One of the most important concepts that we cover in our exit planning conferences is the idea of casting a wide net when considering where to look for buyers. When asked who they expect will buy their company, quite often business owners are under the mistaken assumption that the ONLY buyer for their business will most likely come from inside their industry. Even more likely, it will be their key competitor.
From our years of experience, this way of thinking seriously limits the business owner’s opportunity to sell for a maximum return. In fact, in many cases, the owner will leave significant amounts of chips on the table by pursuing buyers in this fashion.
What we recommend is a much different approach, one that creates as large a buyer pool as feasible with many buyer types in consideration.
One possible group that many business owners are completely unaware of is private equity. These firms exist for one reason: To invest in businesses to help them grow, with the idea of eventually taking a much larger entity public or selling to another buyer.
This “partial sale” scenario is a win-win for all parties. Not only does it allow current ownership to cash out a portion of their stock initially, it also allows them to have a “second bite of the apple” later when the new organization is sold or taken public.
A perfect example of this in action was recently seen when PPC Partners acquired C.H. Guenther & Son:
PPC Partners has acquired C.H. Guenther & Son, Inc., San Antonio, Texas, a manufacturer of grain-based foods and seasoning products for the food service and retail segments. Founded in 1851, C.H. Guenther has a rich history in the food industry. Products manufactured by the company include artisan bread, buns, rolls, biscuits, gravy mixes, frozen appetizers, spices and desserts. The Company has been continuously owned by Guenther family members since its founding.
Although terms of the acquisition were not released, based on additional information, it is pretty clear that PPC will be using its investment in C.H. Guenther as a “platform” for future growth:
The current C.H. Guenther management team will continue to lead the company and no changes are planned for the company’s manufacturing footprint. In addition to opportunities for organic growth, Michael Nelson (investment partner with PPC Partners) said “PPC Partners sees the acquisition as a platform to continue to acquire complementary businesses.”
“C.H.G. is a clear market leader with an outstanding management team,” said Tony Pritzker, chairman and CEO of PPC Partners. “Combining our flexible capital base and industry knowledge with this management team will enable the company to generate new opportunities for growth while continuing the family legacy.”
I have taken the liberty of bolding a few key segments above to emphasize some points. First, clearly this is an entry point for PPC to gain a foothold in this industry niche, with a goal of expanding the holding via future acquisitions of “complementary” businesses.
What does this mean in layman’s terms? Simply this: PPC will be looking for businesses to invest in (most likely much smaller that C.H. Guenther) in this industry over the next 5-7 years to create a much larger entity.
Secondly, PPC, like most private equity firms that focus on acquisitions in the middle market, plans on maintaining the “family legacy” going forward.
For many of our clients, this is a critical issue. For a company like C.H. Guenther, with 167 years of continuous family ownership, this would be a huge concern. Clearly they found a partner that agrees and will maintain the legacy that generations have built in the business over time.
Many of the attendees at our conferences are under the mistaken impression that private equity firms only invest in “sexy” industries where growth is unlimited. Can there be any business less sexy than one manufacturing grain-based foods? Well, from PPC’s perspective, this partial sale must be fairly enticing for them to make this type of investment in it.
If the idea of casting a wide net for buyers intrigues you and the concept of an equity firm possibly being in your future is novel, then you need to attend a Generational Equity exit planning conference soon.
Our meetings are designed to educate business owners on all facets of buyers and M&A activity today and going forward. The time you spend there will be well worth the investment when you decide the time is right to sell your business.
To learn more about Generational Equity and our conferences, please use the following links:
And if I can leave one final thought with you, it would be this: Don’t sell yourself and your company short by assuming your buyer will be from your industry and/or will be one of your competitors. Ultimately your buyer may be from one of these two sets, but at the outset think far more broadly and don’t forget about private equity firms and partial sale strategies.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC. All Rights Reserved.
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
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
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
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.JoAnn Ellis, Owner of Fondren 5 Star Kennels
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.
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
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.Caroline Connelly, CEO, OptoTest
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
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
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
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 thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.Rick Greene of Dobbs Equity Partners LLC
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
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
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.Shane and Johanna Kline, Owners of Vision Upfitters
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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!Tom Currier, Former President & CEO, Rackmount Solutions
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.
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.Salvo Stoch, Founder and CEO of Sleeping Partners
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.Betty L. Brennan, President, Taylor Studios
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
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 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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!JoAnn Ellis, Owner of Fondren 5 Star Kennels
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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