Mid-Market M&A

Buy-Side-Engagement

Middle-Market Mergers and Acquisitions

At Northwest Arkansas Business Brokers, our Mergers & Acquisition Mid-Market activity primarily focus on businesses having annual revenues from $2 – $10 Million because companies this size are prime candidates for strategic buyers or a private equity groups (PEGS). These types of buyers like companies this size because they have usually achieved a pinnacle of success and stability allowing integration with less risk which can translate in the seller receiving a premium price for the company.

Sellers Are Similar – But Buyers Are Different

The seller of a business with revenues in the $2,000,000 range and the seller of a business with revenues in the $10,000,000 range mostly share the same business mindset and values even though one produces over five times more revenue. At business conference and trade shows in round-table discussions it’s amazing just how similar they are with each sharing ideas and stories of struggle, growth and successes.

Be that as it may, differences between the buyer profiles of these two businesses start to change as the size of the acquisition reaches around the two million dollar range; shifting from an individual buyer, to a private equity group (PEG). They usually are acquiring a company based on their own investment criteria and the rate of return they can receive. Or shifting again to an Industry Buyer having expansion plans to gain new marketing areas or to secure a favorable line of products that can be integrated into their existing company.

A well thought out strategy is needed to find the qualified buyers that have the ability and available capital to acquire a multi-million dollar company. They do not publicly disclose their acquisition plans rather preferring to work through firms like us who find the seller, value and prepare the business for sale. For these buyers, they realize we save them thousands of dollars in traveling and preparation costs presenting them with businesses that are bankable and ready for acquisition. These are the reasons why they have the ability to make a purchase decision quickly and some will offer sellers a premium for a company they think is a good fit.

We will figure out and identify those companies who would benefit and should buy your business. Those who benefit from buying the company are motivated buyers not just any buyer but the RIGHT BUYER.

It’s is these differences in types of buyers that call for a different level of expertise working for you.

 STRAIGHT TALK – We had a Seller who had been in business for nearly 40 years. We found three interested parties to look at the business and to whom we released the company’s financials to at the same time on the same day thereby creating a bidding situation. When the bidding time expired, all three had tendered an offer. We let the seller decide which offer he wanted to take. He took exactly $500,000 less for his company. You know why? He believed that this buyer would take better care of his employees. You really gotta respect a man like that…

Using Buy Side Engagements – Another Way to Grow

As a business owner there is the realization that expanding an existing customer base to increase earnings involves investing some bottom line profits. Adding new product lines, expanding inventory, equipment or services is expensive; not to mention the cost of locating capable employees. Time spent in training may be a costly lesson not bargained for. This is an obvious way to achieve growth as many small businesses are built in this manner. There is another way. In the Merger and Acquisition world this is known as Organic Growth, defined as growth that comes from a company’s existing business.

Inorganic Growth, on the other hand, is buying or merging with another company to create a business that is more successful and profitable than each could be standing alone. This method is not limited to multi-million dollar companies. Through inorganic growth a larger customer base, access to new markets or distribution channels, experienced employees already in place, profits and return on investment are all highly accelerated. This can be achieved by any size company with a reasonable amount of  capital.

Northwest Arkansas Business Brokers offers this value in Buy Side Representation, a service designed to locate business to fit the growth sought after. We turn our attention to demographics, industry, compatibility and size in order to target a list of companies suitable for integration into our client company. Our approach will determine the viability of such a merger. With Non-Disclosure documents securely in place parties are identified, introduced and talks scheduled. If discussions bring agreement, a business valuation of the target company is ordered and the discovery process begins including financial feasibility of the purchase and impact on bottom line earnings concluding with location of acquisition capital, if needed.

To learn more about a Buy Side Engagements, contact us.