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.
BTS News
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
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.
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.
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.
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.
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.
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.
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.
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.
Buyer Trends in Lower Mid-Market
Other businesses are a significant market for companies being sold within the lower mid-market.
Case Studies
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.