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Industrial Sales Lead Research (Part 4): The Advantages of Understanding Company Hierarchy

Posted by IndustrySelect on Wednesday, July 15, 2020



Welcome to Part Four of our series on industrial sales lead research. Today we're going to talk about how salespeople can leverage their understanding of a company's family tree. Despite the overwhelming majority of manufacturing companies being privately held, it does not mean that they are not part of a corporate family. For our purposes, family does not refer to ownership by people who are related to each other. We are referring to parent companies that acquire and retain smaller businesses, usually in a related field.

Understanding company hierarchy can give you an advantage in generating sales in the manufacturing sector. 

Acquisition Benefits

There are numerous reasons for acquiring these smaller businesses. One of the more often cited purposes is to reduce competition in a given marketplace. If company A is competing with companies D and G, they can gain a significant advantage by folding one of them into their own holdings.

Beyond competition, there is also the immediate increase in experience. In specialized fields, finding people who have decades of hands-on knowledge can be difficult and expensive. When a child company that already has those individuals employed is purchased, the parent company immediately gains that knowledge and experience as well.

Sometimes an acquisition is done to help a struggling company as well. Occasionally, a smaller business will encounter financial, managerial or other difficulties. Left to their own devices, survival may be questionable. A large enough umbrella company may decide to rescue the troubled firm knowing that with just a little bit of help, profitability and market share are nearly guaranteed. This is often the case with extremely specific companies that are very sensitive to fluctuations in their market.

Caterpillar Case Study

The benefits of acquisition can be seen in Caterpillar Inc. and its diverse but relevant portfolio of businesses. Caterpillar's focus on construction vehicles and heavy machinery has been strengthened by the acquisition of companies like PerkinsAnchor and Progress Rail. These firms had long-standing histories in manufacturing various parts such as off-highway diesel engines, hydraulic accessories, locomotives, rolling stock and railway maintenance equipment. By acquiring these companies, Caterpillar positioned themselves to not only support critical businesses but also to enjoy a sizable market share of multiple industries.

How to Discover Company Lineage

Understanding the family tree of large corporate entities can be confusing. Relying on websites may not give the data you need since they may list the parent firm prominently with little to no mention of the “child” business. On the other hand, there may be no mention of the parent firm whatsoever. This may leave you with inaccurate or incomplete information that can torpedo a critical meeting or conversation.

Not having access to accurate and concise information about these structures puts you at a disadvantage when trying to generate sales. For example, if you don’t know that a given parent company owns an automotive fasteners business, it would be quite embarrassing to recommend that they work with a direct competitor. Likewise, if you do not know what challenges may be present in all the fields that they are a part of, you could be missing an opportunity to sell based on need.

An Easy Solution

Understanding the need to know what’s going on with these structures led IndustrySelect to offer the family tree feature. This is an extremely useful tool for tracking the lineage and ownership of any company in manufacturing. Not only will it show the parent company, but it also shows all child companies and how they are related to each other. Date of acquisition, headquarters location and critical leadership are also listed. Additionally, in the event that more data is required, a direct link to every company’s full profile is also provided.

Learning about company hierarchy does not have to be complicated. IndustrySelect has a database of 400,000 manufacturing companies, with each one showing its family tree. You'll be able to discover details about prospects that your competition is not even aware of. Click here to try out a free demo or watch the video below to learn more about the features of an IndustrySelect company profile and how to use them. 

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