Mastering M&A Integration Through Leadership Development and Cultural Alignment Evolving from seller-led to buyer-led M&A strategies

It’s been a really interesting evolution for us. Like I said, we started out buying small companies. I didn’t have any experience in M&A, and I didn’t have any M&A people. We just had this growth path charted out—where and how we wanted to grow.

There were some obvious supplier peers and competitors along the way. We took a natural progression: this company makes the most sense at this time, and then this company makes sense. 

These opportunities weren’t coming from investment bankers or anything like that. It was me and our team reaching out to people in the local industry, saying, “You’re probably not looking to sell, but if you’re interested, we’d love to have a conversation.”

A lot of those conversations blossomed into full-blown M&A discussions, leading to deals where we bolted on great, interesting businesses that added value to our strategy of supplying components to RVs.

We've learned a lot of key things to make deals successful. There are a few key common denominators. Over the last three decades of buying companies, we’ve found a sweet spot for us.  

We could buy companies anywhere—we’ve got the capital and generate a lot of cash—but we’ve deliberately stayed within a certain “fence.” We focus on specific industries and components within those industries. That’s where we see the most opportunity in these six areas that we do business in today.

We avoid commoditized products. We learned early on not to be in markets where 20 other competitors are chasing prices to the bottom. Instead, we look for good leadership teams—teams that want to win and are passionate about it. 

That’s one of our core values. We get excited about teams that have wide-open growth potential in their market share with their products, services, or ideas.

Typically, we stay within a sweet spot of $20 million to $100 million in deal size. We’ve done smaller and larger deals, but this range provides significant value. In these smaller businesses, we can quickly drive meaningful purchasing and manufacturing synergies. 

When companies are too large, they’ve often already optimized areas like manufacturing, so the real opportunity for us is in these smaller businesses where we can quickly integrate and make them a meaningful part of our company.

Capital allocation and acquisition strategy in a public company

There are all sorts of ways we could spend our capital. At the top of the list is investing back into the business. We do a lot of innovation, so we allocate a portion of our capital there. Launching new products to grow organically is a big part of that as well.

There are also projects focused on making our existing processes and manufacturing more efficient. Whether that’s through automation or investing in new equipment, it helps us improve quality, safety, and manufacturing efficiency. Those are the top buckets, and then M&A is a close second or third.

We look at our cash flows and align our CapEx specifically toward capital projects for innovation and manufacturing efficiencies. Based on our forecasts for the year, expected earnings, and cash flow, we determine how much we can allocate for M&A.

If you average over the last 25 years of meaningful M&A activity, I’d say in the 10 years before COVID, we were doing $100 to $200 million a year in acquisitions. But it depends on the year. For example, last year, we didn’t do much because we were at a 14-year low in our core business.

Our target structure is largely deal-dependent, but the most important metric we focus on is the return on invested capital. We aim for returns in the high teens or twenties. Some of that depends on the resources required to realize those returns.

We also look at valuation. We aim for acquisitions priced at four to six and a half times EBITDA. Would we pay more? Yes, but only if the business has special attributes, such as significant growth opportunities, patented products, or innovations that are on the verge of launching.

In terms of paying with cash versus stock, historically, it’s been all cash for us. Lippert, when they acquired us, was the only stock deal they ever did. In our last 70 or so acquisitions, it’s all been cash.

Defining and measuring company culture through core values

I was a co-author with 25 other people on a book. What’s important to me is how we can impact the world through better culture and leadership.

At Lippert, with 15,000 team members and their family members—around 45,000 people in total—we have a huge opportunity to make an impact. Beyond that, we can have an indirect impact on the community. We try to maximize that impact by focusing on the people we touch for 40 hours a week.

We encounter a lot of people, and those interactions can be either negative or positive. With 15,000 people working 40 or 50 hours a week, there’s a significant opportunity to create positive experiences. 

That positivity can extend to their families, and we believe it strengthens the family unit. If more businesses took that approach, the world would become a better place as family units grow stronger and healthier.

You can go to many companies and ask 20 different people to define their culture, and you’ll get different answers. For us, the way we define culture is really simple—it’s our core values.

We focus on being passionate about winning, team play with trust, honesty, integrity, candor, caring about others, and maintaining a positive attitude. Those core values define our company culture. There’s no confusion—it’s not “this” or “that.” It’s always about our core values.

