Manufacturing Company Sale Named Deal of the Year
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.
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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.