A Merger of Synergies

Posted by Carl Doerksen on July 21, 2014 at 8:30 AM

Synergy – the term is probably used too much in investment banking circles. I would bet that there are more synergies discussed than actually pan out in the real world. And if you ask a dozen investment bankers to define it, most would come up with the old 2+2= 5 analogy. Synergy is like beauty: tough to define but you know it when you see it.

That’s why I always keep my eyes open for scenarios that are truly synergistic to share with you folks. A merger was recently announced that involved two companies that had been operating as separate portfolio companies for The CapStreet Group, a private equity firm located in Houston that “invests in growing middle market companies in Texas and other Sunbelt states and partners with management to accelerate growth and improve profitability.”

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Topics: mergers, synergies

What is Driving M&A Activity in the Lower Middle-Market?

Posted by Carl Doerksen on July 18, 2014 at 8:30 AM

The International Business Brokers Association (IBBA) and the M&A Source, in partnership with Pepperdine Private Capital Markets Project, conduct a quarterly survey of M&A intermediaries. Entitled “The Market Pulse Report,” the survey gives timely and accurate data regarding trends and issues impacting and affecting the lower middle-market mergers & acquisitions (M&A) industry.

Two hundred fifty respondents from 42 states completed the first quarter 2014 survey. The majority of respondents (54 percent) had at least 10 years of experience in the M&A industry. Participating advisors reported closing 235 transactions in first quarter 2014. The survey revealed several interesting trends, as reported in the Green Bay Press Gazette:

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Topics: middle market, buyer activity

Why is Middle Market M&A Activity Expected to Grow?

Posted by Carl Doerksen on July 16, 2014 at 8:30 AM

This is a question often sent to us by business owners interested in our services. It seems that so many are still under the impression that buyers are still stuck in 2009 and 2010 when acquisition activity plummeted due to the impact of the recession on the financial industry.

The reality is the current environment is better than it has been in years for middle market M&A activity. This assertion was supported by a recent survey by GE Antares Capital.

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Topics: middle market, m&a activity, buyer activity

Key to a Successful Business Sale – Part IV – Get a Professional Evaluation

Posted by Carl Doerksen on July 14, 2014 at 8:30 AM

This is the last in our series of topics relating to some of the key components you need to manage if you are going to find a buyer for your business without professional representation. To recap, our first installment focused on the accuracy of your numbers. Part II examined the importance of doing your research and finding out who is actively acquiring, and the third piece looked at the significance of managing family dynamics during the selling process. Each of these is equally vital to a successful sale and must be managed carefully.

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Keys to a Successful Business Sale – Part III – Family Dynamics

Posted by Carl Doerksen on July 11, 2014 at 8:30 AM

As most of you are aware, this is the third in a series dealing with some key issues that need to be addressed to culminate in a successful sale of your business. Part I looked at the importance of accuracy in your financials. Part II examined the fact that the more research you can do on who is actively buying companies in your industry and more importantly WHY they are buying will allow you to create effective buyer lists.

Today we look at a topic that is far too often not considered pre-sale: family dynamics.

Most business owners who have partners realize how vital (and legally required) it is to have all partners on the same page when it comes to the sale of a business. In reality, even if you are a 100% owner of a company, the dynamics of family relationships play a big role, bigger than most founders consider when they approach buyers.

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Topics: selling a business, exiting your business, succession planning, family dynamics

Keys to a Successful Business Sale – Part II – Identify Active Buyers

Posted by Carl Doerksen on July 9, 2014 at 8:30 AM

This is the second installment in our series that examines the important steps you need to undertake to successfully sell your business. In the first part we stressed realism and accuracy in terms of your base year and projected numbers. We focused on how vital accurate financials are in helping potential buyers believe in your story and have confidence in your future.

Today we look at another important step that too many business owners who enter the market without representation often overlook: doing your research to determine who is active AND understanding how precedent transactions will impact the value of your company. Both of these go hand in hand, and although logic would tell you that these are important, too often the business owner in his haste to close a deal doesn’t do sufficient research in both of these areas.

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Topics: add-on company, selling a business, finding a buyer

Keys to a Successful Business Sale – Part I – Accuracy

Posted by Carl Doerksen on July 7, 2014 at 8:30 AM

This is the first in a series of articles we are sharing on the topic of how to successfully find a buyer for your company. If you have attempted to do so in the past, or have done some research into the possibility, you have no doubt learned how complex it is to actually close a deal with an optimal buyer with a deal structure that favors you.

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Topics: projections, selling a business, finding a buyer, valuation

International Business Buyers and Your Buyer List

Posted by Carl Doerksen on July 2, 2014 at 8:30 AM

Throughout the years we have discussed how vital it is to cast a wide net when you are creating a buyer list for your company. We have discussed investors such as equity firms, strategic and synergistic buyers, competitors, regional players, single family offices, and even high-net-worth individuals. Today we turn our attention to international buyers, a tricky group to approach, but a group that can be quite lucrative as a source of buyers for your business.

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Topics: finding a buyer, international buyers & investors

Private Equity Activity in 2013

Posted by Carl Doerksen on June 30, 2014 at 1:00 PM

A few weeks ago PitchBook, the leading research firm tracking the venture capital and private equity industries, released its 1st Half 2014 PE Middle-Market Report. As always the PitchBook data is well analyzed and thorough, documenting key trends and changes in the overall PE market niche.

One of their tables really caught my eye:

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5 Value Drivers from a Business Buyer’s Perspective

Posted by Carl Doerksen on June 30, 2014 at 8:30 AM

A few weeks ago the M&A Source hosted a webinar entitled “Value Drivers and Business Models” lead by James Darnell, a partner with KLH Capital. KLH Capital is a “fully capitalized SBIC-licensed private equity firm, which currently manages $165 million in capital across two funds. During their nearly 30-year business tenure, they have successfully completed more than 130 transactions, including recapitalizations, management buy-outs and buy-ins, family successions and retirement transitions, and corporate divestitures.”

Based on their track record, KLH’s perspective on the acquisition process can be quite enlightening. Their information was delivered from the viewpoint of a private equity firm actively acquiring privately held companies. Since many of our loyal readers are business owners who eventually will be looking for investors, I thought I would share with you KLH’s insight regarding how they view their targets, items that add value to an opportunity for them, and generally what they look for when they examine potential investments.

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Topics: thinking like a buyer, due diligence, selling your business, valuation

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