The CEO of a family business, had a sixty-plus-year legacy and knew he needed to make a change. That’s the gist of an interview with Mike Richmond, Managing Director at DAK, with Emily Sackett, Senior Marketing Manager at Axial, recently published on Axial Forum. From the page:
When it was time for Craftmaster Hardware, a third generation business, to once again pass hands, the current owner, Michael Spingeld considered what no one in the family had before: selling to a private equity firm.
Statistics tell us that the likelihood of private businesses remaining family-owned decreases with each generation. The Craftmaster story is a perfect example of why this phenomenon occurs.
“We’re seeing an interesting bifurcation of sellers right now,” explained Mike Richmond, Managing Director at DAK, the investment bank that helped Spingeld find the right buyer for Craftmaster. “On one hand you have sellers on the older end of the spectrum hanging on to their businesses, because they don’t have any place to invest the money they would receive from selling.” Spingeld is one example of the other side of the equation: younger sellers in their early and mid 50s with the desire to take their success and earnings gained from exiting their business and apply it to a new venture or passionate pursuit.
Three Generations of Growth
Craftmaster’s roots date back over 60 years, when founder Jules Austin (and Spingeld’s grandfather) opened with the intention to provide general hardware to customers in lower Manhattan. Even in a crowded market, Austin succeeded in building a competitive position as a preferred provider of physical security hardware (locks, bolts, keys, etc.) to customers throughout the region. Under his ownership, Craftmaster achieved status as a fully operational small-batch locksmith supplier with well under $1 million in sales.
Two generations later, Spingeld (who had taken the reigns after his father-in-law carried on Austin’s vision for Craftmaster as a small business) began to broach an entirely new market.
Realizing the decline of the locksmith industry in local Manhattan and with a desire to become a true business-to-business enterprise, Spingeld evolved Craftmaster from a provider of hardware, to the experts in design, installation, upkeep and emergency replacement and repair of speciality locks.