Even in a market flush with private equity, much strategy and networking go into securing a buyer
ST. PETERSBURG, Fla. (August , 2019) –When a business owner is interested in selling his or her company, there’s an art to finding the right buyer, especially if the company is in the $5 million range in annual EBITDA (earnings before interest, taxes, depreciation and amortization).
For companies of this size, “it’s probably too expensive for a high-net-worth individual but also not in the price range most private equity groups are considering,” Aberdeen Advisors CEO Emery Ellinger told a crowd of almost 100 people at a recent meeting of the Tampa Bay chapter of the Association for Corporate Growth.
Aberdeen, which helps sell companies with annual revenues between $5 million and $100 million, works with a wide network of potential buyers who are interested in companies certain sizes and industries. This is key to finding the right buyer to match with a particular seller.
The ACG session brought together dealmakers focused on creativity in the origination process. And much of the discussion centered on the current climate for corporate M&A work. The consensus: Even though the economy is strong and there is plenty of capital available for deals, finding the right fit for a seller is not as simple as just calling a few potential buyers and closing the deal.
Ellinger shared several other key points that help Aberdeen close 83 percent of the deals it takes to market.
– “We know to make sure the owner is emotionally ready to sell,” he said. “If they founded this business and they have been running it for 35 years, they’re going to go through the seven steps of grief when they sell their business.”
Aberdeen has seen that many sellers worry most about what will happen with their company’s employees or they have other specific concerns. The key is to learn about the seller’s priorities early, so a buyer can be found that meets all the criteria. This, in turn, can make letting go of a business less painful.
– Much consultation needs to take place before going to market. A business owner may say a CPA does the books, but that could mean the accountant has only been doing the taxes. Getting ready for due diligence is a full-time task, and an outside advisor knows how to prepare.
As two other examples of why extensive planning is needed, intellectual property rights need to be in place, and a strong management team needs to be running the company being sold. This is why Aberdeen aims to build relationships with business owners over several years before they are ready to sell. This helps the company be well positioned to get the best price.
David Hellier, partner, Bertram Capital, moderated the ACG Life of the Deal session in St. Petersburg. The robust panel also included David Doney, partner, Akerman LLP; Kyle Madden, partner, KLH Capital; and Justin Santa Cruz, chief development officer at US Eye LLC.
About Aberdeen Advisors: Aberdeen Advisors is a St. Petersburg-based mergers and acquisition firm that helps business owners sell their companies. It leverages extensive knowledge and experience to match buyers and sellers of businesses that range in annual revenues from $5 million to $100 million. Aberdeen’s areas of expertise include manufacturing, medical, distribution, healthcare, technology, and service industries.
The company was founded in 2008 by Emery Ellinger, after he sold his marketing firm that he built from the ground up into a company with $7 million in annual revenues. Each member of the Aberdeen Advisors team has personally owned and managed a business. More information is available at AberdeenAdvisors.com.
About ACG: ACG Tampa Bay offers high quality networking and information on corporate growth best practices for business leaders throughout Tampa Bay. The organization includes members in the area’s top private equity groups, corporate executives, financial intermediaries, attorneys, accountants, commercial and investment bankers, valuation specialists and other professionals. For more information about ACG, visit ACG.org/Tampabay.