Banner

< Return to Case Studies

Magnetics Company with High Profile Customers

Private company with great potential

Our client manufactures large format magnetic coils. Production is a combination of precision machining and wire coil fabrication. Customers include the semiconductor industry; research universities; particle accelerator facilities including CERN and prominent domestic nuclear research facilities; magnetic imaging devices for medical facilities; commercial water purification; levitation trains; alternative energy uses and more. It is literally a gem of precision manufacturing located in the wilderness of New England.

Possibilities and Concerns:

Our client had developed reliable, repeat business. Profits were substantial, and stable. But reliable revenues, and profits, also looked flat to an acquirer. A growth trajectory, which would be expected by a buyer, would mean change. If retained, the manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings. It would also need a sales team to broaden markets; the owner was the sales department. With customers becoming increasingly sophisticated in their expectations, a more professional structure would be needed. But with retirement age approaching, continuing to build was off the table. Owners didn’t want to miss the window for enjoying free time.

The Challenge:

The company was too big to remain small. Yet, it was operating as a lifestyle business – good products, excellent workmanship, excellent customer relationships. The best value would be a sale to a strategic. However, that also could mean unfavorable changes for the skilled staff. A strategic might want to merge the operation into another facility. How could owners best monetize their life’s work and continue earning from a manufacturing facility in the country?

The Plan:

A full information package was developed, tracing its history, performance and financial condition. A key element was the substantial opportunity it represented to a buyer willing to invest in operations and growth. We took the company to market, proactively seeking buyers. Following the traditional M&A process, we reached out to a blend of entities in shoulder industries who might view an acquisition as a good strategic move; private equity firms looking for add-ons to a platform company; and to our own network of high net worth individuals seeking a new opportunity.

The Outcome:

We located several strongly interested groups and individuals, but one proposal stood out. It was a Boston-based private equity fund looking for a technical company with involvement in alternative energy markets and other growth sectors. Another factor was the manufacturing plant location, which was within a car drive of the city. Finally, principals had a background in the field and limited partners with connections that could be leveraged to grow. Their bid offered owners the best short term return at closing while also offering them a return for years to come. The fund hired a professional manager to become CEO, and the former owner remained involved as a consultant.

< Return to Case Studies

BTS News

  • Looking at a Sale Through the Right Lens

    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.

    Read more >

  • 5 Deal Points from the Trenches

    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.

    Read more >

  • Tax Changes Could Hurt Net Proceeds

    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.

    Read more >

  • Good Ideas From Shark Tank Deal

    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.

    Read more >

  • Buyer Trends in Lower Mid-Market

    Buyer Trends in Lower Mid-Market

    Other businesses are a significant market for companies being sold within the lower mid-market.

    Read more >

  • Things to Consider in Transition Thinking

    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.

    Read more >

  • Spring Cleaning is Good for Business

    Spring Cleaning is Good for Business

    May is a good time for spring cleaning, especially at your business. It is a good time to look at your business as though you were in the throes of due diligence. Here are a few areas to consider.

    Read more >

  • Planning Ahead for a Sale

    Planning Ahead for a Sale

    As you start thinking about selling your business, it is important to engage with someone who can coach you. There’s a lot of value you can create over the final years before you sell.

    Read more >

  • Economist Suggests Business Owners Sell by 2024

    Economist Suggests Business Owners Sell by 2024

    Economically speaking, COVID-19 was a “natural disaster.” That’s according to Brian Beaulieu, CEO and chief economist of ITR economics.

    Read more >

  • Update on PlasTech Machining and Fabrication

    Update on PlasTech Machining and Fabrication

    PlasTech Machining of Dunklee Road in Bow, a company recently acquired by DelCam Holdings, is in the process of rebranding with a new website www.PlasTechFab.com and expanded social media exposure.

    Read more >

Case Studies

  • 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.

    Read more >

  • 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.

    Read more >

  • 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?

    Read more >

  • 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.

    Read more >