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."
How M&A Will Respond to Next Recession
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Perception vs Reality with Small Businesses
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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.
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.
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.
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.
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.
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.
Buyer Trends in Lower Mid-Market
Other businesses are a significant market for companies being sold within the lower mid-market.
Things to Consider in Transition Thinking
As a business owner, you have to consider the role you want to play in the business in the immediate future following a sale and how that could impact the sale.
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.