Transition Time featuring Jerry Hein, Rich Hanson and Mike Hanson with ECSI Systems Integrators, LLC
Written by John P. Palen for Minnesota Business Magazine August 2013
Integration can mean a lot of different things in business. Some companies provide systems integration for their customers, but those same companies also must focus on integration within their operations to ensure growth. When the owners decide whether or not to merge with another company, integration has a whole different meaning.
The owners of ECSI, a system integrator in St. Paul, have experienced several layers of integration since founding the company in 1997. At each stage of integration, they've learned how to adapt their leadership styles, expectations and service promises in order to run a larger enterprise and take on larger Minnesota-based clients ranging from Grand Casino and Ecolab to the National Sports Center in Blaine and St. Jude Medical. The company has also supported systems integration for several city offices in Minnesota, mid-sized hospital facilities, and college campuses such as Bethel University.
Jerry Hein focused operations and Rich Hanson focused on sales when the two decided to leave their employer and start their own low-voltage systems integration service. Their new company would install and maintain fire alarm, security, communications and industry-specific applications.
Over the first five years, the owners evolved from being technical experts to real leaders who oversaw key performance indicators for planning, productivity and performance management. Hiring a service manager in 2002 helped them step out of direct operations to even larger executive roles. "We learned to create more sophisticated tools and practices that helped us manage our people and our jobs more effectively," said Hein.
By 2008, the partners were ready to consider a merger opportunity. Though an industry association board, they knew Mike Hanson, owner of St. Paul–based Hunt Electric Corporation. They began talking to him about how ECSI could enhance Hunt's primary focus on commercial electric contracting (it was already outsourcing much of its low voltage work). In turn, ECSI could consolidate costs and gain more resources for continued growth.
Once the two companies negotiated the merger, integration had its share of challenges. In addition to gaining the trust of the Hunt project managers and estimators, ECSI needed to communicate benefits to customers. Internally, the companies also had to integrate their cultures and employees. New key performance indicators and processes were required to operate a larger company.
The changes did result in losing some customers and employees. Revenue dropped as the owners focused on the transition. However, within two years revenue has gone up 30 percent from combined pre-merger revenue, Hein says. "We've gotten into larger accounts we couldn't get into on our own, and we've been able to diversify into additional low voltage services."
A successful integration, whether of electrical systems or people or processes, takes time and investment. In the long run, owners and employees alike will have the proper foundation to continue delivering high-quality customer results.
Tips for Merger Integration
- Plan on and estimate down-time costs associated with integration.
- Decide on what level of long-term cost savings will offset integration investment.
- Manage customer expectations during integration through processes and communication.
- Look for cost consolidation in areas such as human resources, insurance, benefits, and licensing.
- Plan on difficult decisions with employees, including who to hire and areas for possible downsizing.