We talk about our core values regularly and evaluate everyone—whether they’re executives or frontline team members—based on those same values.

We measure people. That includes measuring adherence to those values in addition to performance. But it can’t be all about performance, and it can’t be all about values. It’s about finding a healthy, balanced blend of evaluating both. 

Culture as a driver of value in M&A integration

When we acquire companies, we’re very direct about culture from the start. We make it clear: you might have a great culture, or maybe it hasn’t been great, but either way, this is how we define our culture—by our values. We spend time with every single team member to ensure they understand why values are important.

If the culture aligns, that’s great. But if there are individuals who don’t want to get on board, we address it respectfully. We can’t afford drama or dissension, especially during the first six to 12 months of integrating a business. 

There’s already enough complexity in M&A without cultural issues adding to it. So, we make it clear: you’re either with us, and you’ll find this a positive and fulfilling experience, or we’ll help you transition to something else, but we won’t allow conflict to derail the process.

Where I believe culture becomes a competitive advantage is in the day-to-day impact it has on people. Take two team members at two different companies—or even within the same company. 

One works in an okay or average culture, while the other is in a thriving culture where values are alive, people love working there, and they feel energized and passionate about contributing. 

The difference in their productivity is significant. It’s not just about the individual; it’s about how much the culture drives their motivation and engagement. A stronger culture means higher productivity and better outcomes for the business.

For instance, some of the recognition practices or celebrations other companies do. Everyone handles these things a little uniquely and differently. From manufacturing to recognition and even how they approach life at work, we’ve found things we can learn and incorporate.

So there’s a culture of open-mindedness in our company that allows us to pick up ideas from other places. That’s the great thing about culture—it’s an ever-evolving journey. There’s always a next step or a better step to take. When we see a new, better way of doing things, we grab onto it, take that step, and move forward together. That’s how a company improves.

If you’re constantly moving in a forward direction, your culture won’t become stale. We emphasize innovation—not just in products but in our culture too. It’s one of the most important things we do. We don’t want people to settle for the same old routines. If we can make things better, we’ll do it.

Assessing and transforming culture in M&A pre-LOI

To me, you never really get to spend enough time inside a company to fully understand its culture during the pre-LOI stage. When you talk to people, they’re unlikely to admit to having a bad culture or significant issues—they’re trying to sell their company, so you’re getting the sales pitch. 

We tend not to worry about it too much. If we like the company and the leadership, we see opportunities for improvement and know we can always build on that.

I’ve seen it go both ways. Sometimes the leadership’s pitch aligns with reality, and other times it doesn’t. In a manufacturing business, 95% of the team members are on the front lines, and you don’t really see that during diligence. 

Most of your conversations are with top-level leadership. You might get a quick look at the factory floor, but you’re not spending significant time there.

Culture in a manufacturing business largely resides with the front-line workers and their supervisors, which you don’t fully experience during pre-LOI. That’s why we go into acquisitions with the expectation that we’ll transform the culture on the front lines.

We know how to do it—we have a playbook, and we start executing on day one. From the beginning, we ensure that front-line workers, supervisors, and leaders understand what we’re aiming for in terms of culture and what the expectations are. It takes time, but we’re confident in our approach to making that transformation happen.

Leveraging culture as a competitive advantage post-LOI

From my experience, there’s often some hesitancy from the businesses we acquire. They don’t want us spending too much time inside for a couple of reasons.

One, they don’t want us looking too closely at everything they have—they worry we might walk away.

Two, there’s some fear about sharing trade secrets, especially since we’re a big company that can manufacture almost anything.

Because of that, we don’t always get the level of access we’d like to truly understand their culture. We do the best we can, and we’ve gotten pretty good at observing and making general assumptions.

But sometimes, those assumptions turn out to be wrong. We turn culture into a competitive advantage, and that’s essentially what we're betting on—that by improving the culture, employees will become more motivated and productive.

That said, we rely on the fact that we know our culture works. No matter the environment we walk into, we’re confident in our ability to transform the culture. We do this by implementing our values, coaching leaders, and creating an environment where people thrive.

