Business owners have a wide variety of options open to them. Which option to choose depends on their goals and objectives. A few Tuesdays ago, a group of business owners joined us at our fall master class that focused on transition options and the experience of those who have taken action.
Sale to a Third Party.
EndurID founder Bob Chadwick said he wanted to make a full exit within a few years so decided to sell now rather than wait until he reached retirement age. In addition, the business had become much more technical and to take it to the next level was going to require some new expertise. He met with BTS Director John Howe and Ken Schaefer after completing the Sellability Survey on the BTS website.
Chadwick ended up selling in 2017 to Capital Resource Partners of Boston. The North Hampton company manufactures and distributes customizable wrist bands for use in medical facilities, corrections and other settings. These bands are printed by end users at their facility on their own printers. Information contained on the bands is customizable.
Chadwick explained the mixture of emotions that come with handing over control to new owners, but also continues to have a close view of the operation as a member of the Board of Directors. He remains a part owner, and has been active through a two-year transition. He worked with BTS to prepare and then sell the company. He is now able to take more time off, spend more time on his boat and now realizes he needs a bigger boat to travel to the destinations he wants to reach.
Growth through Acquisition
CAI Technologies has grown steadily in recent years, largely through organic expansion. But last year, it was ready to be proactive: look for a business to buy in a related field. It retained the BTS team to identify prospective targets, negotiate agreements and ultimately help it acquire two companies: GIS Mapping and a division of James W. Sewell Company.
The deals helped the northern NH firm increase its footprint substantially while remaining based in the rural North Country since its services are web-based.
CEO Franco Rossi, along with financial advisor William Bedor, CPA, said the process used by BTS and acquisition advisor Mark Lagasse enabled the company to do a search, locate several possible targets and ultimately complete deals within a year.They said the integration has gone smoothly and that the acquisitions have met expectations, both financially and strategically.
Who Are the Buyers?
What are new owners like who are purchasing lower mid-market companies in the region? Two examples are Michael Donovan of East Range Partners, and John Dalton of Industrial Device Investments of Tennessee. Both made acquisitions through BTS.
East Range was formed after the principals graduated Harvard Business School. They decided to avoid Wall Street and instead focus on buying a business. They purchased Pure Flow, experts in high purity water, which is based in Peterborough but serves the industrial and medical community throughout New England. They have made two acquisitions since, including Atlas High Purity Solutions in Braintree.
Industrial Device Investors last year acquired Materials Research Furnaces of Allenstown, a manufacturer of high temperature vacuum and controlled atmosphere furnaces used widely by manufacturing companies and research facilities around the globe.
John Dalton, the principal at IDI, said the firm remains strongly committed to acquiring technical companies that provide sophisticated engineering solutions to end markets. IDI made connection with BTS at an annual M&A conference, and became strongly interested in the NH-based furnace company after reviewing the confidential information memorandum provided by BTS.
Owner Master Class
These discussions were part of the Owner Master Class presented in late September to business owners focusing on transition options. The program, held at Manchester Country Club, was attended by approximately 30 people. Also discussed were current M&A market trends for private companies; valuation methodologies; and an overview of available transition planning options. BTS is making plans for a similar session in the spring of 2020, and owners with interest are encouraged to email BT*@*****-a.com to get on the mail list.