition is focused on what I can acquire on the European continent to bring me local manufacturing. I could build from scratch like we did in India, but it’s riskier and more expensive. If I can buy a base of business that already comes with the manufacturing capabilities I want, I can bring other products that I already make in my other locations into that facility to manufacture there as well.
The current tariff situation has just crystallized the importance of local manufacturing in major markets. If I can manufacture in Europe, I care less about currency exchange, less about tariffs, less about any of that.
When you acquire international manufacturing, think beyond just local market access. What we learn in one region often predicts what will happen in other markets six months later, giving you strategic advantages in product development and market positioning.
It’s also important to create financial resilience through diversified operations. We have one business that’s so cyclical we measure performance over two-year periods because they work on giant projects that can take 18 months, with sales cycles stretching multiple years. One year they might lose money, the next year they make 25-percent returns. We’re fortunate we can think this way because we’re private and we don’t have to report quarterly earnings. We can look at the bigger picture.
4. Evolve Your Acquisition Criteria as You Mature
Early in my career, I targeted distressed companies—fixer-uppers that I could buy at three times earnings and turn around. I knew we could grow them out of their slump and help them become profitable as part of our larger organization.
But now? I don’t have time for that, and I don’t have the stomach for it. The metrics I look at now are very different. In a perfect world, I’d love to have a company making 10 percent return on sales that I know I could grow to 15-plus percent. They’re still profitable, I don’t have to drain resources trying to bring them out of their doldrums from day one, and I can help grow them from there.
And when you’re targeting, look for businesses that become more valuable when connected to your existing operations. Some smaller manufacturing companies can’t handle large orders because they lack supplier relationships and production capacity. A $20-30 million company that gets hit with a $5 million order will often over-quote or turn away other business because they don’t have that support structure or ability to scale. Those are lifestyle businesses, which is fine. But I am not trying to build a lifestyle business. I believe you’re growing or you’re dying, and if that doesn’t resonate with the seller, they’re not selling to me.
5. Build Vertical Integration Systematically
We’re very vertically integrated—the only components we really buy are electronics and electric motors to build our food processing equipment. We manufacture most of our components internally, which gives us cost advantages, quality control and delivery flexibility. So I look for vertical integration opportunities in every deal. If they make a lot of their own things, that’s very synergistic to my philosophy.
Your ability to bring multiple capabilities to complex customer problems becomes increasingly valuable as projects grow larger. We can bring multiple brands to an opportunity, giving customers one-stop shopping for complex projects. They might need equipment from three of our different brands, and we can coordinate the entire project. Pure product companies can’t replicate that relationship depth.
Think systems, not components. How does your machine shop acquisition support your assembly operations? How does your European facility enable your domestic sales growth? Each acquisition should strengthen your platform while building competitive moats that become harder to replicate over time.
6. Master Integration as Core Competency
Most acquirers treat integration as something to get through quickly. I learned the hard way that integration is where deals either create value or destroy it and a lot of that depends on culture fit.
Back in 2007-2008, when I was a lot less experienced, we acquired a company in England. Having been a salesman a lot longer than I’ve been an engineer or a CEO, I thought I could sell my way through anything—but I couldn’t get the employees to buy into me or my company’s beliefs. I even moved them to a new location, spent a lot of money trying to make it work. But in the end, we had to shut it down.
That failure taught me to look much more carefully at culture before getting way down the road with a deal. Now I assess upfront: Do I believe this group will buy into my direction? Because later on in the deal, you’ll get what I call acquisition lust, where you just have to get this deal done. You need to have someone on your team who is going to point out the things you really can’t overlook.
We have a 100-day integration plan that involves management from corporate as well as local management. During those first 100 days, somebody from Grote is on-site the whole time.
The first week is entirely focused on people: You all have a job, you’re coming back tomorrow, here are your health benefits, here’s why being part of something bigger is good for you. That’s all we care about in the first week—getting them to buy into where we’re going.
After that first week, we start digging into processes and finding hiccups we can help with, but we keep operations the same. We talk to each individual at the location about what’s going wrong, what’s going well, how we can help. Then we look for small things—like the bathroom door that’s been sticking for years or the loading dock light that’s been burned out. We fix those little things that don’t cost any money and morale goes up. People realize they can trust us and we actually do care. Then they start opening up about the real problems.
I highly recommend building systematic knowledge capture so that each acquisition teaches you something that benefits all your other locations. Create mechanisms for different facilities to share best practices without forcing standardization. Resist the urge to impose your systems immediately—if an acquired company is profitable and growing, their methods are working. Learn from them before you try to change them.
7. Execute with Patient Capital Discipline
Building market dominance requires thinking like a permanent owner, not a financial investor. During Covid, we made acquisition decisions that other people thought were crazy. I bought a company that was losing money, but I’d wanted that company for a long time. It was a sizable acquisition, and it could have gone ugly, but it worked out great.
You can’t just sit on the sidelines and freeze because of volatility. You have to pull the trigger and make sure it’s not big enough to sink the boat if you’re wrong. In those times, no one knows what’s happening, so you might as well move forward. No decision is still a decision, and that doesn’t get you anywhere.
By the way, it was also during Covid that I learned that being human or vulnerable doesn’t make you weak as a CEO, that you can be honest with yourself and with the people around you. People respond to that human humility and will get behind you even more. Don’t get me wrong, I don’t ask my people to feel sorry for me. But I want them to understand that I’m human and I’m trying my best, just like they are.
Ultimately, the companies that dominate their markets over the next generation won’t be those with the most capital or the most aggressive deal strategies. They’ll be the ones that systematically build competitive advantages through patient, strategic acquisitions executed with discipline and long-term vision. I’m fortunate to be in a position where I can take advantage of the baby boomer generation deciding they don’t want to go through another economic cycle—so the timing is good.
But that timing only matters if you’ve built the relationships, reputation and operational capabilities to execute when opportunities arise. I would recommend starting to build those advantages today—even if your first acquisition is still years away.
