Lynx and Port-Style: The Ultimate Team
August 11, 2021
Lynx and Port-Style: The Ultimate Team
“The whole company was either going to live or die,” says Katherine Samuel, President of Lynx subsidiary company, Port-Style Enterprises Inc (“Port-Style” or “the Company”). Port-Style is an importer and distributor of kitchenware products. It represents over 30 high-quality and well-known kitchen and home brands, including its own product line, Kitchen Basics.
Port-Style is currently on track to have its best year yet. However, the harsh reality of acquisitions: it is not always smooth sailing. In mid-2017, Port-Style was definitely not having its best year. So, what changed between then and now? Over Zoom, we were able to catch up with Katherine Samuel (President) and Ken Keene (VP of Operations) to further reflect upon Port-Style’s turnaround, Lynx’s involvement, and the key factors contributing to their success.
Lynx, Meet Port-Style. Port-Style, Meet Lynx.
Lynx and Port-Style first learned of one another in 2014, when the Company’s owners approached retirement and were seeking ownership transition opportunities. Ken, who has been at Port-Style since 2004, recalled that the acquisition itself had been fairly unobtrusive. Lynx strives to make as few changes as possible in the businesses it acquires. While the Company managed to remain profitable in the first few years following the acquisition, it was not a sustainable state of operations; and eventually, they hit a wall in terms of growth.
Lynx’s ownership alone could not be an automatic fix to the issues Port-Style was facing. However, Ken stated that “[Lynx] was there to support us in whatever way was necessary. Primarily, to fund a lot of front-end costs.” Ken recounted that upon Lynx taking over, he was asked what was required to operate the business effectively. Ken’s response? A new ERP management system “to bring [them] into the late 2010’s” in terms of technology and operational efficiencies.
Ken appreciated that “Lynx gave us the latitude to assess what we felt was best to serve the needs of our company” and that “by making that type of investment, it meant they were there to help us with a view of the long-term”. However, the long-term solution was not as simple as a new ERP system; Lynx recognized that changes also had to be made at a higher level to position Port-Style for success.
Katherine, Meet Port-Style. Port-Style, Meet Katherine. (The Turning Point)
Two years post-acquisition, Lynx felt that it was in both companies’ interests to bring in a new President to Port-Style. Katherine was approached by Lynx in late 2016, at which point she said “it was clear that Port-Style was not all butterflies and roses.” But Katherine wanted to investigate further and was brought into the Lynx office where she spoke with several members of the organization one-on-one. She recalled that “it was not easy leaving a stable role for something riskier, however Lynx was very forthcoming about the situation at Port-Style.” Ultimately, those conversations led Katherine to accept the project – after all, “how bad could it really be?”, she thought.
Lynx and Port-Style: The Ultimate Team
After the first few months at Port-Style, a few things became clear to Katherine. As an entrepreneurial company, there were no strict processes in place and most issues were deeply rooted in the organization. Inventory management and financial reporting were two areas most clearly in need of reform. From the start, Lynx and Katherine had been on the same page – they were willing to collaborate and do what they could to help turn the Company around. So, Katherine approached Lynx with her insights and asked to develop a plan of action together. Through active communication, Lynx staff became more involved and brought with them their expertise from working with other portfolio companies.
During Katherine’s first year at Port-Style, she also noticed a significant amount of unusable inventory. With a shift in perspective, she and the team made a concerted effort to sell the stale inventory, convert it to cash, and make room for new goods. Katherine also helped create new deals for customers by using a novel strategy to target a customer base that would be forecasted to weather the future retail climate.
From a financial perspective, Katherine observed a huge disparity between Port-Style’s budget and what was actually being spent. Without a strategy for knowing which bills to pay first and where to access the funds, Katherine was faced with the question, “should we be buying this inventory if we can’t pay for it?”. Lynx helped navigate decisions involving inventory and capital. Specifically, Jennifer, Lynx’ Vice President of Financing Services, was able to leverage her experience in the corporate banking world to expertly support Port-Style. Katherine stated that Lynx’s contribution and the overall relationships that Jennifer had with the bank kept the Company alive.
Sink or Swim: What Truly Kept Port-Style Afloat?
With Port-Style and Lynx’s collaboration, the business was back on track. Katherine was quick to note that none of their accomplishments would have been possible without the people who helped to actualize the plans, both at Lynx and Port-Style. She claimed that “the communication at Lynx is constant; when you have a question, they have a whole network of people who can help.” She believes that without Lynx, the situation would have been nearly impossible to navigate. Lynx continues to provide guidance and support on anything from finances to HR. As more members join the Lynx family, the ability to provide support continues to grow.
However, Lynx would not have even had the opportunity to help Port-Style if it was not for their loyal and hardworking staff. “The key ingredient to keeping the Company afloat all those years is its people,” says Katherine. “When I arrived, everybody from our warehouse team to our order entry team knew that the business was on rocky ground. Typically, when people have that awareness, they either walk away or they roll up their sleeves and go above and beyond… Our team came to work every day, did everything they could, and worked in all sorts of different roles [to help keep Port-Style alive].”
Since they could not afford to hire more staff, it was truly an all-hands-on-deck situation. However, after Katherine’s arrival, it was done in a more organized fashion. Michele, Lynx’ Executive Vice President of Human Resources, helped Katherine provide her staff with redefined job descriptions, new titles, and adjusted pay in order to increase engagement and allow for more autonomy. As a result, Port-Style was able to effectively utilize their core group of workers who had their stations, knew their roles, and asked when they needed to outsource help. COVID-19 also provided the perfect opportunity to assess what changes needed to be made during an already challenging time.
Ken noted, “we had a very dedicated group of people, and Katherine managed to create the feeling of an open-door policy across all levels of staff and management – which had not existed before. It made a huge difference, everyone finally felt that their contributions were welcome and recognized.” Katherine truly bought into the Port-Style culture, and cultivated a safe environment where employees felt appreciated and further, operational order was restored. It can surely be said that these are all signs of a great leader, as she helped inspire and create the conditions necessary for positive change.
When Reality Hits: The True Test of a Relationship (or, a business deal)
Working in private equity does not come without some bumps in the road. As seen in Port-Style’s case, a business that not only produced a turnaround during a pandemic but is on track to have its best year to date, it is clear that the way in which obstacles are handled is most important. Providing support and guidance to its companies is one of Lynx’s main priorities. As Brad described in our last feature, buying a business is like committing to a relationship; there are two parties involved and it requires work and communication on both sides.
Part of Lynx’s philosophy is that in any relationship, one does not simply walk away when things get hard. After all, there is no perfect formula to a successful acquisition, nor is there a perfect formula to a successful turnaround. As important as strategy and plans are, it all starts and ends with the people who bring them to life. Acquisitions, like relationships, require dedication from both parties as they continuously work together as partners; providing each other with the support needed to grow alongside one another, and help the relationship thrive. As we ended the call, Katherine closed with the following sentiment, “I could not imagine not having Lynx as a resource … Lynx is a lifeline for us.”