March 26, 2013

Soap company owners knew an acquisition was the answer

Eric Ryan and Adam Lowry created Method, an environmentally driven soap and cleaning products company in 2001. The duo knew it would be difficult to break into a market dominated by firms like Proctor and Gamble, but by 2005, Method had grown to $34 million in revenue and 39 employees.

In September, the company was acquired by the Belgian company Ecover – for an undisclosed amount – and helped create what Ryan and Lowry call the largest green cleaning company in the world, with revenue "north of $200 million."

According to Lowry, when the company first started, he and Ryan understood that there were two options available.

"One was to grow organically, which a lot of businesses do, and you control the business and grow slowly and steadily," he told The New York Times. "We fundamentally believed that we would not have success in this competitive space unless we went after it fast and aggressively. So we had to take outside capital. And when we took that outside capital – at some point, you have to give it back with a return."

Lowry added that the mergers and acquisitions process is similar to a marriage. It is important to find someone – or a company – that is compatible and shares a similar vision. He explained that working with Ecover will still allow the Method brand name to exist and the two organizations will not overpower one another. They can reach a broader audience collectively.

While business mergers and acquisitions will occur for different reasons, Lowry explained that he and Ryan understood it was the best option for Method. They needed capital to accelerate growth and get the volume to a place where it would be profitable, he said. Growing organically was possible, but it would have been very difficult, which is why they opted for selling the company.