Our client manufactures large format magnetic coils. Production is a combination of precision machining and wire coil fabrication. Customers include the semiconductor industry; research universities; particle accelerator facilities including CERN and prominent domestic nuclear research facilities; magnetic imaging devices for medical facilities; commercial water purification; levitation trains; alternative energy uses and more. It is literally a gem of precision manufacturing located in the wilderness of New England.
Our client had developed reliable, repeat business. Profits were substantial, and stable. But reliable revenues, and profits, also looked flat to an acquirer. A growth trajectory, which would be expected by a buyer, would mean change. If retained, the manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings. It would also need a sales team to broaden markets; the owner was the sales department. With customers becoming increasingly sophisticated in their expectations, a more professional structure would be needed. But with retirement age approaching, continuing to build was off the table. Owners didn’t want to miss the window for enjoying free time.
The company was too big to remain small. Yet, it was operating as a lifestyle business – good products, excellent workmanship, excellent customer relationships. The best value would be a sale to a strategic. However, that also could mean unfavorable changes for the skilled staff. A strategic might want to merge the operation into another facility. How could owners best monetize their life’s work and continue earning from a manufacturing facility in the country?
A full information package was developed, tracing its history, performance and financial condition. A key element was the substantial opportunity it represented to a buyer willing to invest in operations and growth. We took the company to market, proactively seeking buyers. Following the traditional M&A process, we reached out to a blend of entities in shoulder industries who might view an acquisition as a good strategic move; private equity firms looking for add-ons to a platform company; and to our own network of high net worth individuals seeking a new opportunity.
We located several strongly interested groups and individuals, but one proposal stood out. It was a Boston-based private equity fund looking for a technical company with involvement in alternative energy markets and other growth sectors. Another factor was the manufacturing plant location, which was within a car drive of the city. Finally, principals had a background in the field and limited partners with connections that could be leveraged to grow. Their bid offered owners the best short term return at closing while also offering them a return for years to come. The fund hired a professional manager to become CEO, and the former owner remained involved as a consultant.
"The entire process went smoothly and professionally. The BTS team kept me fully informed at every step. They worked hard and were effective in bringing the deal home."
"Skip and I continue to be grateful for all you have done to make the sale of Pure Flow come to fruition."
"BTS’s level of expertise in the process and close attention to detail enabled us to successfully navigate the deal."
"These types of transactions are often long and complicated and I doubt it could have been successfully completed without your close ongoing involvement."
"The outside objective point of view that you have brought us has been invaluable as we prepare for the rapid growth."
"John then found the right buyer and coordinated a seamless transition—he doesn’t miss a single detail."
"John immediately identified our strengths and experiences and discussed a business that ultimately was more in line with our goals."
"The BTS team came in, evaluated everything in a professional and thankfully non-threatening manner."
Private Equity Trends
More and more PE firms are searching for smaller transactions. The reason for this is simply competition
Using a Specialist in M&A
While using an industry specialist to market a company may save a few days in preparing the offering materials, there is the danger of a cookie-cutter approach.
Legal Breakfast Series: How I Sold My Company - A Case Study
Attorney Peter Burger and John Howe of Business Transition Strategies will be the featured speakers during the latest Orr & Reno Legal Breakfast Series on Wednesday, June 14 at the Orr & Reno offices
What's Next Really Matters
The book explores the exits of owners ranging from the good to the bad, from the joyful to the ugly...Often overlooked is the reality that after the closing, everything will be different.
Staying Current to Help Clients
Twice a year we attend a deal expo with private equity groups and strategic buyers...Connections made at this event broaden our list of people who will take our calls, answer our questions, help when
Overcoming Fear of Public Speaking
Communication skills are critical in business, and overcoming fear of speaking is fundamental...it can be the difference between getting a sale or missing out.
P+E+S=EF, a winning formula for Michael Coles
The experience factor is the way a customer feels about a business, and in part determines whether the customer returns or goes elsewhere.
Tailwinds Continue for M&A Deals in 2017
There are good indications that the favorable tailwind continues for M&A activity in the coming year. Key indicators paint a clear picture: buyers are actively seeking opportunities that advance thei
Why Consider a Buy Side Transaction?
There is also a truism when it comes to growth, “It is much faster to grow through acquisition than organically one customer at a time”.
Is 2017 the time to act?
Wrapping up 2016, and considering key initiatives of the year, we see trends that we believe will continue for New England M&A in the year ahead. Key things we are seeing:
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.
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.
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?
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.