A Business Builder and a Gentleman
Call it a kinder, gentler approach to capitalism. In the quarter-century since he founded Madison Industries, Larry Gies, ’88 BUS, has grown his company into an international manufacturing powerhouse with annual revenues of $5 billion. Having launched the Chicago-based enterprise with the “buy, build, sell” model prevalent among venture capital and private equity firms, Gies, over time, has morphed Madison’s acquisition strategy into “hold forever” partnerships that mutually benefit customers, employees and the business owners who join it.
Even more striking is the overarching corporate aim. “Making the world safer, healthier and more productive is our ‘why’—and how we connect the dots between what we do each and every day and a higher purpose,” says Gies during a recent interview at Madison’s Chicago headquarters, where he serves as CEO. “We do that through creating innovative solutions that deliver outstanding customer value. We believe that only happens by developing a sustainable culture that is authentic and inspiring to our team.
“Think of General Electric or Danaher or Johnson & Johnson,” he continues. “We’re a corporation. We happen to do acquisitions. But our focus is growing our businesses organically. We want Madison Industries to be here 200 years from now.”
The corporation is privately held by 500 owner-managers, including Gies and his 23-member staff. With 180 facilities in 31 countries and 10,000 employees, the enterprise comprises six vertical areas: filtration; medical; safety and flow; industrial solutions; energy; and indoor air quality. The product rundown reads like a list of good works in progress: surgical tools, inhalers, insulin pumps, firefighting equipment, rescue tools. Task Force Tips, a northwest Indiana manufacturer of firefighting equipment, joined the Madison family in January 2017. “The best decision after 45 years in business was I found Madison,” Task Force CEO Stewart McMillian recently told Northwest Indiana Business Magazine. “A most incredible partner.”
Air quality, clean water, cleaner-running cars, safe medical procedures and a smaller carbon footprint are top priorities for Filtration Group, a Madison company headquartered in Oak Brook, Ill., that Gies says is “really core to what we’re doing today. They are cleaning water, improving air quality, and making medical products and procedures safer. It’s a very important business to the world. The team is building a more sustainable future for their own kids and grandkids. Which is kind of cool.”
“Madison has a unique business model. They look for business owners that don’t want to sell,” says Alan Clarke, president of Jonell, a Mineral Wells, Texas-based company that is part of Filtration Group. “They create an environment that allows you to continue to do what you enjoy doing, and they are willing to inject capital to help you grow.”
Madison’s reputation and track record are both pristine and impressive. “Larry Gies and his team are the only buyers I have ever met that never wavered in what they said they would do, never strayed from their letter of intent, and acted with integrity and honor from start to finish,” attests Eric Menke, a founding partner of the private equity firm Champlain Capital. “I would be comfortable doing my next deal with them on just a handshake.”
Gies calls Madison “a safe haven for entrepreneurs,” offering them capital, ideas and “emotional support” to continue to do what they do best—pursue their passion by building their business. “We think people who are closest to the product … are going to make the best decisions,” he says. “And entrepreneurs who are allowed to ‘do their thing’ are more likely to have an engaged workforce.”
The interview is taking place in Madison’s conference room just outside Chicago’s downtown Loop. Located on the 38th floor of the 500 West Madison skyscraper, the suite seems to float over a cityscape of the river, railroad tracks, towers of steel and facades of terracotta, looking north over the edge of the skyline and into the company’s seemingly unlimited future.
“We’re growing so fast right now—it’s crazy,” says Gies, observing that owners of partner companies are attracted to Madison’s culture, which, along with entrepreneurship, values “a bias for action” and trust. “A bias for action is critical. Problems don’t get better with time,” he says. “If you have a problem, fix it right away. Trust—[built on] honesty and integrity—is the most important thing in life and in business.
“And that’s something that I learned growing up in a small Illinois farming community and at the University of Illinois. You’re only as good as your word.”
The decision to attend Illinois was, for Gies, always a certainty. “My high school wrestling coach tried to talk me into going to Columbia because he knew the wrestling coach there,” Gies recalls with a smile. “And I said, ‘I don’t want to go to New York City.’ For me, the best school in the nation was—and is—in Urbana-Champaign.”
