Our client company is a processor and distributor of ultra-pure water systems for medical and manufacturing concerns. It works with major institutions and research facilities in the Boston area, and caters to the needs of technology and manufacturing facilities along the I-95 corridor and across New England. It enjoys repeat business and is effective in serving customer needs.
The company designs, builds and installs systems. It also provides the consumable components and ongoing service to maintain ultra-pure water. Customers include dialysis treatment centers, research facilities and manufacturing sites – commercial clients who need the services. The business made this its niche, staying clear of the home market.
The owners invited us to help with an exit strategy. The company had grown remarkably during its three-plus decades. Staff members are authorities in the field, and do their jobs without much direction from management. A media replenishing plant, custom built on the site, remains in excellent shape and is an integral to the operation.
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 (owned by a related entity) remain in use? Recurring revenues and healthy profits made the company attractive. There was a catch, though. Its rural location put it miles from urban areas. The crew was like family, and a sale to a strategic player – who would pay the highest multiple of EBITDA - might require a shutdown of the facility. The experienced staff might have to relocate or lose their jobs.
After a thorough research of the market and exploration of potential buyers, the company was taken to market. Owners received an offer from a strategic group, with a very good price attached, but as feared with the provision that the company would have to be moved. Among the other bidders was a newly-formed search fund. Coordinated by two recent MBA grads from Harvard, the group submitted a proposal satisfactory to owners. And additionally, the principals planned to actively run the company and wanted to live in a rural area.
We facilitated a thorough diligence process with records provided via our data room. This enabled the owner to stay focused on business. One concern was ability to finance the deal. But since there were limited partners, with substantial resources available, it was not a problem. Several banks competed for the transaction.
Owners received a satisfactory price. They provided transition training and assistance. The buyer group leased the facility for years into the future, an added benefit to owners. The staff was retained and new jobs created. Interestingly, after operating the business for a while, the fund owners purchased a second company in a similar business and are on track for long term growth.
"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."
What’s the M&A Outlook?
The intense pace of mergers and acquisitions that shaped the Lower Middle Market last year is likely to continue through 2019, according to the most recent Market Pulse survey. The survey is a join
Why an IOI can help get a better LOI
We generally include an Indication of Interest (IOI) in our sales process. This is not the same as an LOI – letter of intent - but is still an important part of the sales process. Here’s why.
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.
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.