In July 2017, I wrote that it was deal time in the business cycle and that I had been helping a number of clients sell their businesses. At that time, we were overdue for a recession. Now, almost two years later, we’re even more overdue for a recession. Still, somehow the economy keeps on going and M&A (Mergers and Acquisitions) activity continues. And while the term is mergers and acquisitions, for most of my clients, the activity is usually a sale.
Most of my clients are ‘stay and grow’ types, that is, they aren’t ready to sell, whether they aren’t big enough yet or the owner isn’t ready to give up their business. But more and more, clients are ready to sell, they receive an offer they can’t ignore, or they want to acquire another business to speed up their growth.
In all cases, I get involved. My involvement varies from due diligence, to deal negotiation or evaluation, to calculation of price. While I had done a bit of this before, during the last three years I have spent an awful lot of time on Deals. Here are some examples.
Three clients have been successfully sold to public companies. Two of those deals were to multi-nationals. One was a sale to a Chinese publicly-traded company and one was the sale of a U.S. subsidiary of a European company (my client) to a public U.S. company. The third deal was my client to a large U.S. public company.
Another deal involved two separate transactions. My client was split and then sold in two transactions, one a merger and one a straight acquisition. With another client, we’ve evaluated an unsolicited offer which was eventually turned down. Curiously, three of the deals I’ve been involved in have been web-based businesses in one form or another.
On the buy side, I’ve been involved in two acquisitions by clients of smaller companies. These were opportunistic purchases that helped the client grow faster than by just organic growth. Currently, I have at least four clients considering acquisitions or mergers.
In most cases, acquisitions are done for growth, for synergy or because it makes sense for someone’s life circumstances. I can add value because of my experience and training, my knowledge of what the options are and my knowledge of the way things typically are done. It is also important to have an objective advisor to the owner and someone who can keep the owner from getting distracted. The last thing you want during a sale is the owner neglecting the business during the sale process and getting a price reduction at the end as a result.
I always hate to lose a client, but if it is through a successful sale, I don’t mind so much. In fact, that is pretty much my business model. I help the client grow enterprise value until they are ready to cash in and retire or do something different. When their dream is realized, my job is done.
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