Acquiring Minds Podcast: How to Buy a Multinational Hosted by Will Smith | Episode Release Date: March 24, 2025

Introduction

In this episode of Acquiring Minds, host Will Smith delves into the intricate world of acquisition entrepreneurship by featuring Adam Salman, the CEO of UMEC. The episode, titled "How to Buy a Multinational," provides an in-depth exploration of Adam's journey from a global corporate strategist to owning a multinational company in the heavy industrial sector. Listeners gain valuable insights into the complexities of acquiring large-scale businesses, the challenges faced during the process, and the strategic decisions that led to Adam's successful acquisition.

Adam Salman's Entrepreneurial Journey

Background and Early Career

Adam Salman begins by sharing his entrepreneurial roots and extensive experience in the global industrial sector. With a master's degree in Global Entrepreneurship from Babson College, Adam ventured into the startup ecosystem in San Francisco around 2009-2010. However, recognizing the volatility of the startup world, he transitioned to corporate strategy with Bayer Material Science in China. This move marked his shift from the fast-paced startup environment to the structured realm of multinational corporations.

Quote:

"I went into global industrial markets and helping drive industry. And so his idea was, and something I've followed in my whole career is find big opportunities that are solving lots of things."
— Adam Salman [03:54]

After spending years in Asia and Europe, Adam returned to the United States in 2020 amid the COVID-19 pandemic. This period of introspection and remote work catalyzed his decision to pursue acquisition entrepreneurship, inspired by Walker Deibel's book "Buy Then Build."

Choosing the Right Business: The "Hair" Metaphor

One of the standout concepts Adam introduces is the "hair" metaphor, emphasizing the unique challenges or characteristics of a business deal that align with the buyer's expertise.

Quote:

"Every deal has hair. So if you're looking for a deal, don't look for a deal with no hair. Look for a deal that has hair that you uniquely know how to shave up and trim up."
— Adam Salman [22:53]

Adam explains that instead of chasing clean, large deals that often result in bidding wars ("chasing multiples"), entrepreneurs should seek out "hairy" deals where their unique skills can address specific challenges, thereby adding significant value post-acquisition.

The Acquisition Process: From Search to Purchase

Search Criteria and Strategy

Adam outlines his search criteria, targeting global, industrial, B2B companies with an enterprise value between $10 million and $50 million. His goal was to leverage his extensive global experience to acquire a business that operates on an international scale, diverging from the more commonly pursued local or franchise businesses.

Quote:

"I'm really looking for something which I was qualified to run... the further upstream you go, the more profitable they can be and the more scale they have."
— Adam Salman [13:33]

Finding UMEC

After evaluating 83 companies and submitting 12 Letters of Intent (LOIs), Adam identified UMEC Services as a perfect fit. UMEC specializes in sourcing machinery for steel manufacturers, operating across North America, the Middle East, Asia, and beyond. The company's robust growth and ethical practices resonated with Adam, culminating in the acquisition closed on October 1, 2024.

Deal Structuring and NovaStone's Role

Partnering with NovaStone, a search fund accelerator focused on mid-career professionals, was pivotal in securing the eight-figure investment required for UMEC. NovaStone provided essential support in fundraising, legal documentation, and financial modeling, enabling Adam to take calculated risks in acquiring a large-scale multinational.

Quote:

"Having a team, a legal team that could help draft all the legal documents, an M&A team that could do all the financial modeling... was really helpful for me."
— Adam Salman [18:35]

Overcoming Challenges: Due Diligence and Fundraising

Operational Due Diligence

One of the significant hurdles in the acquisition was the operational due diligence, particularly the consolidation of diverse accounting systems from UMEC's multiple international entities. This process took nearly a year, highlighting the complexities of managing finances across different currencies, banking relationships, and outdated accounting software.

Quote:

"There are several entities working across many different currencies and banking relationships, using antiquated accounting software. Consolidating these was a challenge."
— Adam Salman [55:07]

Fundraising Struggles

Adam faced challenges in raising the necessary capital, initially attempting a crowdfunding round through WeFunder. Despite raising over $1.3 million, the Securities and Exchange Commission (SEC) halted the process due to compliance issues related to Non-Disclosure Agreements (NDAs). This setback, however, steered Adam back to NovaStone and traditional investors, ultimately securing the required funds without the complications of mass individual investments.

