From “fierce competitors” to co-owners – how two longstanding family businesses managed to merge
Tuesday, September 17, 2013/
When 60-year-old business Tieman Materials Handling approached 26-year-old competitor Safetech to discuss the idea of joining forces, the initial reaction was surprise.
“I thought, they are a competitor, we had nothing to do with them,” says Safetech managing director Lindsay Wakefield.
However, Wakefield was curious. So late in 2012 the two companies began discussions about the possibility of joining forces.
On August 31 this year, talking came to fruition, and they launched a new joint venture, STS Safetech Tieman Solutions.
Any company merger is challenging. But one between two long-standing family-owned businesses, with entrenched systems in place and a raft of clients in Australia and internationally, was bound to be complex.
Tieman, launched by Neil Tieman in Melbourne, has reached its third generation of family-member management. Safetech, located in regional Victoria, is entering its first succession phase.
The businesses described themselves as former “fierce competitors” in the Australian industrial lifting market.
“For many years they were the source of heartburn and anguish to each other, but along the way a mutual respect was created,” a statement from STS said.
Tieman has four divisions which operate in different markets. It set out to boost its materials handling division and hunted around the Australian industrial scene for a potential partner. Safetech proved the most attractive.
“Tieman realised that Safetech was considerably Tieman’s junior in years but had become their major competitor in several crucial product areas,” the company said in a statement.
Both businesses revealed to each other that they were facing similar challenges – tough competition from China, high wages and industrial relations complexities.
They narrowed down their strengths and weaknesses – Tieman had a specialist sales force connected to major Australian corporates, while Safetech had a strong engineering team that was winning large jobs.
As a joint venture, they could harness both aspects to offer better sales and a larger catalogue of products to its distributors.
Wakefield says negotiations were long and complex, but the key was to stick to the decision that the merger was the right path.
“When we hit a hurdle, we had the goodwill to push through.
“You have to decide to compromise and work through your differences.”
Planning covered how administration would work, how the logistics and systems would marry and details such as how they would quote clients. They also had to agree on how to promote their new identity to the market.
Legal and accounting experts were required, who went over every detail to highlight and document all potential risks.
“It was so much work. We kept signing documents to say we’d be signing more documents … that’s frustrating,” he says.
Wakefield says it was vital to ensure the people on both sides could cooperate, and that the companies were a good cultural mix.
Now that the merger is cemented, Wakefield says it is time to focus on growth. The new sales and engineering teams recently held a get-together and brainstorming session, which Wakefield says proved optimistic.
“STS creates a company with a much better focus and we have a greater critical mass to work with,” Wakefield says.
The new business will be based in Moe, regional Victoria, with sales offices around the country.