Sealing the Deal
December 1 1996 by Judith Rehak
The well-mannered members of the famed Beardstown Ladies’ Investment Club can be a pretty hard-nosed bunch when it comes to choosing their investments. But one company that wins their approval year after year is RPM, the
Plain-spoken and no-nonsense, Sullivan, 58, joined his father’s business in 1961 after college and a stint in the Navy. A decade later, at age 34, he took the helm at RPM after his father’s death. The company’s flagship product then was aluminum coating for roofing (hence its original name of Republic Powdered Metals), and its sales were $11 million a year. Today, sales have multiplied tenfold, and RPM boasts more than 100 products, ranging from corrosion-proof coatings for oil rigs to Testor’s model airplane kits. RPM competes with Sherwin-Williams and DuPont in individual products, but has no one competitor with the same wide array of products.
Sullivan acquired most of RPM’s products by buying more than 40 companies. His strategy: He won’t touch a company unless it fits with existing businesses and is financially healthy. And once he zeros in on a candidate, he can be very patient. “Few good companies come to you,” he observes, recalling his 15-year courtship of Rust-Oleum. “I went through four chairmen.”
But that’s only part of his game plan. To make an acquisition work, Sullivan applies his father’s philosophy: “Get good people working for you, create the atmosphere to keep them, and let them do their own thing.” That means keeping original management and giving them autonomy, though operating companies must meet regularly to share strategies and ideas.
While his strategy has been successful, RPM’s earnings in fiscal 1996 rose only 10 percent to $68.9 million, compared with its typical 17 percent. The culprit: faltering sales in Day-Glo fluorescent pigments, whose overall market is shrinking, and auto maintenance products, hard hit by last winter’s stormy weather. However, the picture has brightened considerably since, as earnings rebounded to a first-quarter record for fiscal 1997, leaping 20 percent over the previous year.
But Sullivan isn’t taking any chances. While still making acquisitions, he is encouraging RPM’s divisions to create internal growth with new products of their own.
In the global arena, Sullivan plans to grow international business, now about 17 percent of sales, to 20 percent by 2000. After a recent trip to