Quote:

"The SEC said anyone putting money into a transaction, even if it's not taken, already has an escrow account. That process does not fit with SEC compliance."
— Adam Salman [60:29]

Advice on Fundraising: Adam advises searchers to approach crowdfunding with caution, emphasizing the importance of understanding compliance and managing investor relations effectively.

UMEC: Business Overview and Value Proposition

Core Operations

UMEC serves as a centralized hub for steel manufacturers, sourcing a wide range of machinery essential for maintaining and expanding steel production. From maintenance, repair, and operations (MRO) equipment to major capital investments like furnaces and transfer cars, UMEC ensures that steel plants remain operational and efficient.

Quote:

"We don't want to be just like a shop. We want to be a partner to the steel manufacturers, working alongside them in their capital planning."
— Adam Salman [33:02]

Multinational Reach

With headquarters in Cincinnati, Ohio, UMEC operates offices in Canada, the U.S., and Mexico, and maintains agent networks across Asia, South America, and the Middle East. This extensive global presence allows UMEC to cater to a diverse clientele, providing customized solutions tailored to each region's specific needs.

Competitive Advantage and Moat

UMEC's unique position in the market is reinforced by its comprehensive network of vetted manufacturing partners and strong customer relationships. The rigorous certification and quality assurance processes ensure that UMEC's offerings meet high standards, creating a robust moat that protects against competitors.

Quote:

"There is a huge moat there and we're confident in the stability of the company."
— Adam Salman [73:44]

Financials and Valuation

UMEC operates with annual revenues between $25 million and $50 million and EBITDA in the high single digits. The acquisition price was strategically negotiated below the typical multiples for such opportunities, reflecting Adam's confidence in UMEC's stable growth and resilient business model.

Stability Amid Cyclicality

Despite operating in a cyclical industry tied to infrastructure spending, UMEC demonstrated consistent revenue growth, even navigating challenges like tariffs and the COVID-19 pandemic effectively.

Quote:

"The top line kept on growing steadily, and the EBITDA was able to grow lockstep with that growth."
— Adam Salman [43:33]

Vision for Growth and Future Opportunities

Adam's vision for UMEC includes continued global expansion, particularly targeting regions with the lowest cost of energy, such as the Middle East and Brazil. Additionally, UMEC aims to support steel manufacturers in transitioning to more sustainable practices, aligning with the industry's carbon neutrality goals by 2050.

Quote:

"We want to be working with them hand in hand as their needs change, especially with the transition to green steel manufacturing equipment."
— Adam Salman [67:49]

Scalability and Leadership

With a highly efficient team—currently 28 employees generating substantial revenue—UMEC is poised for scalable growth. Adam emphasizes the importance of building a strong leadership team to ensure the company's continued success beyond his tenure.

Key Takeaways and Insights

1. Leverage Unique Expertise: Seek acquisition opportunities that align with your unique skills and experience to add maximum value post-acquisition.

2. Thorough Due Diligence: Operational and financial due diligence are critical, especially when dealing with multinational entities with complex accounting systems.

3. Strategic Fundraising: Traditional fundraising avenues, supported by experienced accelerators like NovaStone, can provide the necessary backing without the pitfalls of crowdfunding compliance issues.

4. Value Proposition and Moat: Building strong customer relationships and maintaining rigorous quality standards create a durable competitive advantage.

5. Visionary Growth: Align acquisition strategies with long-term industry trends, such as sustainability and global expansion, to ensure continued relevance and growth.

Conclusion

Adam Salman's acquisition of UMEC Services exemplifies the potential of acquisition entrepreneurship in the multinational industrial sector. By leveraging his global experience, partnering with the right accelerator, and maintaining a clear vision for growth, Adam successfully navigated the complexities of buying and running a large-scale business. His journey offers valuable lessons for aspiring acquisition entrepreneurs aiming to make impactful and profitable acquisitions in specialized industries.

Final Quote:

"Don't buy a PowerPoint presentation; buy the relationship with the sellers. I have complete confidence in that."
— Adam Salman [71:43]

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