InSight

Exit and Growth Strategies for Middle Market Businesses

M&A Quarterly News In The Metal Fabrication Industry Sector

By Jim Zipursky | Feb 20, 2020

The report below gives a good overview of the first quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q4 2019 included 40 closed deals, according to data published by industry data tracker FactSet.

Kaman Aerospace Group, Inc., a subsidiary company of Kaman Corp, acquired Bal Seal Engineering, Inc. for US$330 million in cash, subject to customary adjustments for net debt and working capital. Kaman Aerospace Group manufactures aircraft components and aero structures. Bal Seal Engineering manufactures coil springs. The Company offers sealing, connecting, conducting, electromagnetic interference shielding, and grounding components.

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M&A Quarterly News In The Healthcare Industry Sector

By Daniel Sirvent | Feb 20, 2020

The report below gives a good overview of the first quarter M&A activity in the Healthcare Industry Sector. There were 189 completed North American-based Healthcare M&A deals in Q4 2019, according to FactSet Research Systems.

A notable middle-market transaction announced in Q4 was Charles River Laboratories International, Inc.’s [NYSE: CRL] acquisition of HemaCare Corporation [OTCMKTS: HEMA] for approximately $380 million in cash. The acquisition expands Charles River’s scientific capabilities in the emerging, high-growth cell therapy sector, creating a comprehensive cell therapy solution that can help developers and manufacturers advance their critical programs from discovery through commercialization.

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M&A Quarterly News In The Wholesale Distribution Industry Sector

By Jeremiah Hughes | Feb 19, 2020

The report below gives a good overview of the first quarter M&A activity in the Wholesale Distribution Industry Sector. M&A activity for North American based target companies in the Wholesale and Distribution sector for Q4 2019 included 143 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions in the sector was announced in October when Platinum Equity Advisors, LLC acquired TruckPro LLC, a portfolio company of Harvest Partners LP, OCM Mezzanine Investments Group and Partners Group, for an undisclosed amount. Platinum Equity is a global private equity firm. TruckPro is a distributor of heavy-duty truck & trailer products and advanced repair services. Through a distribution network of more than 150 stores and advanced service shops, TruckPro delivers a comprehensive range of products to support commercial and government customer requirements in the areas of brake systems, electrical, engines, gear & drivetrain and more.

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M&A Quarterly News In The Commercial Real Estate Industry Sector

By Peter Moore | Feb 19, 2020

The report below gives a good overview of the first quarter M&A activity in the Commercial Real Estate Industry Sector. According to data released by CBRE, a leading commercial real estate firm, global investment volume totaled US$260 billion in Q3 2019, up by 7% over the previous quarter but down by 2% from Q3 2018. The U.S. recorded a relatively soft third quarter due to political uncertainty, low yields and some recession fears.

Investment volume in the Americas declined by 17% year-over-year an, mainly driven by lower volumes in Canada and the U.S.

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M&A Quarterly News In The Financial Services Industry Sector

By David Sinyard | Feb 14, 2020

The report below gives a good overview of the first quarter M&A activity in the Financial Services Industry Sector. M&A activity for North American based target companies in the Financial Services sector for Q3 2019 included 224 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions in the sector was announced in October when Redwood Trust, Inc. acquired CoreVest American Finance Lender, LLC from Fortress Investment Group LLC, ultimately owned by SoftBank Group Corp, for US$492 million with an undisclosed amount in cash and stock, subject to adjustments. CoreVest American Finance Lender is located in Irvine, California and provides loans to residential real estate investors.

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M&A Quarterly News In The Hospitality and Leisure Industry Sector

By David Sinyard | Feb 14, 2020

The report below gives a good overview of the first quarter M&A activity in the Hospitality and Leisure Industry Sector. M&A activity for North American based target companies in the Hospitality and Leisure sector for Q4 2019 included 64 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions in the sector was announced in December when Maybourne Hotels Ltd, a subsidiary of Constellation Hotels Holding Ltd, acquired Montage Hotels & Resorts LLC from Ohana Real Estate Investors LLC, ultimately owned by Orei Advisors LP for approximately US$415 million. Maybourne Hotels owns and operates hotels. Montage Hotels & Resorts owns and operates hotels, resorts and residences. It operates portfolio of hotels, resorts and residences such as Montage Laguna Beach, Montage Beverly Hills, Montage Deer Valley, Montage Kapalua Bay, Montage Palmetto Bluff and Montage Los Cabos. The company was founded in 2002 and is headquartered in Laguna Beach, CA.

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M&A Quarterly News In The Aviation, Aerospace and Defense Industry Sector

By Daniel Sirvent | Jan 14, 2020

The report below gives a good overview of the fourth quarter M&A activity in the Aviation, Aerospace and Defense Industry Sector. M&A activity for North American based target companies in the Aerospace and Defense sector for Q3 2019 included 13 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions in the sector was announced in July when Kellstrom Defense Aerospace, Inc., a subsidiary of Kellstrom Defense, Inc., ultimately owned by The Merex Group, acquired Tavco, Inc. for an undisclosed amount. The transaction would enhance Kellstrom Defense Aerospace’s customer service capabilities. Tavco manufactures and distributes defense aircrafts. The company is headquartered in Chatsworth, CA.

