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Archive for Saturday, January 13, 1990

SATURDAY COLUMN

January 13, 1990

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Earlier this week spokesmen for Hall-Kimbrell, the Lawrence-based environmental testing company, announced approximately 40 to 45 employees were receiving notices of termination. It was not a pleasant task for Hall-Kimbrell officials and it probably came as a shock and bitter experience for those particular employees.

This action came about as a result of the recently announced acquisition of Hall-Kimbrell by Professional Service Industries, Inc., of Chicago. PSI is part of an even larger company with operations throughout the world.

The acquisition of Hall-Kimbrell is one of a relative few cases where a Lawrence firm has been bought by an out-of-town or out-of-state company, and the fall-out of such business transactions either can be good or bad for the company which has been absorbed. In every such situation, whether in Lawrence or elsewhere, spokesmen for both the buyer and seller usually say something like the merger in question is good for all parties and that in the long run the new, merged operation will result in an even better, more efficient business. They talk about little being changed within the newly acquired company, that few individuals will lose their jobs due to the merger and that most all operations will remain pretty much the same under the new ownership.

All such statements usually are made with the utmost sincerity. However, in most all mergers, no matter what kinds or sizes of companies are involved, there are offices or individuals which duplicate efforts of others. In these types of situations, there is the need to trim or eliminate some personnel and/or business operations.

This is the case with Hall-Kimbrell as there were duplications, and apparently good business judgment called for trimming the work force.

At the same time, there is reason to believe the merger could result in an eventual net gain of jobs in Lawrence for the Hall-Kimbrell division of PSI. Although nothing is guaranteed, there is the possibility some PSI operations may be moved to Lawrence from other parts of the country. Many factors will be involved in any such decisions, but according to some at Hall-Kimbrell they have been led to believe additional testing laboratories may be shifted to Lawrence. Hopefully, this will prove to be the case.

Although Hall-Kimbrell officials are careful in detailing events which led to their decision to sell to PSI, there are several known facts:

Hall-Kimbrell had been recognized as one of the nation's fastest-growing companies.

In such fast-growth situations, it is quite common for a company to enjoy tremendous growth but along the way fail to build a company infrastructure which can handle all facets of such growth.

Hall-Kimbrell officials were not hesitant to acknowledge their company was weak in the business-management area.

And, in the case of companies that have looked like shooting stars in their growth patters, there also is a high probability of these same companies looking like falling stars within a relatively short time. For whatever reason, the time frame on these business curves often runs in the seven-year range from take-off, soaring growth and then a bad crash.

Hall-Kimbrell officials did not want to see their company crash. They received a number of inquiries from other companies about possible purchase, but, for one reason or another, company officials did not feel comfortable in selling. Finally, and very recently, PSI made an offer which seemed to fit well with Hall-Kimbrell owners.

It didn't take long for the deal to be finalized with one of the primary factors being that unless a merger/acquisition with a company such as PSI could be negotiated, there was a chance Hall-Kimbrell could be added to the list of super growth companies which could not sustain or handle the growth and eventually crashed.

Although the likelihood of terminating the jobs of 40 to 50 persons was quite unpleasant, the alternative of possibly having to close down and terminate the jobs of more than 400 persons was even more unacceptable.

So, Hall-Kimbrell owners OK'd the merger, with both parties agreeing to certain conditions such as retaining the name of Hall-Kimbrell, employing the use of professionals in trying to help find jobs for those who were to be terminated, the firm remaining in Lawrence for a certain number of years and the possibility of new labs and testing equipment being moved to Lawrence.

Only time will tell whether the deal works out as well and as successfully as all parties envision at this time. Part of this will depend on the continued excellence of work done by Hall-Kimbrell people, part will depend on how well PSI officials like the work being done in Lawrence by Hall-Kimbrell people, the profitability of the Lawrence division and how PSI perceives the overall environment of Lawrence as the site for one of their divisions. If these officials like Lawrence and if they think Lawrence is a good city in which to be located, chances are they will give serious consideration to enlarging this operation.

There is nothing guaranteed, however, at this time. It's a new marriage and there are a lot of factors or conditions that must work out to everyone's satisfaction.

Aside from this, the PSI/Hall-Kimbrell deal gives local residents a front-row seat to what is happening with increasing frequency around the country: consolidations, mergers and acquisitions with fewer and fewer independent, stand-alone companies surviving in these times. It is happening in all fields of business and, in most all situations, there are bound to be some unfortunate, painful spin-offs, such as the loss of jobs.

No single factor can guarantee newly merged companies will be winners and that the dreams, plans and justifications for acquisitions and sales will come to fruition.

Hall-Kimbrell has enjoyed a superior record in a relatively short time frame, and it is hoped the just-completed acquisition/merger will prove to be a winning move for all parties.

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