Compass Growing With Seamless Operating Company Acquisitions
Compass Precision is growing its business in multiple ways. One of the fastest ways is through acquiring more operating companies.
Compass announced purchasing Pocasset Machine Corporation in Pocasset, MA on July 21. The Kent family sold Pocasset Machine after 48 years of ownership.
Previous Pocasset owner Barry Kent (Pictured at right above, with wife Vicky. Also shown are Chris and Donna Kent, plus Compass VP of Sales Jim Miller (with baseball hat)) is staying with the company through the transitional phase with Compass. Two months into the transition, we sat down with Barry to see how things have been progressing.
Here’s what he said during our conversation:
When did you decide to sell Pocasset Machine?
The day after I started [laughs]. You think about it all the time, obviously. But I probably started seriously thinking about it roughly 8-10 years ago. You start thinking about your age and your future. Then it becomes, ‘You know what. It might be time.’
The process with Compass, what surprised you the most about the pre-sale process?
It was clear from the beginning that they knew what a job shop was. They didn’t worry about things that happen day-to-day in the shop. They didn’t worry about all the legal speak that goes along – the legal terms and conditions and flow downs.
So, I knew right away, they spoke our language. I think we had six other offers that we weren’t as comfortable with that I don’t think would have worked out as well.
Did those six offers come over the course of the 8-10 year timeframe you referenced?
No, when we first started thinking seriously about it, our lawyer gave us the name of a broker. We met with him a couple times, but then we changed from a C-corp to an S-corp. For tax implications, you need to wait five years. So we waited five years, and then that broker put us on the market, and we went through all the due diligence.
It didn’t turn out well. We walked away from an offer. We only had that one, and I don’t regret it at all.
Then I think it was our CPA that got us in touch with our current broker. That’s what led to the offer from Compass and the five other offers that came with it.Then as the process continued, we determined that Compass was the best fit.
When the sale finally went through with Compass, how did your customers react when you told them?
They were a little taken aback. But I’ve taken Mike Kane (new Pocasset Vice President & General Manager, hired by Compass shortly after the acquisition) around to two of the local customers. We have two more lined up this upcoming week. I’ve known these people for a long, long time, and I think they trust my judgment as far as we’re making the right choice. I’m not going to be around forever. I assured them that things should not be different.
I’ve said that to Mike, and I’ve said that to the Compass people. The best thing that they can do is make it seamless as if I’m still there. And continue to make really good parts for them.
How close to seamless has it been so far?
It’s been good. Mike obviously knows what he’s doing. I’m trying to get him comfortable in the way that we do things. And I’ve said to the Compass people, ‘I know you’re going to have to make some changes. But the best thing you can do is make it look like there are no changes, at least initially.’
So the customers are comfortable and the employees are comfortable. I think they have done that really well.
One of the nicest things, my wife Vicky has noticed this too, is every time we’ve had an in-person meeting, Zoom meeting, etc. after every one of them, Compass people, including CEO Gary Holcomb, have genuinely thanked us for having picked them. It’s a really nice feeling. They are genuinely happy that we chose them to carry on the legacy of Pocasset Machine.
Are there any other examples of things Compass employees have done that have made you feel they are the right parent company for Pocasset?
They’ve been more than generous as far as benefits go. They’re going to change health insurance, but they agreed to let our employees carry over what they currently have until the first of the new year. They’ve been more than generous as far as paying the conversions out of our 401Ks for our employees. Getting us adapted to the system that they use. They’ve tried really hard to not disrupt anything and make the employees feel comfortable. This is a good fit for sure.
Yeah, I wanted to ask about the employees. What was their reaction to the sale?
Some were a little bit shocked. Others weren’t very surprised. I’m going to be 69, so I’m just not going to be around forever. I think they knew it. People don’t typically like change, but you have to get used to it. All the things that are changing are pretty minor at this point.
One of the things that I stressed to the employees when I met with them, ironically, the last shop that Compass had bought in Massachusetts was Bergeron Machine. When I saw that name, I said, ‘Hey, I know Mark Kelly [the previous Bergeron owner]. I went to high school with him. And he married a woman that Vicky and I knew from high school. He was a year ahead of us. His wife graduated with us.
So I called Mark, and we were able to have some pretty in depth conversations. ‘Hey, before you chose Compass, what was your experience like? Do they do what they say they’re going to do?’