Gies majored in accountancy “because it was the No. 1 program in the country, and I wanted something fundamental that I could use going forward.” He also quickly got involved in campus life. Gies won seats in the Student Government Association and on the Faculty Senate, and held leadership positions with the Beta Alpha Psi accountancy fraternity and Delta Chi social fraternity. “The teamwork at Illinois is so phenomenal,” he says. “I learned that you don’t have to know everything, and you don’t have to do everything. But with a team, you can accomplish truly wonderful outcomes.”
While an undergraduate, Gies served on the board of the Illini Media Company, which publishes The Daily Illini and Illio. “That was a real, running business, and they were going through a lot of change at the time,” he recalls. “It taught me that the product and the customer have to be your focus, and constant communication with all constituents is critical. It was a great experience that I will always cherish.”
Post-graduation life led him to a stint with the professional services firm Touche Ross & Co. (now Deloitte) and an MBA in 1992 from the Kellogg School of Management at Northwestern University. He then spent a couple of years doing operations and acquisitions work with Michael Heisley, a businessman and one-time owner of the Memphis Grizzlies NBA basketball team. “He was buying businesses around the world,” Gies recalls. “I bought a business for him and ran it. Then I naively thought I was smart enough to build my own business, so I started Madison.”
That was in 1994. “When I started the business, I had no cash,” Gies recalls. “I had to borrow $50,000 from a buddy I played football with in high school, who also was in school with me at the U of I. My wife worked three jobs. And I loaded up 10 credit cards.”
With a smile, he adds, “I don’t recommend this approach.”
To fund Madison’s acquisitions and operations, Gies says, “We had to have investors. So we couldn’t just buy and build; we had to sell in order for the investors to get a return. I never enjoyed saying goodbye to a business that had become part of who we are, or a team of employees with whom we had developed strong bonds. We eventually sat down together as a team and decided we wanted to build our legacy—something truly remarkable that would long outlast us. So we stopped selling businesses.
“And when we stopped that and started doing what we do today, that’s when everything just started to jell. And Madison Industries will now outlast me, if we build it right.”
Paying it Forward
How a history-making gift will transform the UI College of Business
In October 2017, the University announced a stunning gift of $150 million from alumni Larry and Beth Gies, ’89 aces—the largest ever received by Illinois—to the College of Business, which has since been named for him and his family.
“I believe education is the differentiator,” Gies says. “From a global standpoint, it allows all of us to attain a higher standard of living, be more tolerant, work more closely together, create more opportunities for those in need, and make the Earth more sustainable. With education, people are better able to communicate, and those communications can lead to wonderful opportunities going forward.”
A long-time supporter of The Gies Campus of Chicago Jesuit Academy, an all-scholarship school for African American youth from Chicago’s West Side, Gies also has demonstrated his commitment to education by teaching entrepreneurial classes at Illinois and traveling to campus every semester to talk with students. “It’s inspiring,” he says. “I learn as much from them in those sessions as they learn from me.”
For Jeffrey Brown, dean of business at the University, Gies is “the kind of donor everybody dreams about.” The unrestricted $150 million gift is a vote of confidence for Brown’s plans to build the College into the nation’s most innovative business school.
Accessibility is a top priority. This fall, scholarship support for UI business undergraduates will increase by approximately 40 percent thanks to Gies, who wants to ensure that talented students can attend regardless of family financial circumstances. Innovation also is important. Gift funds are targeted in the College’s forward-thinking programs, which range from a curriculum focused on action learning to an iVenture Accelerator, which allows student entrepreneurs to grow their startups while still in school. The third priority is funding for faculty positions and research.
Brown presented Gies with a gift opportunity in support of the College in August 2017. After he received Gies’ astounding response, the dean says, “We asked Larry if we could put his name on the College.” The proposal took Gies and his family “some time to get used to,” Brown recalls. “They have done most of their prior philanthropy quietly.” Brown convinced them by making the case for branding.
“Among the top 20 business schools in the country, we were the only one that didn’t have a name,” Brown says. “And now we do.” —M.T.