Building a playbook for culture and leadership integration

First, you need dedicated resources for this effort. It takes a lot of work and energy, and you can’t rely solely on the existing team, whether that’s manufacturing managers or other internal staff. You need a team specifically focused on culture and leadership.

At Lippert, we have a culture and leadership team, which includes leadership coaches, personal development coaches, chaplains, and community impact team members. This team works with our plants and acquired businesses, many of which have never prioritized community service or leadership development. 

We do a lot of teaching and coaching, helping people understand why we focus on core values, leadership principles, and reducing turnover.

Turnover impacts everything—training, quality, safety, efficiency, and innovation. Nobody likes to retrain people constantly or deal with quality problems caused by inexperience. By creating a great culture, we can significantly reduce turnover and improve these areas.

Part of our execution involves embedding culture and leadership into the front lines of the business. We don’t let acquired businesses operate in silos. 

Instead, our best manufacturing leaders and executives are actively involved in those businesses to ensure culture integration and identify synergies—whether in purchasing, manufacturing, or other areas. It’s all about resource dedication on both the leadership and culture sides.

Every leader in the business gets coaching, with a strong focus on first-level supervisors. These supervisors typically come from the front lines of manufacturing and often have the least amount of leadership training in their careers.

While executives receive plenty of leadership training resources, frontline supervisors running manufacturing cells rarely get the same attention. 

That’s why we spend about 80% of our time upfront on leadership and culture training for those leaders. 

They’re essentially running the entire factory, and if they don’t understand what good culture and leadership look like, how can their teams and work cells be expected to?

Fostering personal and professional growth plans for employees

There’s a part about how we want every employee to have both a personal and professional growth plan in my book. That’s a big focus for me right now—making sure it’s happening in the business. Yesterday, I was in a listening session, hearing from our team members. I asked them about their LAPs—their Leadership Action Plans—and their personal goals.

I care about career-related goals, but I’ve realized that when the men and women in our business are growing personally, when their personal lives are flourishing because they’re setting and achieving goals, it creates a ripple effect. Their teammates and others in the business celebrate those wins with them. That positivity carries over into how they show up for work. When people feel good personally, they tend to be more productive, contribute more to their teams, and ultimately help the business perform better.

If I had to run a business with 15,000 people, I’d want every single one of them flourishing, growing, and developing as human beings while pursuing their personal goals. It’s an incredible place to invest time and effort.

It's something we actively implement, especially with newly-acquired employees. My approach with our culture and leadership team is not to push this as a box-checking exercise or a race. It’s about introducing the idea and helping people take small steps toward it. Eventually, they see how beneficial it is for their personal lives and for the people around them—at work and at home.

When people improve their personal lives, they positively impact those they interact with: their teammates, friends, family, spouses, and children. That ripple effect extends far beyond work.

When you know what their goals are and what they’re working toward, it creates a sense of something greater. It builds stronger relationships.

If you want to develop great relationships, you can’t stay on the surface. You have to go deeper. Building depth in relationships creates something far more valuable.

We keep it simple. It’s written on something like a 5x7 card, just big enough for a few personal goals and a few career-related goals. We don’t push anyone to set a specific number of goals. Even one personal goal is a great start.

Our leadership coaches help team members turn those goals into actionable steps. It’s not enough to write down a goal; you need an action plan. We also encourage them to find an accountability partner because when you combine written goals, actions, and accountability, the likelihood of success increases significantly.

We’ve been doing this for about three years, and now 65% of our 15,000 team members have leadership action plans. The stories that come back are inspiring. For example, people tell me, “I’m a better mom” or “I’m a better dad because of this.” 

One team member’s goal was to have family dinners without phones, and hearing how that strengthened their family connection is incredibly rewarding. It reminds us that as leaders, our role is about more than just productivity—it’s about helping people be better human beings and positively impacting their families and communities. Our world needs more of that.

To help new employees embrace this approach, it's all about thoughtful communication and respectful encouragement. This isn’t a box-checking exercise or something we push aggressively. We introduce the idea and encourage people to take small steps. Once they experience the benefits of personal and professional growth, they usually want more.

Of course, some people resist. They might roll their eyes and say, “Why are we doing this? I just want to do my job and go home.” Our answer is, “Not here.” We want our team members to grow and develop because we know it makes their lives better. And while some people choose to leave, that’s okay. Not everyone is ready for this kind of growth, but we focus on those who are.