Back to my employees, a couple of them have gone through some pretty bad acquisitions where the acquiring company comes in and says, ‘Nothing is going to change. Everything is wonderful.’ Then it changes completely. Those guys were a little nervous. So I let them know that I had an inside track because of a guy I knew from high school. And it was comforting for them to know Mark Kelly had nothing but positive things to say about Compass.
And that probably really made the decision for us. Before we decided to go with Compass, I think it was Mark that really kind of pushed us over the edge that yes, ‘This is a positive group. They do what they say they’re going to do. You will operate independently.’ So it was kind of like, ‘Yeah, I’m convinced now.’ That’s when we decided to go with Compass.
So things have been going well for your employees just like Pocasset’s customers?
Yeah, it’s been good. It’s a transition. There’s a few bumps here and there. But I’m certain that Mike is going to be more than capable of taking the reins. I think the next two customer visits will go a long way to ensure our customers of that. He knows what he’s talking about. He asks good questions. So I think that will kind of slow things down, and I think the customers are going to come away with, ‘You know what. This is not a bad thing.’
I also have to emphasize that I’m rounding third, and Compass is ready to take this to the next level. I just don’t have the time or the energy anymore to do it. So it’s a necessary transition so we can do more for our customers with Compass leading the way.
What has your role been since the sale?
I’m trying to get Mike comfortable with how I do things. That doesn’t mean he has to do them that same way. But he wants to know what I do now so he can understand it. How I process jobs, how I quote jobs, and I think he’s getting more and more comfortable, and I’m becoming less and less necessary. I think. I hope.
How has it been working with Mike?
Good. He’s knowledgeable. He understands machining. He understands processes, what it takes to make parts and be efficient. Look at equipment needs and all that kind of stuff. He will get even better when I’m gone. That will give him an opportunity to get more comfortable.
He’s not nervous, but he’s been picking my brain as much as he can. Once it’s fully picked, I think he will settle down, and it will be like, ‘Ok, I’m ready to go.’
There’s also going to be a lot of old-timers around to help him. The foreman, he’s very knowledgeable, has been there 35 years or more I think. The quality control guys, the guys that work out in the assembly. He’s got a lot of support.
Is there anything specific you are going over with Mike or anyone else on the team to prepare them for when you aren’t with the company anymore?
Nothing directly. Just going over the overall. Mike and I have conversations, and he knows this, but you never know what you’re going to get when you walk in every morning to a job shop. You leave the night before, and everything is all settled. Then everything changes in the morning. That’s the life of a job shop. It’s a reactive business, and it’s hard. But if you are good at it, you can do well. I think we’ve been good at it. Mike will be good at it next for Pocasset Machine.
As long as you understand that and can handle that everything could change from the plan you had the night before, you can excel.
Why is the future so bright for Pocasset Machine?
I think we’ve built a pretty solid platform over our 48 years. Many of our customers have come and gone, but the platform is there. The industries that we serve. Compass is involved in a lot of different things – semiconductors, aerospace – this is all new to them as far as the ocean.
We’ve spent a lot of time doing things for scientific and military work, but the ocean is a big world out there. It’s new to them. It’s pretty exciting. When the Compass people come back again to Pocasset, and they really see what our customers do, the AUV market is enormous.
I just see it as a big platform for them, and it’s like, ‘Here you go. Take it to the next level. The opportunity is there.’
It’s pretty neat stuff. You watch Discovery channel, you see the underwater vehicles and cameras and sidescanning sonar. For most people, it’s like, ‘Wow, there’s a lot of stuff out there that I never knew existed.’
But that’s been our life the past 48 years. Coming from small to where we are now, it’s really developed a lot. We’ve been involved in a lot of different projects over the years. We were there back in ‘86 when they discovered the Titanic. We were involved in all the vehicle building that was required to find the ship.
Same with making the movie, Titanic. We were involved in making the titanium camera housings for the director to film it underwater. So there’s a lot of stuff going on that unless you’ve lived that life we’ve been living down on the cape, you have no idea that it exists.
Anything else that we haven’t addressed?
In closing, I’m looking forward to watching Compass take this to the next level. I’m looking forward to leaving and spending time with my wife and my grandkids. We’ve got a place in Sarasota, so we would like to spend more time down there. I’m very optimistic that it’s going to work. We made the right choice. Compass is poised to take it to that next level.
Again, the opportunity is there.