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.
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.
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.
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.
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.
"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.