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M&A Deal Flow

By Generational Equity

Money Tunnel

It really is amazing how resilient the lower middle-market M&A tends to be. Despite a slowdown in larger transactions (valuations over $100 million), the niche that Generational Equity operates in has been fairly stable. In fact, so far this year, we are on pace to close just as many deals this year as we did in our record-setting year of 2015.

Why?

First, it is easier to locate financing for a transaction valued at $25 million versus one valued at more than $100 million. It is far less risky, from a lender’s standpoint (and a buyer’s as well), to acquire several $25 million targets than trying to hit a home run with one over $100 million. Thus making the time it takes to close a smaller transaction shorter AND, most importantly, making the integration into the new entity that much less complex as well.

Secondly, the factors driving the buyers in our niche are much more strategic and long-term than those that focus on very large transactions. Buyers we deal with are looking for new products, new geographies, new markets, access to new technology and skilled people. These features tend to make our buyers insulated from other issues that may affect billion-dollar transactions.

Finally, our success as a team is driven by our process, which creates fully vetted, highly committed sellers. Buyers know this and find our clients highly desirable because of this. One thing that all buyers lack is excess time. Nothing can be worse for them than to spend months and months with a seller only to have the deal fall apart at the 11th hour due to a seller getting cold feet. Or, worse yet, having a buyer discover some unforeseen weakness or issue that destroys the deal.

That is why the first step in our process is a full business valuation. We examine and drill into our client’s historic financials, operations, growth strategies, strengths, weaknesses, opportunities, and threats. This 90 - 120 day program can be quite grueling for many clients. But it really is helpful in that we can, at the end of the analysis, provide our professional opinion on what the value range would be in the current market for our client.

This vetting that we do, a mini-due diligence is how some clients describe the process, really weeds out those business owners that are not personally ready right now to sell AND those businesses that are not quite buyer ready yet, those that need to enter our hold-and-grow program to improve or enhance their value.

Despite what you may read, for some deal flow may be down, but Generational Equity is on course to have another record year. This is great news for our clients.

If you own a business and would like to find out how our services might be of benefit to you, please reach out to me at cdoerksen@generational.com or 972-232-1125. Our proven process has helped hundreds of entrepreneurs achieve their financial goals. We might be able to do the same for you!

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2016 Generational Equity, LLC. All Rights Reserved.

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The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!
Andy Graham, Vice President, Modern Heating & Plumbing
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.
Karen S. Williams, CFO, BW Manufacturing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”
Karen S. Williams, CFO, BW Manufacturing
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.
Michael J Polarek, President, Paragon Packaging
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.
Michael J Polarek, President, Paragon Packaging
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.