Regular readers of our M&A insights know that from time to time we focus on recently published transactions to gain insight into how professional buyers operate, giving you valuable information that could help you when selling a business.
Today we are going to look at a classic example of a private equity (PE) firm operating in the middle market.
The headline read: Sentinel Buys GSM Outdoors from Huron
Sentinel is technically Sentinel Capital Partners and Huron is Huron Capital. Huron is a perfect example of a private equity firm operating in the middle market, as it focuses on companies with revenue below $200 million.
Its investment in GSM and subsequent “add-on” acquisitions to it are a classic case study in the tremendous service these types of PE firms bring to owners of privately held companies. This is how the growth was described in the press release:
Huron Capital acquired Grand Prairie, TX-based Good Sportsman Marketing (GSM) in June 2016. In October 2016, GSM completed its first add-on acquisition with the buy of Isanti, MN-based HME Products, a designer and seller of hunting tools including accessory hooks, deer gambrels and drags, tree-stand accessories, and gloves.
In May 2017, GSM added-on two additional companies with the buys of Eugene, OR-based Bullseye Camera Systems, a designer, assembler and distributor of target shooting camera systems; and Scent Web from Beaverton, MI-based A-Way Hunting Products. Scent Web has a patented foam spray delivery mechanism for dispensing deer scent attractants.
Two things stand out to me in that paragraph. First, you can see the strategy that Huron was operating under when it made its initial investment in GSM.
Clearly, the goal was to make the initial foray into the sporting goods industry and then add on to it by making precise and targeted synergistic acquisitions in order to grow the GSM platform into a much larger organization. This is a classic private equity firm modus operandi.
Secondly, although the size of the add-ons is not indicated, it is safe to assume that most (if not all) of these add-ons were smaller than the initial platform valuation of GSM. This is important to note as you begin to look for buyers when you decide to sell your company.
It is vital that you know who is acquiring and why in your industry. This is the type of research that Generational Equity's deal teams do for each client they work with. Determining the WHO and the WHY are equally important when creating your buyer list.
What we find most interesting when we create pitchbooks for prospects that show private equity firms with holdings in their industry is that quite often many of the holdings that have PE backing are unknown to our potential clients.
This is a very tangible benefit of working with an experienced M&A advisory firm like Generational Equity. Our deal teams not only have the experience of working with buyers like private equity firms, but they also have access to the research tools to aid them in their development of buyer lists.
Unfortunately, odds are good you have neither the time nor the skill set to conduct the same thoroughness of buyer research as a professional M&A advisory firm, which is another incentive for smart sellers to contact experienced advisors.
Not surprisingly, the add-on strategy begun by Huron will continue under Sentinel:
"We are very pleased to partner with Sentinel as we execute the next phase of our growth," said GSM CEO Eddie Castro.
"We have an incredibly committed and competitive culture and are passionate about our brands and the customers we serve. Our enthusiast end-user base is loyal and growing."
"We plan to leverage Sentinel’s extensive experience investing in specialty consumer businesses and making add-on acquisitions to continue our strong growth trajectory."
Sounds like a true win-win scenario for all parties, and the use of add-ons to drive growth will continue under Sentinel. We find these types of buyers to typically benefit our clients who have ideas for growing their business, but lack capital and expertise to take their $10 million company to $25 million, $50 million and beyond.
If you would like to learn more about how to conduct buyer research and find active private equity firms like Huron and Sentinel in your industry, you need to set aside some time and attend a Generational Equity exit planning conference.
These highly educational meetings are completely complimentary and are designed to help business owners develop the knowledge base they need in order to navigate the highly complex M&A industry.
If you are interested in learning from our experienced M&A advisors or want to attend one of our meetings, please call us at 972-232-1121 or visit our website, provide us with your contact information, and we will be in touch.
No matter what, please be sure to do your research when you begin to market your company so that you can find the optimal buyer for your business – not only one that will pay you a premium, but will also ensure the ongoing legacy you have built.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 2 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.