Over time, we’ve seen incredible transformations. Some team members have shared that these initiatives pulled them out of depression or gave them a new sense of purpose. 

On the flip side, bad leadership can have devastating consequences, like the story of someone who took their own life because of a toxic boss. That’s why we prioritize fostering positive growth—it reduces depression, anxiety, and other mental health challenges. It creates a workplace where people feel supported and fulfilled.

We’ve been making this cultural shift since 2013, so it’s now deeply ingrained in our company. After 10 years of consistent steps, our culture permeates everything we do. Today, our turnover is very low because people want to stay. They’ve worked at other places and know what it’s like to feel unappreciated.

Even in cases where someone might earn more money elsewhere, they stay because they feel cared for, supported in their personal and professional growth, and fulfilled. That’s the impact of creating a culture that values people beyond their productivity. It’s something they don’t want to give up.

Specifically in an M&A scenario, the team members we send in to work with the acquired company have already gone through leadership action plans and are familiar with our culture. They know how to explain it well.

When enough of our people are around, sharing the same message—“This is what we do, and it works really well”—it builds trust. We approach it gradually. We’re not shoving it down anyone’s throat; we’re spoon-feeding it, step by step.

The real power comes once relationships start to form between our people and the acquired team. You see integrity in action—whether people do what they say they’re going to do. As those relationships deepen, it becomes easier to introduce concepts like the leadership action plan (LAP). 

For example, one of our team members might say, “Here’s my LAP; let me share it with you.” Then, the acquired employee creates their own LAP and starts sharing it with their team.

It’s a slow process, but it gains momentum over time. The key is to start the process. The opposite approach—doing nothing—means the initiative never gets off the ground. Starting small, building trust, and fostering relationships are what make it work.

Measuring success through culture and leadership metrics

We have many metrics to measure how well companies perform post-acquisition, and it could be a separate podcast entirely. We have a comprehensive packet of leadership metrics. These include everything from the number of employees completing leadership action plans (LAPs) to the wins people have achieved through their goals.

Some goals are deeply personal, like improving marriages or building better relationships with their kids. We track these outcomes because people share them with us. In fact, some of our plants post copies of LAPs in their break rooms to inspire others.

The leadership action plan includes personal goals. Yes, it covers both personal and professional goals. I believe there’s more power in personal goals because they resonate more deeply with individuals. Everyone cares about their jobs, but they care even more about their personal lives—their families and what happens outside of work.

When employees know the company supports their personal goals, it creates a powerful impact. They come to work in a better headspace, more productive, and feeling like the company genuinely cares about them. That sense of fulfillment leads to greater success for the business.

Another key metric is community service hours. We’ve seen a direct correlation between serving the community and being a great team member. Last year, 78% of our employees participated in at least one community service event, contributing a total of 125,000 hours.

We’ve averaged over 100,000 hours annually for seven years now. Each of our 100+ facilities is asked to organize a few serving events each year. Our community impact team sets up the connections with charitable partners, provides options to facility leaders, and invites team members to participate. Many employees serve for the first time through these events.

Community service is a core part of our culture and something we measure significantly because it reflects and strengthens our values.

Our success metrics are tied to cultural behaviors, and they’re directly related to retention. When employees feel connected to their community and see their personal and professional growth supported, they’re more likely to stay.

We track plenty of things, but I always say if you don’t have a dedicated culture and leadership team, this type of work doesn’t get done meaningfully. HR teams are already stretched thin with compliance and regulatory responsibilities. Culture and leadership need their own focus and resources.

Our team includes a mix of backgrounds—sports coaches, teachers, pastors, and professional leadership coaches. We currently have 27 people in this department.

I’d encourage any company, whether you have 50 employees or 1,000, to start with just one leadership coach. That’s how we began—when we had about 6,000 team members, we hired our first coach. The benefits were transformative, and we realized we needed to expand.

Consultants can be costly and aren’t always available full-time, so we chose to build an in-house team. Finding the right people for this work has made all the difference.

