Exit and Growth Strategies for Middle Market Businesses

Author Archive

Covid Can’t Beat This Seller’s Market

By Terry Fick | Oct 02, 2020

There is good news in the air for anyone thinking about or in the process of selling a business. While the Moody’s graph below depicts, the North American M&A results fell off a cliff in April, you also see that activity has almost returned to last August levels in number of deals and surpassed that level in total value of deals!

Surprised? Let’s look at the “Why?” and “What does it mean?”.

The Why may lie just below the Covid press, but the answers we continue to get from buyers and lenders is threefold:

  1. There is simply too much capital (corporate and Private Equity) looking for good acquisitions for them to sit still. Corporations are finding it even harder to grow today, so the solution is growth via acquisition. The slowdown in the second quarter puts extra pressure on PE to find and close acquisitions. When they raised their new funds last year and early this year, they did not promise their investors “if we don’t have a pandemic, we will perform and put your money to work.”
  2. Buyers now feel they can more clearly see the real impact of Covid on the targets they are considering and as we move further through that chaos, they can also get a better picture as to what a target may look like at the end of this period.
  3. Buyers and seller are getting more comfortable with the new rules and limitations on face to face meetings. Zoom is taking deals further into the process that before Covid, and buyers are getting more comfortable traveling when necessary. Life goes on.

Outside valuation professional are telling CFA that values for good companies are holding to pre Covid levels across the board. Other factors include some level of deal structure when that can maximize value for the seller and lower risk for the buyer. Also good seller are simply holding their ground and telling prospective buyers they won’t take lower offers due to this temporary environment. The buyers know there is competition for the attractive targets.

So what does this mean to sellers? The market for sellers is surprisingly good. At some point, the laws of supply and demand will start to even the odds as more and more companies get ready and come to the marketplace. Now don’t get me wrong. It takes time for that shift to come to fruition and there will still be plenty of capital to go around. The difference will be that just as sellers enjoy the competition of many buyers, the buyers will start to have more options relative to where to put their money.

What about those companies that are not doing so well during this Pandemic but don’t want to be valued on a more cloudy rebound from Covid? You might look into selling some part of the company to bring in some new capital and boost your growth curve. That way you create even more value later on and gives you time to look for a better window to sell the balance at higher prices.

I guess the main takeaway is that most sellers can defeat Covid, at least financially. And you may just pull one over on the Tax Man while you are at it.


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 Food and Beverage Industry Sector

By Terry Fick | Dec 05, 2019

The report below gives a good overview of the fourth quarter M&A activity in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q3 2019 included 49 closed deals, according to data published by industry data tracker FactSet.
The Hershey Co acquired One Brands LLC, formerly known as Oh Yeah! Nutrition and a portfolio company of CAVU Venture Partners LLC, for US$397 million in cash, subject to certain adjustments. The acquisition complements The Hershey Co’s existing Oatmega business. The transaction is expected to be accretive to the earnings per share of The Hershey Co. Founded in 1999, One Brands is located in Charlotte, North Carolina and manufactures protein bars.

Read more »

M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Sep 16, 2019


The report below gives a good overview of the third quarter M&A activity in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q2 2019 included 48 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions in the sector was announced in June when Butterfly Equity LP acquired Wm Bolthouse Farms, Inc. from Campbell Soup Co for US$510 million in cash, subject to customary adjustments. Founded in 1915, Wm Bolthouse Farms is located in Bakersfield, California and engages in growing and processing carrots. The deal was subject to customary closing conditions and was expected to close by the end of Campbell Soup Co’s fiscal year 2019.

Read more »

M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Jun 21, 2019

The report below gives a good overview of the second quarter M&A activity in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q1 2019 included 48 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in February when PepsiCo, Inc. acquired CytoSport, Inc. from Hormel Foods Corp for US$465 million in cash. Included in the acquisition are the Muscle Milk and Evolve Brands. CytoSport is located in California and manufactures nutritional supplement products.

