Rytec’s Don Grasso: Vertical Man
May 27 2013 by Jennifer Pellet
In the ’90s, Don Grasso was in the midst of a perfectly good investment banking career in Merrill Lynch when opportunity came a-knocking. “My father-in-law offered to back me with debt if I bought a company,” he recounts. “He said I needed a real job.”
While couched in humor, the offer made a lot of sense. At Merrill Lynch, Grasso was charged with prepping $80 million to $500 million businesses for IPOs, a job that essentially required instilling processes, systems and management into those companies, as well as developing solid, strategic growth plans. Why not do all that for a company he actually owned?
Being a thorough kind of guy—and mindful of the debt he would be taking on—Grasso shopped carefully, considering more than 200 businesses on the block at the time. Finally, a friend suggested that he speak with Paul Reilly, founder of Rytec Doors, a manufacturer of high-performance doors for industrial, commercial and cold-storage environments. These high-speed rolling or folding doors are used to minimize the air exchange between two areas, providing greater energy efficiency, security and productivity.
Reilly’s business wasn’t officially for sale, but the meeting led to a conversation about valuation, which, in turn, led to an offer. “I made a decision almost immediately,” says Grasso. “I had worked with two door companies on going public and I knew about the market, so I did my due diligence. I actually ended up paying significantly more than we initially discussed, but I was confident about the opportunity for growth.”
His confidence proved well-placed. Jackson, Wisconsin-based Rytec grew 32 percent the very first year Grasso owned it, and it has had a double-digit, average compound annual growth rate ever since. “We couldn’t sustain 32 percent—that gets harder and harder the bigger you get—but we’ve had consistently strong sales growth,” explains Grasso, who focused on finding new opportunities for the company’s core products. “We were essentially in three markets—industrial plants, food processing and food distribution—all areas where you need to separate clean or temperature controlled environments. So I looked at that and said, okay, what other businesses need to separate environments and how can we service them?”
That simple question led to Rytec targeting pharmaceuticals, airports, automotive plants (and later dealerships). “We are constantly tweaking existing products for new markets or coming out with new products based on a potential market’s needs,” explains Grasso, who cites Rytec’s Break-Away rollup door as an example.
Designed to be quickly reset without tools, the door was developed in 1990, but it wasn’t until Grasso owned the company that Rytec began marketing it to automotive plants and dealerships and airports. “Doors in places like [those] get hit by forklifts all the time, so there’s a real advantage in repair costs and door downtime to a door that can take a hit and be back in operation seconds later. Now, we sort of own the auto market.”