May 28, 2024

Driving Growth: A Look Back at KGM's Partnership with Compass Group

Compass Group recently completed a successful exit of KGM, a prominent distributor of regulators, valves, and measuring equipment, after partnering together in 2021. In a few short years, KGM experienced remarkable growth: more than doubling revenue, expanding its national presence and product offerings, and creating new opportunities for employees across the organization. From the initial conversation between KGM CEO Tim Wood and the Compass team, to positioning the business for its next leg of growth, here's a closer look at some of the milestones achieved together.

Partnership

The initial conversation about a partnership between KGM and Compass Group took place around Tim Wood's kitchen table with his wife, Nancy. The Compass deal team, comprised of Chris Gibson, Bobby Bryan, Ryan Roepke, and Cristobal Gonzalez, had spent over a year doing thematic research in the Testing & Measurement space and identified KGM as an attractive partner with a successful track record and multiple opportunities for continued growth. This thematic approach and understanding of the industry resonated well with Tim and Nancy. Similarly, the Compass team loved Tim’s style and together laid the foundation for a successful partnership while riding around the property on Tim’s UTV. Reflecting on the meeting, Bobby Bryan said, "Our first in-person meeting was fantastic. Tim and Nancy invited us into their home and treated us like family. We felt like we had great rapport and believed in the vision Tim outlined for KGM, which set the tone for a strong and successful partnership."

M&A

Since the start of the partnership with Compass Group, KGM's footprint has expanded significantly across the United States. By leveraging Tim’s longstanding industry relationships and our own market research and experience in the space, KGM successfully completed three strategic add-ons with MarieCo, Bartlett Controls, and Nelson Technologies to strengthen the team and expand its operational reach and capabilities.

Organic Growth

Through consistent quality performance and being an early leader in the shift to a stocking distributorship model – and attractive feature for OEMs – KGM was awarded multiple new territories and exclusive access to new product offerings. From operating in 20 states pre-partnership to now serving 40+ states, KGM has successfully entered into the Mid-Atlantic, Southeast, and upper Midwest regions. All locations work collaboratively to provide comprehensive service offerings to meet customer needs.

KGM's organic growth translated into new opportunities for employment, leading to the creation of more than 20 new jobs. These roles span across many functions, from Human Resources to Sales.

Strengthening the Executive Team

To better support CEO Tim Wood, KGM made two strategic appointments within its management team: the promotion of the Head of Sales to President and the hiring of a CFO. After bringing on a CFO, Tim was able to increase focus on overarching strategy and growth initiatives. "Before partnering with Compass Group, I was stretched thin handling multiple job functions due to limited staff and resources," said Tim. "Thanks to their support, I was able to focus on building my team and doing what I love most, which is growing the business."

Embracing Professionalization

As part of its continuous improvement journey, KGM made many investments in people, process, and systems to further grow the business. This includes the creation of a human resources department tasked with organizational development and establishing policies and procedures to ensure consistent quality and management across the platform, all critical to achieve successful integration of the newly acquired businesses. For the sales team, KGM introduced an incentive plan where none had previously existed and saw immediate results in top-line growth. Additionally, KGM bolstered its financial reporting and analysis firepower by implementing a new ERP system and developing meaningful KPIs to measure and drive performance. Both efforts have delivered improved visibility into business operations, strengthened financial controls and reporting, and streamlined processes that ultimately lead to better strategic analysis and decision making across the leadership team.

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