MSA Industries
South San Francisco, CA

 

The Company

MSA Industries and its successor companies (“MSAI”) provide floor coverings and services for commercial applications including office, hotel, airport, and multi-unit residential projects.

We grew MSAI from a small family business with annual sales of $3M to an industry leader with 46 branches in 31 states generating annual revenues in excess of $350 million. During the final three years of ownership, we grew MSAI sales at a 63% compounded annual growth rate (“CAGR”).

This period of high-growth was a function of extraordinary organic growth (26% CAGR vs. industry average 3% CAGR) plus 10 strategic acquisitions, including the purchase of our three largest competitors.

At the end of this 3-year period of robust growth, the Company was acquired by E.I DuPont de Nemours & Co. At the time of the sale to DuPont, Barry Schneider was the sole MSAI shareholder.

Strategy

Our strategy was to align participants in the value chain, and through such strategic partnerships to eliminate duplicate functions throughout the supply chain. This strategy sought to achieve efficiencies similar to that of a company executing forward integration; but to do so “off balance sheet.”

Of course, this strategy required shared information and trust, and it required partnerships of scale. Thus, this alignment strategy went hand-in-hand with MSAI’s high-growth strategy. Each strategic participant was able to reduce costs and pass on the savings to its customer, providing all partners with a competitive advantage. It was this strategic and competitive advantage that drove MSAI’s remarkable growth and market leadership.

This supply chain partnership strategy changed an industry. And it caught the attention of Stanford Business School, which made MSAI a case study.

Summary

By any metric, MSAI was an unqualified success. In addition to the final three years of 63% CAGR, the Company grew from 6 locations in 3 states to 46 locations in 31 states. And from 200 employees to 2,000 employees.

Best of all, at the time of sale 81 MSAI employees held unvested stock options in the Company that transferred into DuPont stock options with value in excess of $18 million. The employees earned every bit of this stock option value, as they comprised the team that drove such extraordinary execution.