Many companies perform complex, highly technical work and require special treatment when it comes to a transition and sale. A good M&A process, managed by advisors who stay current with trends, participate in continuing education and remain involved in professional groups can make the difference.
Such was the case for Materials Research Furnaces, a N.H. based producer of high temperature furnaces used in manufacturing processes as well as research facilities.
Peter Sanborn, the second-generation leader of the Allenstown company, hired Business Transition Strategies to help sell the company. That was accomplished in late 2018 when Industrial Device Investments, a Tennessee manufacturing investment fund with a long-term outlook, purchased the company.
In November, BTS and IDI were presented the M&A Source Deal of the Year Award at the organization’s 2019 conference in San Antonio. The award recognizes a sale completed with an investment group or private equity fund initiated at one of the merger and acquisition organization’s bi-annual Deal Marketplaces.
BTS introduced Materials Research Furnaces to IDI principal John Dalton at the 2018 spring conference in Charlotte.
At the same conference, Dalton took a course taught by BTS Director John Howe on selling manufacturing companies. The course made reference to another NH company – Technicoil – which was sold by BTS to Capital Resource Partners of Boston several years ago. The technical nature of that transaction intrigued Dalton, which led to a sidebar conversation after the class ended.
The next day, the MRF offering was discussed in greater detail with IDI representatives by BTS representatives Howe and Ken Schaefer during a meeting at the Private Equity Marketplace, which the two participate in regularly.
With an NDA in place, a confidential information memorandum was provided by BTS. Several weeks later, IDI indicated strong interest in becoming one of several groups to submit an acquisition proposal with an indication of interest letter. IDI ultimately delivered the best LOI proposal for acquisition. The deal closed roughly one year ago.
MRF units are used by ceramic and refractory metal engineers around the globe. Its furnaces are used for sintering, crystal growth, hot pressing, physical testing, annealing, vacuum brazing, heat treating and many other applications. Units reach temperatures up to 3500° C.
It was a good fit for IDI, which focuses on highly technical products. It intends to keep the company based in New Hampshire.
MRF was represented by Concord law firm Orr & Reno and Graham & Graham CPA. IDI received transaction assistance from Atlanta law firm Nelson Mullins Riley & Scarborough and Concord accounting firm Nathan Wechsler & Co.
"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."
Dealing with risks in a company sale
The passing last week of Harvard Business School professor Clayton Christensen – famous for his theory of business disruption - is a good time to consider business risk.
M&A Advisor Tip: Earnouts Can Break a Deadlock
Earnouts can be used to address a perception of risk faced by a buyer. They also are used to bridge a valuation gap between a buyer and a seller.
Changes by owners helped a sale
Owners considering selling can look at the experience of a N.H. company for ideas of what to do to increase their chances for a good transition.
Advisor Tip: Don’t lose your focus
Don't let those future plans distract you from what's going on today.
Growth Methods Used by Buyers
We often hear from founders who feel they have hit the ceiling with what they can do with their companies. Buyer groups in the market see this as an opportunity.
Manufacturing Company Sale Named Deal of the Year
In November, BTS and IDI were presented the M&A Source Deal of the Year Award at the organization’s 2019 conference in San Antonio.
A Better Option to the Unsolicited Offer
The call came out of the blue. It was a group interested in buying the business. They needed information. Your company was a perfect fit. Just send us some details and we will be in touch.
M&A Advisor Tip - How to Answer Questions
As you start the sale process, you may be holding offsite meetings and fielding confidential phone calls. Even a subtle shift in activity can cause savvy employees to wonder, ‘What's up?’.
What’s the Best Option for my Business?
Business owners have a wide variety of options open to them. A group of business owners joined us at our fall master class that focused on transition options and the experience.
M&A Advisor Tip - When You Can't Fix Customer Concentration Issues
As a general rule, no one customer should account for more than 20-25% of your company revenue.
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.