TAM International is a freight forwarding and logistics provider specializing in shipments of radioactive material. Based in Saskatoon, the company also has offices in Europe, India, and the US. Kurtis Hinz, TAM International’s CEO, and Johanna Salloum, a partner at PFM Capital, discuss a recent investment that PFM made in TAM.
Why did this deal make sense?
Kurtis: TAM was at a crossroads. Our founding partners were looking at retirement. Our management team entered the mergers and acquisitions process and landed with PFM. The shareholders who would manage the company kept a significant stake and were able to preserve the company’s culture.
Johanna: PFM wanted to back a strong and eager management team. We put a deal together that aligned our interests. We had confidence we’d have a really good working relationship as we move through the next few years of growing the company.
What is the nature of the investment?
Johanna: This was a management buyout. The founders of TAM had for the most part retired, had not been running things day to day, and were looking for an exit. The management team was looking for a way to have a larger stake in the company. We were able to come in and take the place of the founders and structure it in a way that provided management with more equity.
A successful partnership requires a strong working relationship. This connection starts during original negotiations and evolves naturally over time.
Watch this video titled The Value of a Strong Relationship with excerpts from this conversation between PFM Capital and TAM International.
What unfolded after the financing deal was in place?
Kurtis: It’s like any new relationship. There are things you think you know but you don’t.. What’s been encouraging is that we’ve had an open and honest dialogue. The relationship has been really strong and we’ve had minimal conflicts. What we identified early after the close was the need to lay out the strategic plan. We had big goals for the company and needed to identify what that looks like for us. Not only having them, but what are we going to do to get them?
Johanna: The business started as a three-person operation and has grown significantly with offices around the world. We brought our oversight, where we created a board and a structure, but it did not impede your entrepreneurial strengths. It did not stop anything you planned to do.
Kurtis: The structure encouraged our entrepreneurial strengths. One of the things we realized after the close was PFM’s strong encouragement and commitment that we need to go after these things, we need to find that growth. All those things we were not sure of because of the risk and necessary capital investment – we’re now making those investments. We’ve developed better HR systems and formalized our processes, and hired strong administrative staff to help set the base for the growth.
What’s next for TAM?
Kurtis: We’re excited. We have aggressive global targets in terms of using the expertise we’ve gained in this industry, working with great companies like Cameco here in Saskatchewan that have helped us establish ourselves – our reputation – and moving all that we’ve learned in this industry around the world. That’s where PFM is there to help. If we have acquisition opportunities or if we need to make a strategic investment in certain countries, we can do that because we see growth in this industry.
Johanna: That’s what we’re here to support. Our intent is to continue to back TAM financially if there are good opportunities to invest in.
Kurtis: One of the things that helped as well is diversification. We’ve talked about it quite a bit in our board meetings. The diversification plan we’ve put together is strong and helps us ride out these global economic waves that you don’t have a lot of say in.
Johanna: A lot of companies want diversification, but you have worked through that aggressively this first year, between new geographies and new services.
What advice do you have for owners who require capital?
Kurtis: Ask questions. It can be overwhelming when you are looking for partners with capital and are in a management buyout. Also, what we came back to as a management team is that it is so important to not risk your culture. Don’t risk what got you to where you are for an extra dollar. Make sure the people investing in your company have the vision and the cultural buy-in that you have.
Interview has been edited for brevity and clarity.
First published in the June 2020 edition of The Business Advisor.