Growth Through Acquisition in the Lower Mid-market
Growth through acquisition has been a strategy largely used by mid-sized and larger companies for years. Now firms in the lower mid-market are getting into it as well.
Under this strategy, a company buys another entity for reasons that include:
- building market share
- gaining access to a new market
- getting special skills or services offered by the target
- to get access to skilled personnel in an increasingly tight labor market
An acquisition can greatly compress an organic growth strategy which could take years and major strategic investments to accomplish.
We are seeing smaller companies in the region achieving scale more quickly with acquisitions, one of which is referenced in the second article in this newsletter where a N.H. company acquired part of a Maine entity for just this reason.
This process involves targeting competitors or related entities for acquisition. When another company is purchased and combined with the acquiring entity, the result is a larger, more dynamic business. The goal is to grow the top line, and then - through efficiencies, market expansion, greater customer reach – to grow the bottom line for the combined entity as well.
Owners engaging this strategy should have the long-term in mind. It may take months or years to fully achieve the potential value.
There is an added benefit to the new ownership: the company is larger and more likely to be of interest when the time comes for a sale.
Our team will work with owners and other advisors to plan out and initiate such a strategy.
BTS News
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Manufacturer Sold and New Owner Expands It
BTS served as advisor in the sale of PlasTech Machining Fabrication, Inc. to DelCam Holdings in 2020...the company has grown substantially, doubling employment and adding capacity to boost future prod
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How M&A Will Respond to Next Recession
The takeaway for business owners: Get back to basics. Don’t worry about hyper growth. De-risk your company as much as possible.
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Perception vs Reality with Small Businesses
Sometimes the economic picture on the news seems inconsistent with what is happening for many business owners. Nearly every owner we speak to is out straight.
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NH-Based Techinical Manufacturing Company Sold
Hampshire Controls has a bright future with new ownership. The company was recently sold by Diane Rush, owner and president, to Pillar Imaging and its leader Dr. Michael Pilon.
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Be Ready When You Are Ready
When a business owner says it’s time to sell, I ask, “How fast do you want to be out?” The answer I hear most is, “Yesterday.” But sellers underestimate how long the process takes.
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Looking at a Sale Through the Right Lens
Sometimes our vision about the future is blurry because we aren’t considering the whole picture but only parts of it.
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5 Deal Points from the Trenches
Today I work with clients of Business Transition Strategies who are implementing Growth Through Acquisition strategies. Here are a few observations from working on a wide variety of projects.
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Tax Changes Could Hurt Net Proceeds
Changes proposed to the capital gains tax suggest they may need to get 30% more in a transaction in the future just to net the same value they would get today.
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Good Ideas From Shark Tank Deal
One of my colleagues in Cornerstone Alliance was front and center in a recent Shark Tank exercise. A business that had been sold was put in front of four potential buyer groups.
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Buyer Trends in Lower Mid-Market
Other businesses are a significant market for companies being sold within the lower mid-market.
Case Studies
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Precision Machining Company
Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.
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Green Product Company
Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.
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Water Purification Company and Young Buyers
Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?
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Magnetics Company with High Profile Customers
(T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.