Banner

< Return to News Articles

A Good Process Gets Results

Companies in the lower mid-market often are surprised when they attract attention from larger entities, even those whose balance sheets dwarf the target.

I moderated a panel discussion on Strategic Sales at the May M&A Source conference. The session looked at three case studies:

  • A small regional bread company in the organic space sold to a public company
  • A transportation company with $1M in revenues sold to a $3B conglomerate
  • A gluten-free baked goods company acquired, built and then resold

Why do small companies attract this kind of interest?

Small companies often are more agile.

Large companies have difficulty innovating quickly enough to capitalize on trends. Two of the case studies were in sectors previously considered alternative but now considered mainstream: organic and gluten-free.

In an article in Food Dive, Carolyn Heneghan notes that consumer tastes are rapidly changing and popular brands are losing their luster to new products. Big food companies need innovation and sometimes find it more efficient to buy a company than start from scratch.

Small companies often have a desirable market niche.

In the transportation company case study, the operator had developed deep inroads in a foreign market. The buyer group wanted to reach that market quickly. It was more productive to buy the tiny company than to start from scratch.

A good M&A process is critical.

With the bread company, the advisor worked with owners to delay a sale for over a year while the production methodologies, distribution network and internal operations were fully documented and put in order to satisfy an acquirer.

With the transportation company, the M&A advisor insisted on preparing a full sales information package even through there was really only one logical buyer. It would have been tempting to just rely on an exchange of documents. But the information package helped show the opportunity clearly to the ultimate buyer.

With the snack enterprise, the investment group developed a detailed growth plan and then worked with the management team to rapidly ramp up production and sales. The company went from $7 million in sales to over $120 million within three years.

These results are extraordinary, and can’t be duplicated in every case. However, they illustrate the value of a good advisor and a good M&A process.

< Return to News Articles

BTS News

  • M&A Trend Impacts Smaller Companies Too

    M&A Trend Impacts Smaller Companies Too

    Lower mid-market company sales are often influenced by larger M&A deal flow. A recent article on the Forbes website illustrates this point. Here’s why.

    Read more >

  • New Chapter for Polartec

    New Chapter for Polartec

    Many in New England will remember December 11, 1995 the day that Malden Mills, the maker of PolarFleece® and the employer of thousands, burned to the ground. The company made headlines again June 12.

    Read more >

  • A Good Process Gets Results

    A Good Process Gets Results

    Companies in the lower mid-market often are surprised when they attract attention from larger entities, even those whose balance sheets dwarf the target. Why do small companies attract this kind of in

    Read more >

  • M&A Tip- Make Sure We Know Your Goals

    M&A Tip- Make Sure We Know Your Goals

    It’s a good idea for owners to be clear about their goals when discussing the sale of their company with the M&A advisor.

    Read more >

  • M&A Advisor Tip: Intangibles Matter

    M&A Advisor Tip: Intangibles Matter

    Intangible assets can play a significant role in your business value. While these may not take physical form, they can be legally identified and transferred. It can be a hard exercise, especially w

    Read more >

  • Selling Your Business? Get Clear About Why

    Selling Your Business? Get Clear About Why

    We regularly have conversations with owners about selling. As part of these discussions we take time to talk about the ‘why’. This almost always leads to one of ten core factors, each of which req

    Read more >

  • Successful Acquisition Hinges on More Than Strategy

    Successful Acquisition Hinges on More Than Strategy

    In the current labor environment, it can be difficult to grow a business. Instead of hiring the talent you need to fuel organic growth, growth through acquisition can be another way to expand.

    Read more >

  • Three Things to Check

    Three Things to Check

    When you are preparing for a possible transition and sale, lots of things come to mind. Before you get too far along the path to dreams, consider these three things when preparing for the transaction.

    Read more >

  • What’s the M&A Outlook?

    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

    Read more >

  • Why an IOI can help get a better LOI

    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.

    Read more >

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.

    Read more >

  • 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.

    Read more >

  • 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?

    Read more >

  • 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.

    Read more >