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."
Looking Back to Plan the Future
As one year closes; another is just beginning. It is an excellent time for company owners to consider the options for what is next.
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.
PEI Cites 8 Attributes of Quality Deals
Quality deal flow is among the top concerns for M&A advisors. A recent blog posted by Private Equity Information offers 8 key attributes of “quality deals.”
In an M&A Program: Why Consider a Business “Carve Out”?
An M&A program need not be limited in the search to the complete acquisition of a company.
The BIA Report on Consumer Confidence
"NH consumer confidence remains high" according to the latest BIA Survey conducted October 10 and October 18, 2018 by the UNH Survey Center.
Business Transition Snippets
Here are a few observations we culled from sources we regularly review that relate to business transitions.
What to expect in the LOI exclusivity period
A question that often emerges when reviewing proposals for acquisition with owners is the exclusivity period.
Growth through acquisition isn't just for the big companies
Growth through acquisition Is a valid strategy for businesses in the lower mid-market as well as the mid-market.
The exit decision- timing and issues
When should a business owner start thinking about planning their exit? Early! This is a high-stakes decision and should not be first contemplated when it is imminent.
April PEG investments
It is interesting to watch trends in private equity investments. In general, they reflect confidence in the value of making things. Transactions give insights on the broader acquisition environment, p
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.