When businesses consider a growth through acquisition or merger effort, generally most consideration is given to target businesses that offer the same goods and services. This is logical since it would add market share or increase their geographic footprint.
However, another target consideration is a “carve out” from an established business. “What is a business carve out?” It is the merger or acquisition of a buyer, or the sale or divestiture of a seller, of a specific division or profit center of a business.
Business entities will carve out divisions in order to better focus on their core business or simply to raise cash for other purposes.
An M&A program need not be limited in the search to the complete acquisition of a company. There may be a current market participant that wishes to sell or divest an operational division to someone who will not compete with the seller’s core business.
Mark Lagasse is working with companies in the Northeast considering strategies to grow through acquisition. He brings to engagements 30 years of accounting and operational management experience including 25 years of pre and post-acquisition planning, financial and operational due diligence, and post-closing integration.
Business Transition Strategies is a buy-side and sell-side lower middle market transaction advisory firm. If you have any questions about implementing a buy-side strategy or add-on target search, please contact us.
BTS News
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Good Ideas From Shark Tank Deal
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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.