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IS THE COMPETITIVE BIDDING PROCESS THE RIGHT PATH TO SELL YOUR COMPANY?

By Terry Fick | Dec 19, 2019

You may have heard it called the “Auction Process” which in an of itself carries a negative connotation.  It sounds like a program to sell distressed companies or properties. It is just the opposite. This is a process conducted by professional Investment Bankers (Bankers) to deliver your value proposition to multiple prospective buyers at the same time pitting them against each other in an effort to extract the best price from the best buyer.

 

The key word here is “Competitive” because this competition accomplishes three things:

  1. Buyers are aware that others are interested and that they need to offer a premium price to beat out the competition.
  2. In the end, it assures you that the value of your business has been set by multiple, knowledgeable buyers.
  3. It should allow you to select your favorite buyer whether or not his offer is the highest.

Everyone would probably agree that these are all important objectives when selling a company.

This is not  an “Auction” whereby your name and information are posted somewhere with bidders in a room raising a flag to outbid the last offer until the hammer comes down. Properly conducted, your information is tightly controlled and protected, only allowing serious, capable prospects that you have approved and have signed a Non-Disclosure Agreement to have access to your identity and/or information. None of these know who the other bidders are or how high their bids may be. Properly executed, it is possible to have only one bidder, but extract a great offer from him because he doesn’t see the other horses in the race but he definitely hears the hoofbeats!

While most Investment Bankers believe there is no better way to maximize your value, there are those owners that prefer to minimize their effort and time when selling by avoiding that process and simply wait for the right buyer to come along. That can be a long wait and if that buyer comes along, he knows there is no competition and makes his offer accordingly. Sometimes this preference is based on a business owner friend’s horror tale of a “Busted” auction that did not result in a sale. You minimize that risk by making sure the information you provide is complete and accurate and hire the most professional Banker you can find.

Along these lines, let me interject a big red flag here. I am quite sure you get calls and letters from Business Brokers and some Investment Bankers touting that they represent the perfect buyer for your company.  You should first ask them to name this buyer and tell you why they are interested.  If they won’t do this and send you an NDA signed by this buyer, then politely take a pass.

Sometimes we hear “Bring me one buyer”. That approach (or something close) can result in a good transaction if properly managed. Your Investment Banker should scour the same list they might have invited to an auction for a handful that they believe would be front runners.  From this handful, they try to find the one that is definitely interested in your company.  The buyer knows you have hired a Banker to maximize your outcome, so he will assume there is competition (hearing hoofbeats) and makes an appropriate offer. Hopefully, all ends in a good transaction for you. Two things to consider if this is your preferred approach.  One is that you and your Banker must assemble the same information for this process that you do for an auction.  You simply cannot solicit a valid offer until the buyer knows what he is getting. The other is that there is a much greater risk that this one buyer does not complete the acquisition and you must start this whole process over again.

So, there are pros and cons to the Competitive Bidding process. It is hard work and takes some time and a little money. As mentioned above, there are alternatives to the Competitive Bidding process and if that is your strong preference, be sure to let prospective Investment Bankers know this when interviewing them and see how they would plan to implement your chosen process.


M&A Quarterly News In The Transport, Logistics and Supply Chain Industry Sector

By Peter Heydenrych | Dec 11, 2019

The report below gives a good overview of the fourth quarter M&A activity in the Transport, Logistics and Supply Chain Industry Sector. M&A activity for North American based target companies in the Transportation and Logistics sector for Q3 2019 included 47 closed deals, according to data published by industry data tracker FactSet.
One of the notable middle market transactions in the sector was announced in August when AIT Worldwide Logistics, Inc. acquired Unitrans International Corp, a subsidiary of Unitrans, Inc. ultimately owned by Q International Courier LLC for an undisclosed amount. The transaction enables AIT Worldwide Logistics to enhance its existing business. Founded in 1997, Unitrans International is located in Inglewood, California and provides logistics solutions.

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M&A Quarterly News In The Consumer Retail Industry Sector

By Joe Sands | Dec 11, 2019

The report below gives a good overview of the fourth quarter M&A activity in the Consumer Retail Industry Sector. M&A activity for North American based target companies in the Consumer and Retail sector for Q3 2019 included 91 closed deals, according to data published by industry data tracker FactSet.
One of the notable middle market transactions in the sector was announced in August when Etsy, Inc. acquired Reverb.com LLC, a portfolio company of FJ Labs, Inc., Lightbank LLC and Summit Partners LP, for US$275 million in cash, subject to adjustments. The acquisition expands the market presence of Etsy. Founded in 2013, Reverb.com is located in Chicago, Illinois and retails musical instruments through an online platform.

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