Last week, in Part 1 of our series The Artemis Approach: Day 0, we discussed transactions and transitions by touching on the natural caution with which business owners can often approach the process, highlighting the M&A community’s role in the apprehension of sellers, and explaining how Artemis navigates transactions and transitions to ensure that the business is prepared to achieve its vision and growth. In the second piece in this series on The Artemis Approach, we discuss what legacy is, why it is so essential to the success of Industrial Tech manufacturers, and how Artemis seeks to align with and fiercely preserve those intangible aspects that make our Portfolio Companies so unique and competitive – always striving to ensure that we don’t mess up what made them great in the first place.

The legacy of the Business Owner goes well beyond the capital or time they have invested during their time at the helm. Their influence can often be seen for decades in the company culture and foundational values, operating principles, and relationships.

Careful cultivation of a culture that operates around core values like Accountability, Boldness, Humility, Innovation, Curiosity, Passion, and Collaboration – among others – could arguably be one of the most important factors contributing to the attainment of differentiated growth and success. The process of establishing these crucial tenants within the business is not as simple as it may appear. Unaligned employees have the potential to disrupt cohesion, commitment to higher values may not always be financially optimal in the near term, and the practical implementation of any individual value can be challenging in constantly changing economic environments. Successful business owners, especially Artemis’ exceptional Industrial Tech Partners, are willing to take these short-term risks to preserve and enhance the values of their companies, ultimately establishing the bedrock upon which successful buyers have the opportunity to build.

Similarly, the operating principles implemented by business owners testify to the legacy of founders because they naturally imply both the current and future strategic positioning of the business. From the values of founders and entrepreneurs, come tangible operational guidelines that are deeply impactful as they define who the business is as well as who it has the potential to become. For example, upon the values of Innovation, Boldness, and Curiosity, successful business owners should, and often do, create operational principles that guide how the business approaches technological frontier, positioning their company as the go-to leader for the next generation of products (Wistia Product Development Process, Amplitude). When operating in niche markets, the principles that guide decision-making, processes, and resource allocation are essential to how the company is viewed in the eyes of their customers, employees, and competition – a reality that is especially relevant and valuable to Industrial Tech M&A company builders.

Lastly, the relationships forged by business owners in the early days, solidified as the company is built, and nurtured into consistent performance before a sale, remain for as long as the company stays true to its founding values and operational principles. In any transition, there will be tensions between the values and operational principles of the seller and the buyer. Aligning on the direction of the business in regards to these strategic intangibles can be make or break for the future of the company (Transforming Manufacturing Relationships: A Unique Way to Provide Value (sikich.com)). In the markets serviced by Artemis’ portfolio companies – Industrial OEM, Aerospace & Defense, Life Sciences, Telecommunications, Infrastructure, etc. – customers can often structure their own operations to be dependent on the reliability and quality of their vendors’ (our companies) differentiated and proprietary products. Detrimental deviations from historical company culture and operational principles leading to shifts in lead and delivery times, product performance, or relationship prioritization can cause an erosion of customer confidence and the loss of long-term relationships. This is why it is essential for the founder and entrepreneur, who cares for their legacy and is evaluating a potential buyer, to find alignment around values and operational principles so that they can be sure the company’s next owner will build and optimize upon what they have built into their business rather than restructure and deprioritize.

At Artemis, our approach is quite simple. The first step is simply to ask. During a transaction and transition process, one of the first set of questions we ask is:

• “What about this business is so essential to its success that it should never be changed?”
• “What about your business gives you the most pride?”
• “What about your business has helped it overcome obstacles to vision?”
• “What one core value is held by every one of your employees?”
  
  

The second step is to preserve those intangible values, operational principles, and relationships with an unwavering dedication to building the company through its next generation of growth. This means, when assuming ownership of a company that has built its brand on developing the most innovative products, we don’t cut R&D to look better on paper, we lean into it looking 2, 5, and 10 years down the road. It means, when acquiring a company whose employees thrive in Collaborative and Inclusive environments, we don’t silo working groups, we lean into it by fostering engagement and access in order to build upon a company culture that is strategically more valuable than any financial engineering we might do. 

Next week we’ll discuss Artemis’ approach to new product development, explaining not only the different ways in which each category of M&A Buyer most often navigates the process but also Artemis’ commitment to Industrial Tech expertise as we communicate with engineering teams. As always, be sure to follow the Artemis LinkedIn and check back on the website (www.artemislp.com) next week for the next installment in The Artemis Approach.