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Platform Acquisition

By Capital Markets

Business Platform Opportunities

A platform company is generally known to be the initial investment that allows a Private Equity (PE) firm to take a step into a new industry. All with the fixed objective of then adding to the platform through the acquisition of a number of smaller firms that are complementary to the platform’s operations. In order to illustrate this particular method of operation, we are using a case study from a private equity firm called Pfingsten. As a PE firm that focuses primarily on the acquisition of middle-market companies, through establishing a partnership with Brian Dunsim, a printing/packaging veteran, Pfingsten embarked on the first of many steps in their aggressive strategy to create a new packaging entity.

The middle-market is essentially defined as any company with a value below $500 million and the lower middle-market are those worth less that $100 million. Pfingsten’s investments are usually made within the manufacturing, distribution and business service operations sectors with valuations between $15 and $100 million, revenue from $20 to $150 million, and/or EBITDA of $3-$12 million (EBITDA = earnings before interest, taxes, depreciation and amortization). It’s likely that these numbers – though not stated – are for platform acquisitions; subsequent “add-ons” could be much smaller. As presumed, one of their listed transaction types are “strategic add-on acquisitions for platform companies.”

Why This Should Matter to You

This transaction is just one of many examples of an equity firm operating in the lower middle-market, making very targeted and well thought-out acquisitions to complement an initial investment in a particular industry. There are dozens of firms doing the same in a myriad of industry segments. In fact, it’s likely that there are many companies doing the same in your industry that you may not be aware of, but Generational Capital Markets (part of the Generational Group) are.

Our buyer database contains tens of thousands of registered organizations/entities that have told us specifically what types of businesses they’re interested in acquiring or investing in. We use this information to create targeted buyer lists that help us to attract the attention of professional buyers. One under-publicized benefit of partnering with a lower middle-market focused PE firm like Pfingsten is that not only do they provide an initial capital investment in their targets, they also provide post-acquisition support in the form of professional management, financial acumen, operational expertise, and sales/marketing experience.

If you are the owner of a privately held company and are looking for a partner to fund your growth, be sure to put PE firms on your buyer list. Your company may not be large enough to be a platform acquisition, but it might be possible to be “added on” to a synergistic portfolio holding.

To learn more about how this process works, contact us today and request a discussion with one of our senior business advisors. 

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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
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.
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
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
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
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
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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
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Andy Graham, Vice President, Modern Heating & Plumbing
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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.
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Ralph Noblin, President of Noblin & Associates
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Bil MacLeslie, CEO, ipHouse
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Larry Moore, Owner, A Company Portable Restrooms
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Jay Dinnison, Owner of Sharpe Mixers
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Michael J Polarek, President, Paragon Packaging
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Terry D. Wickman, President, Keytroller
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Bil MacLeslie, CEO, ipHouse
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Andy Graham, Vice President, Modern Heating & Plumbing