He may be 63, but Keith Shoff is not ready to start planning for business succession.
Who can blame him? The man has owned a business for barely more than a month. He’s just getting started.
Shoff is president and CEO of Capway Automation Inc. He also is one of five people who recently bought equal shares of ownership in the York-based company, which designs and manufactures assembly-line equipment used in bakeries around the world.
His partners are Dan Crabill, Robert Harrington, Lori Rhine and Scott Swaltek. They joined to buy Capway from its Dutch parent and establish it as a 100-percent U.S.-owned manufacturer. The process took about two arduous years before closing this fall.
“We never gave up hope or striving to make it happen,” Shoff said. “But up until Nov. 2, when we had them at the table and had the papers signed, I didn’t think it was going to happen.”
To understand why it was so difficult, you have to go back to the structure of the company before it became Capway Automation.
And to understand why you should care, read this week’s issue of the Business Journal. Tucked inside is a glossy supplement looking at the booming business of mergers and acquisitions. The story of Capway illustrates how hard it can be to buy or sell a company, even when conditions appear ripe.
Capway Systems was born about 100 years ago in Holland in a blacksmith’s shop that started making equipment for local bakers, Shoff said. The name was a play on the founder’s family name, Van Capelleveen.
By the 1980s, Capway was run by three brothers, Teus, Piet and Harrio. They opened a sales office in downtown York in 1983 and added a production facility two years later. They chose York because it was home to many baking companies and related equipment manufacturers, Shoff said.
Teus Van Capelleveen died around 2008, Shoff said. The business seemed to decline after that. And in 2012, the Dutch part of the business — operating under common ownership but as a separate corporate entity from the York-based entity — went bankrupt.
The family ultimately lost control, and a Dutch bank took over, Shoff said. It began eyeing a potential sale of the entire business, both the Dutch and American sides.
Shoff and his colleagues were interested, but no one in Holland seemed to take them seriously.
The American portion of the business was profitable and remains so, Shoff added. But rumors about its fate swirled, unsettling employees, customers and vendors alike.
No buyers emerged, and the Dutch business didn’t get any healthier. It went bankrupt a second time in March 2015, Shoff said. “We just had no idea that was going to happen.”
This time, though, the U.S. team recruited some local help. They hired a Dutch advisory group called Ox Partners to work with them on a deal.
“They really did get us a place at the table,” Shoff said.
Negotiations began in April. After multiple delays during the summer, a deal was finalized Nov. 2 during an 11-hour meeting at a law office. That was followed by a celebratory dinner at Blue Heron, a French restaurant in Springettsbury Township. The sale officially closed Nov. 4. Shoff declined to disclose final terms.
The job remains the same
As part of the deal, Capway Automation took over the assets and intellectual property of its Dutch sister company. Operations, though, are now based in York, with no outside ownership. The company employs about 45 people at two buildings in York. Annual revenue in 2016 is expected to come in between $8 million and $10 million.
Now that the journey is over, the partners are adjusting to life as business owners. After slightly more than a month, they say they find it no different from being employees.
Their jobs remain much the same, but some things inevitably have changed
For Scott Swaltek, who oversees engineering, it means spending more time with his co-owners. “It’s like I have a second family, so in that way it’s different,” he said.
Lori Rhine, the finance chief, has to close out two sets of books for 2015, one for the old company, one for the new.
Dan Crabill, in charge of manufacturing, acknowledged the ownership role is a bit more stressful. But he’s proud to have protected U.S. jobs.
Another difference is the new owners’ approach to the workforce. Among their first steps as owners was giving everyone except themselves a raise: an extra $1 per hour for hourly employees and about $40 per week for salaried workers. It was the first raise employees had gotten in three years, said Robert Harrington, who heads up sales and marketing,
“As we get better,” he said, “we’ve got to share.”
The week ahead
The big raise on people’s minds this week is the one being contemplated by the Federal Reserve Board. The Fed meets Tuesday and Wednesday and will consider bumping up a key interest rate, likely making borrowing more expensive for everyone.
Does that make it a good time to start a bank? Find out in this week’s Business Journal. Staff reporter Michael Sadowski talked to the Lancaster County-based buyers of bankrupt Stonebridge Bank to get a sense of their plans for the institution.
We also report on visions for what could become of the Yorktowne Hotel in downtown York, and on one company’s efforts to bounce back from a devastating fire.
The Inside Business section covers business succession planning. Staff reporter Jason Scott updates us on trends in employee stock ownership plans, or ESOPs. George “Hank” Rettew, meanwhile, talks about stepping down from his leadership role at Rettew Associates Inc.
The list is of estate planners.
Find the week’s networking opportunities here.