Innovation

Why We Sold Our Company: Mabel's Labels

Getting acquired doesn't have to mean giving up the business you love, explains co-founder Julie Cole

Written by Deborah Aarts

The founders of Hamilton, Ont.-based Mabel’s Labels have started 2016 by reaching an entrepreneurial milestone: selling their business. On January 4, news broke that the firm—which manufactures personalized identification labels for kids and families—had been purchased by Toronto-based CCL Industries for $12 million.

Mabel’s Labels—which took the #361 spot on the 2015 PROFIT 500 Ranking of Canada’s Fastest-Growing Companies, and made the list the previous two years—will continue to operate under Avery, a subsidiary of CCL, with three of its four co-founders staying on to run the business.

“To us, it doesn’t feel like a takeover,” Allison Phillips, Avery North America’s vice-president and general manager of printable media, tells PROFITguide. “What Mabel’s does is a complement to what we do, and they do it better than we could. We’re here bring some capabilities and let the company get to the next level.”

It may sounds like a dream scenario for any growth-minded business-owner. But how does a deal like this happen? And what will it mean for the company’s long-term success?

We talked to Julie Cole, one of the company’s four co-founders, to get the story.

PROFITguide: Why did you decide to sell now?

Julie Cole: It was the right time. We’re 13 years into this business, and we felt we were approaching a time in which we needed to make a change and start investing in the business more, financially, to get it to that next level. We weren’t really sure how we wanted to go about that. But whether it was finding outside investors or something else, we did know we weren’t necessarily going to be able to do it alone.

So were you actively looking for buyers?

No, Avery/CCL approached us. We got a call asking us to get together for dinner, to have a little chat. We thought ‘well, we’re not for sale, but there’s no harm in having the conversation.

So we met, and the conversation went so well. It felt like a good, natural fit. So when we learned there might be an opportunity for them to buy us, we just kept that conversation going.

Those conversations can take a long time. Was that the case here?

Not at all. We started talking late in the summer [of 2015] and we closed on December 31st. That is record speed. These things can take a very long time.

What will the acquisition allow Mabel’s Labels to do that it wouldn’t have been able to do alone?

It’s really a story about growth. Avery/CCL can invest in our growth. They can also help us with product development, and to get into a part of the market we don’t know. It’s about leveraging connections, leveraging experiences and, absolutely, leveraging investments.

MORE GROWTH: How Mabel’s Labels Sells to Giant Clients »

Buyouts can be very disruptive to organizations. How did you break the news to your staff?

Obviously, any time there’s a change it makes people nervous. We met with our team and were very upfront and honest about the sale. We really went through what it means for them. We told them we’re not moving out of Hamilton. We’re not leaving our facility. No one is losing jobs. We’re still creating the same amazing products and are still fostering our incredible online community. I think knowing that there won’t be a lot of change brought a lot of comfort. There was a lot of relief that it wouldn’t be a situation in which corporate robots came in and slashed our culture.

Also, Allison came in the next day and met individually with each person in our head office. She held a team level as well. That increased everyone’s comfort, too.

MORE CULTURE: Why Mabel’s Labels Lets Its Staff Work Anywhere »

What are you doing to maintain that comfort going forward?

We’ve committed to over-communicating with our staff whenever there’s going to be a change; we’ll tell them as soon as we know. And if they have questions to which we don’t have answers, we’ll find the answers and let them know. And we’ve promised to stick together. Our philosophy is that in times of change, a team has to turn to each other, not on each other.

What does the deal mean for you and your fellow co-founders [Julie Ellis, Cynthia Esp and Tricia Mumby]? To date you’ve all been closely involved in running the business. Will that change?

Three of us are going to stay on board. Cynthia Esp wants to move on and try some other things, so she’ll stay on in a transitional role for three months, so we can make sure her departments are safely under our watch.

Many entrepreneurs who sell find themselves uncomfortable working for someone else. Are you worried about what it will be like to report up the corporate ladder after operating independently for so long?

We’re aware of the risks. We’ve done a lot of research; we’ve studied companies in which there have been pitfalls when these kinds of deals happen.

Certainly, it is tough to wrap our heads around the notion that ‘hey, this isn’t our company any more.’ And there may be a level of accountability that’s a bit different than what we’re used to. But we’re not afraid of being accountable. We want this business to do well and we’ve doing this deal because we want to grow it. If that means more work for us, and if that means being accountable to other people—not just each other—we’re OK with that.

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Originally appeared on PROFITguide.com
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