Read more »

M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Mar 19, 2019

The report below gives a good overview of the first quarter M&A activity in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q4 2018 included 76 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions closed in November when Kerry Group Plc acquired Fleischmann’s Vinegar Co., Inc. from Green Plains, Inc. for US$353.9 million in cash. Kerry Group engages in the manufacturing and distribution of food and beverages. Fleischmann’s Vinegar Co. manufactures and produces industrial vinegar and cooking wine. The company was founded in 2002 and is headquartered in Cerritos, CA.

Industry Indicators

  • The consumer price index for food, an indicator of food product values, rose 1.6% in January 2019 compared to the same month in 2018.
  • US nondurable goods manufacturers’ shipments of food products, an indicator of demand for food manufacturing, rose 1.3% year-to-date in November 2018 compared to the same period in 2017.
  • US retail sales for food and beverage stores, a potential measure of food demand, increased 3.4% in 2018 compared to 2017.
  • Total US wholesale sales of nondurable goods, a potential measure of food demand, rose 9.3% in October 2018 compared to the same period in 2017.

Posted by Terry Fick.

Read the Entire Food and Beverage 1st Quarter Newsletter Here

M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Nov 28, 2018

The report below gives a good overview of the fourth quarter M&A activity in the Food and Beverage Industry Sector.  M&A activity for North American based target companies in the Food and Beverage sector for Q3 2018 included 45 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in September when The Hershey Co. acquired Pirate Brands, LLC from B&G Foods, Inc. for US$420 million in cash, subject to adjustments. The Hershey Co. engages in the manufacture and marketing of chocolate and sugar confectionery products. Pirate Brands operates as a natural snack food maker. Its products include baked, fried and air popped snacks. The company offers its products through stores in the US, Canada, Europe and Asia. The company was founded in 1987 and is headquartered in Sea Cliff, NY.

Read more »

Selling Your Business Is Not An Event… It Is A Strategic Process – Part III

By Terry Fick | Nov 15, 2018

Part III

Selling your business is not an event… It is a strategic Process.

More Conversations
Now that the prospective buyers have reviewed the information in the Data Room,

  • Be prepared to answer questions that stem from their review of the information supplied.
  • There may be another round of Q&A.
  • Ask what information he needs to be able to at least discuss a value range (IOI). DO NOT let him corner you into giving him a price!

With their NDA in place and having received his request for information for their IOI,

  • Populate the data room with the additional data requested, as long as it does not reveal truly sensitive information. You might segment the Data Room to manage the release of that data.
  • Once you have made the decision to give the buyer access to the data room. If there is a broker on their side, do not directly give him access to any of this information.
  • Answer questions about the data provided and wait for his indication of value.

Controlling the Negotiations

Assuming you get multiple indications of interest (IOI’s)in the right range, you will want to orchestrate this process so that visits by these prospects are around the same time. That should lead to getting multiple LOI’s at about the same time, so you can compare them before accepting one LOI.


  • Solicit multiple initial LOI’s before negotiating a final agreement
  • You are exclusive with one party while under LOI
  • LOI’s are mostly non-binding, but:
    • Price and Terms are obviously spelled out in detail.
    • Capital Structure to be employed
    • Your and maybe some of your management team’s roles and compensation should be addressed.
    • Structure of the transaction (stock or asset), how your debt will be eliminated, working capital, escrows
    • Timeframes, 90 days?
    • No Break Up fees!
  • Full disclosure after agreement


  • Involve your CFO very early in the process. He or she can often access and provide the information needed more efficiently than the owner.
  • Involve your other top-level managers when you start to have substantial calls or visits with potential buyers. They will be important to the buyer. Let those managers know you plan to find a deal that is good for them. Before that, you may want to consider if and how you might want to reward them when a deal closes.
  • Think one step ahead so you can be prepared to give timely responses to questions, offers, situations and obstacles.
  • Do not be afraid to identify your company’s “shortcomings or issues”. If you identify them, they are just warts, if they find them, they are cancers.

