By Edward C. Gregor, International Filtration News, Editorial Advisory Board Chairman
Filtration Group is a global provider of advanced filtration products and systems. The company, owned by Madison Industries, has grown to over 5,300 employees in 26 countries over the past 10 years. With an anticipated revenue of $1.2 billion in 2017, it can be described as the fastest-growing global filtration pure-play. That growth has occurred through acquisition and year-over-year organic growth. I recently spoke with George Nolen, CEO of Filtration Group, who provided insights and company strategies and on-going objectives. Nolen came across as knowledgeable of the nuances and inner-workings of the industry, sharing how Filtration Group intends to access future growth and Filtration Group’s vision to achieve success from a portfolio of filtration companies assembled together as a single entity.
Ed Gregor: First, please comment on your personal background and what brought you to the filtration industry?
George Nolen: I came to Madison Industries and Filtration Group after 26 years at Siemens USA in 2009 and worked with Larry Geis, CEO of Madison, to devise a strategy to select a growth industry to make acquisitions in a “build and hold strategy.” We selected filtration. The industry was fragmented at the time and we felt we could put together companies to operate as a single entity and work together in a synergistic manner for the greater good. After less than 10 years, we now have 5,300 employees with operations in 26 countries and are achieving the organic growth we seek, all working together toward our mission of making the world safer, healthier, and more productive.
Ed Gregor: What have been the biggest challenges of managing such a large number of diverse companies, which appear to be independent of each other?
George Nolen: The key to success is strong leadership and a healthy, productive culture. At Filtration Group, we have strong leadership at each of our divisions that all have been successful in a wide range of industries. I like to think each operating unit runs like an entrepreneurship, while encouraging intra-divisional coordination. When a new customer, opportunity or challenge comes along within one division, we all work together to solve the customer need though our diverse assets. The other key aspect to success is culture. We have a shared culture that drives every interaction with each other and our customers across all our locations. The drivers of that culture are a bias for action, entrepreneurship, and trust. We believe our shared culture, diverse application capabilities, collective R&D and production, along with the entrepreneurial spirit of our people fosters an ability to meet and solve whatever is presented to us.
Ed Gregor: It sounds like you’ve assembled broad and comprehensive offerings in filtration. As you look at the filtration landscape, are there gaps in your portfolio of companies you are focused on filling going forward?
George Nolen: Not so much gaps, as opportunities, as we reach out geographically here and overseas, we see excellent growth prospects across all our offerings as they work together to solve customer needs. Examples include difficult areas like PPBs, purifying the air in spaces that house historic works of art, along with large data center filtration, in addition to unwanted gasses and improved air quality in factories to measure CO2 with reports to customers. In other cases, it may be cleaning the discharge of water, air or paint problems at a customer’s production facility. Our business, as we see it, remains largely a consumable market and we believe we are capable of tackling most anything that comes along, regardless of its nature. Execution is the key.
Ed Gregor: What do you see as the largest potential growth opportunities for the Filtration Group in the next 2-4 years?
George Nolen: As a broad brush, it’s technology and designs, along with growth internally and what’s best for our customer. This includes electronics, such as routers in data centers as I alluded to earlier; areas such as dust protection where there are 60-90-day filter changes as repeat business. And customers are coming to us more and more to solve tough problems in alternative energy systems like fuel cell applications, solar energy and wind energy production.
Our life sciences businesses are growing at a fast clip in all areas. We have unique, patented technology to keep operating rooms healthy for patients, nurses and surgeons that is beginning to grow significantly. We also have transferable technology within that group that is being used in some consumer products that will provide a nice source of growth for us in the next 3 years.
Ed Gregor: Once you’ve identified potential growth areas, how do you go about entering the market?
George Nolen: Each of our businesses has somewhat different technology and core capability, which we overall manage as one business with one mission of making the world safer, healthier and more productive. We have a focused process of evaluating strategic acquisitions, and we employ a 100-day integration process that has proven to be successful in integrating newly acquired companies.
Ed Gregor: Please give me your perspective of future premiums as the industry consolidates. There was a recent acquisition of $4.3 billion. In your view, is the industry trending toward higher valuations for higher profile companies or is this an anomaly?
George Nolen: I’d prefer not to discuss specific situations, but we don’t consider the recent trend an anomaly. The public markets have come to the realization in the last three years that the filtration market is at 90 billion dollars, and a market that is typically 75% consumable offers enormous potential. The dynamics of the market when managed properly offer excellent growth, profit and cash flow. These characteristics are extremely attractive to the market and to larger diversified companies who wish to grow at a healthy, profitable rate.
Ed Gregor: Is there a specific aspect of how Filtration Group operates that uniquely positions you for success. In short, what differentiates Filtration Group?
George Nolen: We stay attuned to solving customer problems. We hire the best talent who are empowered to make decisions in our customers’ interests. And all 5,300+ employees come to work every day with the intent to make the world safer, healthier and more productive. That mission is a powerful motivator and we’re doing it.
Ed Gregor: Thank you. On behalf of International Filtration News magazine, we all wish you continued success, as you progress to your 10th anniversary in 2020.