Halma, Kirk Key, & HLMA Organisational Structure | In Practise

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Halma, Kirk Key, & HLMA Organisational Structure

Former VP Global Sales and Marketing at Kirk Key, a Halma Company.

Halma PLC

Why is this company interesting?

Halma is a UK-listed serial acquirer of niche highly engineered industrial or medical products that dominate their respective small markets.The company was founded by David Barber who pioneered the model of rolling up and integrating industrial businesses that have strong market power and durable earnings. Barber’s philosophy, which still underpins Halma’s culture today, is best explained in this short speech.

Today, Halma is structured into three sectors with 50 operating companies: Safety, Medical, and Environmental and Analysis. Each sector has ~20%+ net margin and the group aims for 16% growth in profit before tax every year, half from organic growth and half driven by acquisitions. Halma aims to acquire 15-20 profitable, high quality companies each year and between 2003-13 the company paid on average ~8x EBIT.

The 20-year FCF CAGR is 15% and the 33-year dividend per share CAGR is 5%. This has led Halma to become one of the top performing UK businesses over the last 40 years.

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Executive Bio

Bill Trautmann

Former VP Global Sales and Marketing at Kirk Key, a Halma Company.

Bill was the Former VP of Global Sales and Marketing at Kirk Key, a Process Safety operating company at Halma. In 2011, Halma purchased Kirk Key, the leading US trapped key interlock business, and Bill joined in 2012, months after the acquisition. Bill was on the board of Kirk Key and was present during the organisational restructuring of Halma into more centralised sector teams. He has first-hand experience of how Kirk Key operated as a standalone business within Halma, and then as part of the safety locks business with Castell and Fortress, Halma’s other safety lock companies.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Can you provide an introduction to your role and responsibilities at KIRK Key?

I was the VP of Sales and Marketing for the business. We had recently been purchased by Halma from a private owner and pulled into the Halma umbrella. In that role, the focus was to grow the business, expand upon the brand and to bring in the team and strategy to be successful in that growth.

Who was the owner?

The prior owner was Mr Owens, an entrepreneur in the Canton area of Ohio. He had been in the switchgear business and owned many companies over the years. Control Power was one of his bigger companies and, during that time, he acquired the KIRK Key brand and business, which was owned by ABB who were looking to divest. He happened to be in the right place at the right time and bought it and moved it to Massillon, Ohio, which is where we started after the Halma acquisition.

Is there any context on why he decided to sell to Halma?

Mr Owens had owned the company for several years and was in his early 80s when he put the business up for sale. He had several family members in the business but none of them wanted to take ownership to take it into the future, so he was looking for somebody to buy him out. His son, daughter and son-in-law were in the business. Halma had courted him for at least three years and he was finally at a point where he was ready to sell the business.

Had they tracked and built a relationship with him prior to the acquisition?

Yes; I think they had been tracking KIRK Key for 10 years before that.

Having dinners or lunches with him to be top of mind if he chose to sell?

Yes, as well as other competitors in the US. Superior Key is still privately held. KIRK was a nice opportunity for them and it gave them a strong brand in the trapped key interlock business within North America. They owned similar businesses globally but weren't able to penetrate the North American market, partly due to the strong brand of KIRK. As we move down our conversation, it is important to know that it is a specified product. During the time, even prior to KIRK, ABB had done a phenomenal job getting into the specs in certain marketplaces, which makes it even more difficult to penetrate as an outsider coming in.

Do you have any idea why the owner chose Halma over other bidders?

At the time, Halma had a good history and had done a great job in messaging Mr Owens about keeping the people intact within the business. They were a good decentralized holding company and Mr Owens wanted a business future for all his staff. He was very employee centric and spent a lot of money on his employees. He had developed a strong culture and wanted that to continue, and Halma had messaged it was their culture and they would support that even past the acquisition.

Did all his family members stay on at KIRK post acquisition?

No.

Did they leave?

His son-in-law, Scott Life, the president of the business, stayed on. Laura Life stayed on but was, essentially, a contract participant from a marketing or admin standpoint. Gordon left the business and there was another son-in-law who remained in an operations role but he also left the business.

The owner wanted a continuation of the company rather than a financial bidder or private equity fund who might choose to chop costs and cut employees?

Yes, people who buy businesses have different strategies. Some people can strip the business, show off the profits and look to sell it. Halma typically hold businesses longer term and invest in them. At that time, they were very decentralized which allowed the business to be successful and continue to flourish.

Can you describe the products that KIRK Key offer?

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Halma, Kirk Key, & HLMA Organisational Structure

December 9, 2021

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