Summarizing Some Do’s and Don’ts:


  • Have an idea of what your company is worth before you even start responding.
  • Make sure you are talking to an actual buyer, not a “broker” on a fishing trip.
  • Qualify the buyer before you start giving up information.
  • Always get an NDA in place prior to giving up information.
  • Create a sense of competition even if you are only talking to one party.
  • Make sure to spend some time preparing. Get your information ready and organized.
  • It’s more than OK to brag about your business and talk about your plans for growth. That is what all buyers are interested in.


  • Never give a price or directly state the value you expect.
  • Don’t Let a broker gather information to “give to his client” unless his client directly asks you to do so.
  • Don’t give out competitively sensitive information like customer names until you are under LOI.
  • As earlier suggested, talk to multiple buyers at one time rather than one at a time sequentially.
  • Try to avoid bi-lateral NDA’s. You gain nothing by signing one.
  • Do not sign an LOI until you get legal advice. While they are non-binding for the most part, a well written LOI can save much time and aggravation down the line. It gives you the chance of previewing how a buyer will negotiate.

In Summary:

  • Take control of the process. By simply responding to all of their questions and demands, you lose that.
  • Keep thinking like the buyer. It is like selling your product or service, always determine what they want/need before you start your sales pitch.
  • I would assume this would be the largest financial transaction of your life, don’t take it lightly.
  • Remember:

  Selling your business is not an event… It is a strategic Process.

Selling Your Business Is Not An Event… It Is A Strategic Process – Part II

By Terry Fick | Nov 14, 2018

Part II


Selling your business is not an event… It is a strategic Process.

Like most successful outcomes, selling your company starts with the right preparation!

  • Set your expectations of value.
  • Prepare an NDA so it is ready at the appropriate step below.
  • Set up a virtual data room and populate it with the basic information anyone will need to see. Since you may present your information to multiple parties, this eliminates a duplication of efforts, creates an air of professionalism and gives the impression you are, or plan to, talk to more than one party. Your Attorney or Investment Banker will manage this if you prefer.
  • Look at your company through the eyes of a buyer. Ask yourself what aspects of this company would be attractive to you and what aspects would give you pause. Plan to accentuate the positives and minimize any negatives.
  • Develop a growth plan. Always sell the Future!

Now, prepare some more!

Are you ready to answer the typical questions they will ask?

  • Are your financial reports up to a buyer’s standards? If you aren’t sure what is expected, ask a professional.
  • Can you answer questions about your market position, your customer concentration, your competition (and how you stack up), which of your products are the most profitable, what are your strengths in the Marketplace, What role you want after a transaction, etc.?
  • Who would take your place if you are ready to retire?
  • Prepare a supportable projection for 3-5 years.
  • The list goes on, but a little preparation will give you a significant advantage.

Dealing with buy-side Brokers

They may or may not be credible.

  • Ask them to name their client
    • If they will not, politely tell them you are moving on.
    • Caveat: If they say they will if you give them some info, tell them your revenues and what you sell to who. Period.
  •  Only talk directly with their buyer. If they want the broker on the phone, O.K.
  • Do not give the broker any more information until the buyer signs your NDA and says the broker is covered.
  • DO NOT allow the broker to introduce you to more buyers Be adamant!

Talking with the prospective Buyer

Once you are talking directly to the decision maker at a buyer, then pay attention. Let them know you are considering your options and are discussing those options with your professionals. This gives them the impression they may have competition. Not being objective, we suggest you engage an Investment Banker to either work on just one prospective deal, or to assist you on any contact and create real competition. Qualify that buyer by determining if he can make an acquisition this size (without giving up your desired value.) Pose questions like,

  • What do know about my company?
  • Why are you interested in my company?
  • What other acquisitions have you made? Be industry specific with a PEG.