Using culture to build trust and drive post-acquisition success

I explain a lot of the things we've talked about to CEOs when convincing them to sell their companies. What they often realize is that while they’ve been doing a good job, partnering with someone who’s been there, done that, and has new ideas opens up great opportunities for collaboration. It’s almost like having an in-house consultant, and they get paid for selling their business. Plus, they stay on, earn a wage, and continue to contribute.

Part of the appeal is that there's a career path for them after selling. They can stay involved, grow with the company, and still benefit financially. There’s less risk for them in running the business, and it’s all part of the package. 

I’d say over 90% of the businesses we acquire have their leaders stay on for a significant period—much longer than six months. Who better to help run the business than the people who built it or successfully led it?

I don’t want to boast, but I’d say we’ve built a positive reputation. Part of that comes from our external culture department, which fields calls and questions from businesses trying to develop healthier, more effective leadership models. Many reach out because they’ve seen us on social media, know someone connected to us, or heard about us through a podcast.

Recently, we hosted 13 businesses over two weeks. They spent a day and a half at our facilities, toured our plants, talked to our leaders, and saw our frontline operations. I even spent an hour with them for a Q&A session.

I want to positively impact the world this way. Someone shared their knowledge with me, and it made a difference. Bob Chapman sat down with me, shared his ideas, and showed me a better model. That guidance was transformative for us, and now it’s my turn to give back.

Having a role model and then paying it forward is incredibly rewarding. My best days are when I hear that a company we’ve coached has hired its own head of culture or leadership, like a VP or Chief Culture Officer. 

That’s often the first step: having someone dedicated to driving initiatives beyond HR. It sends a clear message to team members that the company values culture and leadership development enough to create its own department with dedicated resources. That builds trust and confidence among employees.

Separating culture from HR makes a big statement. It also helps you focus more on the leadership and cultural changes needed in acquisitions. When culture has its own team, it ensures the attention and focus required to make meaningful changes, especially during acquisitions. It’s a crucial piece of the process.

Correlating culture metrics with financial performance

One of my favorite things is to compare turnover, the plant’s culture index, engagement scores, and financial performance. Generally, higher financial performance correlates with better culture indexes, engagement scores, and low turnover.

If a plant has high turnover, I’ve never seen great financial performance there. It’s impossible to run an efficient manufacturing business when people are constantly leaving. High turnover is a red flag, and it signals where we need to focus—assessing leadership, implementing performance improvement plans, or making necessary changes if improvement doesn’t happen.

As we go through this, we find some leaders who aren't engaged. Some leaders either misunderstand engagement or don’t align with our values. It’s challenging to get people to change. Some say they’re open to it but don’t follow through, and others are resistant from the start.

You have to move them out of the business. If someone isn’t willing to change, you can’t afford to accept mediocre or poor results. With what we know today about how leadership impacts performance, it’s clear that poor leadership holds everything back. However, finding great leaders who truly understand culture and align with our vision isn’t easy—they’re not everywhere.

Proactive culture development for new team members

There are a few key things companies often miss when proactively developing culture with incoming employees, especially after an acquisition. One is clearly defining who is responsible for hiring and evaluating team members.

HR is important as a gatekeeper, but I believe other leaders in the business should also evaluate potential hires. It’s like welcoming someone into a family—you need to ensure they won’t disrupt the culture.

We involve multiple leaders in the evaluation process because different perspectives might catch something others miss. We also conduct engagement surveys to understand how leaders are perceived and to gauge the health of each facility. This is particularly important for newly acquired businesses.

Identifying strong leadership during diligence

When identifying good leaders early, especially during diligence, I rely on a mix of gut feelings or specific questions. I trust my gut, but I’ve learned not to rely on it entirely. You need to watch leaders in action—how they deal with people, resolve issues, and manage their teams. Actions reveal whether someone is a servant leader.

It’s tricky because this part of business is hard to standardize. You need to buy the right companies at the right time, and once you have them, ensure they stay aligned with your vision.

Managing through industry cycles

We’re in a cyclical business, particularly on the RV side, which is one of our six categories. RV demand skyrocketed in 2022, giving us a record production year. But in 2023, revenues dropped by $1.5 billion. When a cyclical business hits a new peak, it also cycles to a new low, which can last longer.

We’ve been managing this downturn since late 2022. Flexibility is critical—we’ve consolidated cost centers and made tough decisions to maintain healthy cash flows and a strong balance sheet. 

