Analysts with Generational Equity, a leading mergers and acquisitions advisory firm for privately held businesses, are reporting an increasing demand for lower middle-market acquisitions by private equity firms.
According to a survey by PitchBook, close to $119 billion was invested by private equity firms in the first quarter of 2017 alone. And, according to the research firm, nearly 50% of those deals were valued below $25 million; evidence of the interest private equity has in lower middle-market businesses.
"The decision to hire an experienced M&A firm may be the best and most important decision a business owner will ever make, particularly when it comes to having the opportunity to sell to a private equity firm," said Terry Johnson, Chief Revenue and Strategy Officer with Generational Equity. "These firms have deep pockets, are open to flexible deal structure, and are in the business of acquiring companies to add to their portfolios. Gaining access to these private equity buyers is one of the many value adds the right M&A firm can bring to the table."
Generational Equity uses an extensive multi-step process that helps prepare a company for sale, improve buyer-readiness, identify potential strategic and financial buyers and then manage the sales and marketing process to help the business owner achieve their individual specific goals.
According to Johnson, "Equity firms look at hundreds (in some cases thousands) of opportunities every year. You need to make sure your business gets through the noise and is seen. That's a core competency for us; our dealmakers are experts at it."
Generational Equity Dealmakers work with thousands of buyers every year and have a database of more than 30,000 buyers, domestically and internationally that they interact with.
Generational Equity recently assisted in the acquisition of Fogco Systems, located in Chandler, Arizona by Pinewell Capital. Pinewell Capital, located in Scottsdale, Arizona, is a private equity firm focused on investing in lower middle-market companies. The firm seeks to partner with experienced business owners in management buyouts, management transitions and companies pursuing funding to grow.
In addition, Generational Capital Markets, a Generational Group company affiliated with Generational Equity, assisted Fort Wayne, Indiana-based Ellison Bakery, Inc., a leading manufacturer of cookie, snack bars and other products for the retail and private label space, find a partner in Blackford Capital, a national private equity firm headquartered in Grand Rapids, Michigan.
Founded in 2000, Blackford Capital is a private equity investment firm that acquires, manages, and builds middle-market manufacturing, distribution, and service companies.
"Private equity firms are active buyers who recognize value and are willing to pay for it," said Johnson. "Failing to tap into this market when selling a business can unnecessarily limit a business owner's options, and potentially cost an owner millions."
Generational Equity offers complimentary executive exit planning conferences that discuss the opportunities and various options when selling a business, as well as the proven steps that must occur in order for the business owner to achieve the optimal sales price and terms. Find a conference near you or get in contact with a Generational Equity professional advisor today.
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