Now it is time to get your NDA signed before giving any more information

Creating Competition

  • Now, hopefully you still have more than one viable dog in the hunt and you have established the appropriate sense of competition. As you move forward, note the following:
    • Always let the elephant in the room be “other buyers”, but never name those buyers.
    • Never reveal specifically what other offers or value discussions may be.
    • Never let a buyer tell you that you should only be talking to him. It is perfectly ethical and appropriate to talk to multiple parties at once prior to your signing an LOI.

Hiring Professionals

It is obviously hard for me to stay objective when discussing this option because it involves employing an intermediary. Some form of an M&A professional whether it is an Investment Banker, a Business Broker or an M&A attorney. An Investment Banker can manage your process whether you choose to speak with one or multiple prospects and he will be able to bring even more buyers to the table.
An Investment Banker will:

  • Give you a realistic valuation
  • Respond and cull the herd without those parties knowing you might consider a sale.
  • Create a credible environment of competition
  • Be in a better position to look at your business through the eyes of the buyer.
  • Bring “Been there and Done that” expertise to the table
  • Save you and your team countless hours
  • Bring even more valid buyers to the table
  • Negotiate as a third party, preserving the relationship with the buyer
  • SELL your company so you don’t have to sound braggadocios.

Moving Forward

  • With their NDA in hand, have another informal phone call and answer most of their questions. The caveat is making sure you do not give specific customer or employee names. You can also avoid giving up any IP.
  • Let them know you have a data room prepared and that many of their answers will be there.
  • Be prepared to give up fairly detailed financial information, customer information (no names), growth plans, management staff, etc.
  • Talk about his plans for you. Would he want you to stay or phase out?
  • Now you give him access to the data room and give him some time to review that information before moving forward.

To be continued in Part III of this three-part post.

Selling your business is not an event… It is a strategic Process – PART I

By Terry Fick | Nov 13, 2018



Selling your business is not an event… It is a strategic Process.


  1. Always establish a sense, or better yet, a reality of competition for your company.
  2. Never, unless… No Never, give a prospect a price or tell them what you think the company is worth.
    1. Giving a price only sets a ceiling from which to negotiate downward.
    2. Terms are as important as price, and giving a price ignores this all-important element.
    3. Even in negotiations, until the very end, your response to a formal or informal offer is “I don’t think that offer will get you to the pole position…”
    4. At the very end you may have to counter with a definite value and set of terms.

First, let us define the possible responses to unsolicited offers to buy your company by type of buyer.


SELLING TO INDIVIDUALS? Unless your company is so small no private equity group (PEG) or corporation buyer would be interested, do not even talk to them.

Corporate Buyers

  • There are direct competitors and those that do not butt heads with you. Non-competitors are better buyers than direct competitors.
  • Ask them why they are interested. If they have a good reason, they may well be your best bet.
  • They usually want 100% and often allow (or even want) you to leave soon after a sale.
  • Don’t assume they are well funded enough to make this acquisition. Ask the right questions.

Private Equity (PEGs)

  • PEGs come in many flavors and can be very good buyers for those that would like to stay and continue to run the business… on their dime. A large majority of them are “The good guys” and can make great partners going forward. Their success rate for growing companies is outstanding.
  • A great vehicle that allows you to take almost all your chips off the table, eliminate your debt and still manage and grow your company.
  • They allow you to take, say, 90% of the true value of your business out in cash, but keep 20-25% of the equity for your second bite of the apple.
  • A good vehicle to allow you to pass on some equity to your management team or kids.
  • Make sure they are funded. There are thousands of PEGs out there that have millions and billions of cash. Be careful of relying on those that must raise the money after you committing to a sale.

Regardless of the type(s) of company you seek, there are three different paths to take:

  1. One is to be reactive and consider each contact one at a time, starting with the one that looks most likely.
  2. Another is to reach back out to all of them at once, and once you have culled the herd, open dialogues with multiple options at the same time until you eliminate all but one.
  3. The third is to let a professional quarterback the process of talking to one, several or even reaching out to more.

To be continued in Part II of this three-part post.