This cycle felt worse than 2008 because we’re a much larger company now, with more people and facilities to manage. However, we’ve handled it far better because of our experience and leadership maturity.

Balancing CEO responsibilities in a public company

My day-to-day as a CEO covers a lot of ground. One of the consistent things I do is spend a few hours each week in listening sessions with our facilities. These sessions often include frontline leaders—men and women directing the operations on the factory floor.

In these sessions, the frontline leaders present on our five pillars of business. It’s great to hear their perspective, and for many, it’s their first time presenting to a group, including me. Plant leadership is present but plays more of a mediating role, not leading the presentations, which allows the frontline leaders to shine.

After their presentations, I spend 20-30 minutes casting a vision for the future and then take questions for about half an hour. It’s an excellent opportunity for me to hear directly from those who make the business run.

I also spend one to two hours a week on M&A, focusing on strategic acquisitions. Instead of relying on investment bankers for a list of companies for sale, we consider which businesses in our industries align with our strategy and whether it’s the right time to have a conversation with them.

Another significant focus right now is strategic planning. We’re reformulating our plans for the next few years, which involves aligning with our leadership team and understanding where we want to take the business.

I also dedicate time to our customer relationships, ensuring we’re delivering value and innovation that help them succeed. Listening to their feedback and understanding their direction is critical.

Challenges of leading a public company

In terms of the overhead of being a publicly traded company, all the investor relations and regulatory work make it more taxing than being private. There’s a lot of work involved, especially with all the regulatory requirements we face. For example, we have a sustainability leader, which many businesses don’t. Our finance department, led by our CFO, handles much of the public company workload.

It’s a lot to manage, but I’m fortunate to have resources and teams in place to handle it. Public companies today face significantly more regulatory work than they did before Sarbanes-Oxley. I remember when we were public before that, and the workload was much lighter. It’s a different ballgame now.

Connecting with the business and staying on track

I prioritize listening sessions. Those sessions are a highlight because they allow me to hear directly from the people making a difference. I also make time to tour the facilities, see the products being made, and engage with the teams beyond the listening sessions.

And our M&A strategy and strategic planning combine input from internal leaders and customers. We regularly evaluate if we’re staying on plan and delivering what we said we would, whether it’s through new business ventures, innovation, or other initiatives. It’s all about ensuring alignment and keeping the business moving forward.

That's the fun part of my job, and then there's the emergencies. There's the stuff that pops up that I've got to drop everything that I'm doing, like a lot of people have in their jobs, and it's okay. We've got to focus on this for the next few hours or few days. 

Investing in AI and automation for manufacturing excellence

AI and automation are absolutely key areas for future investment. Especially in manufacturing, AI and automation are critical considerations for every company.

For us, automation addresses several needs. People often think it’s just about building faster or reducing labor, and while that’s part of it, the real value lies in the consistency of production. Automated processes help improve quality significantly. For instance, automating a work cell often brings noticeable quality improvements.

Another major benefit is safety. We’ve implemented automation to make jobs safer—reducing the need for lifting heavy steel parts or repetitive motions like welding and assembly that can cause long-term health issues. 

Our automation projects focus on three main areas: safety, quality, and efficiency. When evaluating these projects, we consider whether the investment—often millions of dollars—is justified or if there’s a higher-priority use for the capital.

It’s mostly an internal effort. Our general managers and plant leaders identify processes that need automation. We have an in-house VP of Automation who leads these initiatives, sometimes bringing in outside consultants to evaluate processes and develop plans.

We assess the return on investment and decide whether to move forward. It’s a collaborative approach that ensures we’re tackling the highest-priority needs.

AI is still a developing area for us, but we’re focusing on its potential in customer service. Our call center handles massive volumes—100,000 phone calls, 60,000 emails, and 10,000 chats a month. Most inquiries are related to repairs, replacements, or product questions.

We’re integrating AI to assist our agents. By processing all the data from technical publications, videos, and customer interactions, AI can help agents resolve cases faster and improve training efficiency. The goal is to enhance the customer experience by delivering quicker resolutions.

Manufacturing businesses are inherently complex. They’re challenging to run, but having great teams and keeping them engaged makes a significant difference. When your teams are strong, the work might appear easier than it actually is.

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