At first glance, this is a story about a group of investors buying a small company. Happens all the time.
Take a closer look, and you see Lyle and Shelley Von Essen, longtime owners of a small but profitable business in Yakima producing labeling, lot-code traceability and other services for the fruit and produce industry in the Pacific Northwest and beyond. They and their company, Graphic Label, have been part of Yakima for decades, and the Von Essens themselves are active in their church and community.
But as the years passed, their conversations about next steps and turning the business over to someone else took on more urgency. Doing the right thing — for the business, their employees, vendors, customers, Yakima and their family — proved to be much more difficult than they expected.
It turns out the Von Essens’ story is just one of thousands in the Pacific Northwest and millions across the country. Baby-boomer business owners who simply want to cash out have plenty of options. But owners like the Von Essens, who seek a sense of legacy and a passing of the torch to someone who will care for the people involved, often struggle to find a way forward.
These owners won’t sell to just anyone, but the problem is there aren’t enough of the right kind of buyers. Institutional capital - the normal recourse for private companies - isn’t prepared to serve people like the Von Essens. Their companies are too small and require more time to embrace elements that are often much more important to business owners than just the transaction price. And for owners who have poured their lives into their companies, these are, understandably, extremely difficult decisions. For institutional capital, it’s just not worth it to help.
There’s more at stake than just the company itself. Companies like Graphic Label are found in places outside the high-growth, high-tech belts along both U.S. coasts and in the big cities. They’re in the traditional manufacturing sectors in the heartland and smaller cities and towns—places like Yakima, where the fate of even a small company like Graphic Label can have outsized impact for good or ill.
Who can help? Enter Scott Smith, Jeff Rogers and Darin Leonard - three business veterans who, after 30 years each of operating and consulting to private companies, decided they wanted to do more than just offer advice.
So they started OneAccord Capital with $25 million in funding from 14 like-minded investors.
Graphic Label is their first acquisition. And it wasn’t like they were welcomed as saviors, nor was this anything close to a salvage. The Von Essens had achieved consistent profitability since starting the company in 1993, and they had expanded into new offerings through building trust with customers.
OneAccord Capital had to pass muster with the Von Essens. They had already rejected other suitors based on a meticulous vetting process for values, operational experience, and long-term vision for growing the business. The Von Essens were looking for a buyer who saw what they saw and believed what they believed.
“We win only when we help our customers win. On our best days, we've been able to act from that insight and deliver real value and earn the trust of our customers. That's always led to new opportunities and new growth.”
—Lyle Von Essen
OneAccord Capital’s acquisition of Graphic Label marks a radical departure from the traditional norms of the private equity industry, which generally drives for quick-turnaround results. To the contrary:
- OneAccord Capital has installed a new temporary CEO, former Thomas Kemper president Max Clough, to grow Graphic Label in current and new markets, and to groom and mentor next-generation leadership from within the company.
- They’re committing to a ten-year time horizon during which they believe they can grow the business to several times larger than its current size - and hire accordingly, primarily in Yakima.
- They’re keeping Graphic Label in Yakima, maintaining its ongoing civic commitments, and looking for new ways for Graphic Label to contribute to the Yakima community. In August 2016, they announced a new $5,000 Graphic Label Scholarship for Perry Technical Institute students majoring in certain high-tech fields.
- The Von Essens are investors in the new Graphic Label, and remain as advisors.
"My hope is...that it is not only about the ownership relationship. I think it's a developing friendship. I want to work with people I consider friends - rather than, just, we're in business together as investors."
—Jeff Rogers, Chairman, OneAccord Capital
What’s driving Scott, Jeff and Darin, and why do they think their approach will make a difference? They believe in the power of genuine stewardship, encompassing real return to shareholders and real responsibility to the business, and they apply their own deep operational experience and long-term thinking to spur growth for the companies they buy and manage.
“You’ve got three guys who’ve had eight jobs over 90 years of professional experience. Our whole background is about the long view, loyalty and perseverance,” added Jeff.
“When we set up OneAccord Capital, we set it up to be a long-term, hold and grow investment source. No quick fixes, no buy-and-flip. We hold and build great companies over several years. That’s the commitment.”
A particular strength for OneAccord Capital is its investors - successful entrepreneurs from Puget Sound who are all on the same page in terms of outlook, approach, values and vision. They want to have impact, and providing money is only a part of it. Their deeper interest is to share what they’ve learned after years of growing and operating businesses successfully.
“The depth of their financial commitment is important, but it’s probably not the key thing,” said Lyle. “The key to it, I believe, among both the investors and the people at OneAccord, there’s this vast knowledge of business.”
“We see the Monday after the Friday, the Day One after the close, both for the business owners and the business itself. We have the perspective and know-how to navigate the complexity required for a successful transition, and to get the business to the next level.”
—Darin Leonard, co-founder of OneAccord Capital
Scott agrees: “Our investors have so much more to offer than just a check. They have business experience, connections, skills and insights. They want to help make a difference. Like the Von Essens, OneAccord Capital investors recognize they also have a torch to pass.”
The hard work lies ahead. It’s Max Clough, the Von Essens, the OneAccord Capital team, and Graphic Label employees digging in to chart a course for growth. It’s finding the next right fit for OneAccord Capital investment, the next Lyle and Shelley among the many local private-company owners looking to keep their legacies alive. And hopefully, it’s inspiring others with the same ability, resources and values to join the effort.
Preserve your legacy.