What’s the Best Option for my Business?
Business owners have a wide variety of options open to them. Which option to choose depends on their goals and objectives. A few Tuesdays ago, a group of business owners joined us at our fall master class that focused on transition options and the experience of those who have taken action.
Sale to a Third Party.
EndurID founder Bob Chadwick said he wanted to make a full exit within a few years so decided to sell now rather than wait until he reached retirement age. In addition, the business had become much more technical and to take it to the next level was going to require some new expertise. He met with BTS Director John Howe and Ken Schaefer after completing the Sellability Survey on the BTS website.
Chadwick ended up selling in 2017 to Capital Resource Partners of Boston. The North Hampton company manufactures and distributes customizable wrist bands for use in medical facilities, corrections and other settings. These bands are printed by end users at their facility on their own printers. Information contained on the bands is customizable.
Chadwick explained the mixture of emotions that come with handing over control to new owners, but also continues to have a close view of the operation as a member of the Board of Directors. He remains a part owner, and has been active through a two-year transition. He worked with BTS to prepare and then sell the company. He is now able to take more time off, spend more time on his boat and now realizes he needs a bigger boat to travel to the destinations he wants to reach.
Growth through Acquisition
CAI Technologies has grown steadily in recent years, largely through organic expansion. But last year, it was ready to be proactive: look for a business to buy in a related field. It retained the BTS team to identify prospective targets, negotiate agreements and ultimately help it acquire two companies: GIS Mapping and a division of James W. Sewell Company.
The deals helped the northern NH firm increase its footprint substantially while remaining based in the rural North Country since its services are web-based.
CEO Franco Rossi, along with financial advisor William Bedor, CPA, said the process used by BTS and acquisition advisor Mark Lagasse enabled the company to do a search, locate several possible targets and ultimately complete deals within a year.They said the integration has gone smoothly and that the acquisitions have met expectations, both financially and strategically.
Who Are the Buyers?
What are new owners like who are purchasing lower mid-market companies in the region? Two examples are Michael Donovan of East Range Partners, and John Dalton of Industrial Device Investments of Tennessee. Both made acquisitions through BTS.
East Range was formed after the principals graduated Harvard Business School. They decided to avoid Wall Street and instead focus on buying a business. They purchased Pure Flow, experts in high purity water, which is based in Peterborough but serves the industrial and medical community throughout New England. They have made two acquisitions since, including Atlas High Purity Solutions in Braintree.
Industrial Device Investors last year acquired Materials Research Furnaces of Allenstown, a manufacturer of high temperature vacuum and controlled atmosphere furnaces used widely by manufacturing companies and research facilities around the globe.
John Dalton, the principal at IDI, said the firm remains strongly committed to acquiring technical companies that provide sophisticated engineering solutions to end markets. IDI made connection with BTS at an annual M&A conference, and became strongly interested in the NH-based furnace company after reviewing the confidential information memorandum provided by BTS.
Owner Master Class
These discussions were part of the Owner Master Class presented in late September to business owners focusing on transition options. The program, held at Manchester Country Club, was attended by approximately 30 people. Also discussed were current M&A market trends for private companies; valuation methodologies; and an overview of available transition planning options. BTS is making plans for a similar session in the spring of 2020, and owners with interest are encouraged to email BTS@bts-m-a.com to get on the mail list.
BTS News
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Buyer Trends in Lower Mid-Market
Other businesses are a significant market for companies being sold within the lower mid-market.
Case Studies
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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.
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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.
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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?
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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.