Mergers & Acquisitions...
Merfeld & Schine, Inc.

Selling a Business:

We sell companies in the $1 million to $20 million sales range. We focus on (but do not entirely limit to) selling New England based companies (MA, CT, NH, RI, VT, ME).

Our unique expertise is selling smaller businesses to private equity group (PEG) buyers.

Smaller Acquisition Deals for Private Equity Buyers

Private equity groups are well known for acquiring large companies. Their deals, measuring in the hundred of millions and even billions are regularly reported in the local and national business pages.

Less known is the fact private equity groups make a lot more acquisitions of companies with sales under $20 million than of companies with sales over $100 million. The Wall Street Journal seldom reports on PEG's acquisition of $1 or $2 million companies, but they are taking place quietly, on a regular basis.

Add-On Acquisitions

Private equity is a very profitable industry. They achieve those profits by acquiring companies and growing them. A good deal of this growth is based on buying more businesses.

That is, a PEG will first buy a large company within a particular industry, and then grow that company by acquiring smaller companies within that same industry. In private equity parlance, the large company acquisition is called a platform acquisition and the smaller company acquistions are called add-on acquisitions (or bolt-on acquisitions).

Great Business Buyers

Private equity groups are great buyers of businesses

  • Higher Valuation:

    • In the case of an add-on acquisition, PEGs often will pay more than other buyers, because an add-on acquisitions is a synergistic acquisition. That is, by combining the add-on with their existing platform company(s), they can make 2 + 2 = 5. They can take advantage of synergies like economies of scale, market clout, and more to justify a higher valuation.

    • PEGs virtually all have an aggressive growth strategy and that strategy typically involves -- add-on acquisitions. Their whole reason for being and their investor mandate is to acquire companies. Simply put, they are under pressure to do what they are in business to do--buy companies.

  • Professional Deal Makers

    • Because PEGs exist to buy companies, they are run by people who have a lot of acquisition experience. They know how to cut through a lot of the typical red tape and other time wasters involved in buying a business. They know what is and isn't important and how to avoid getting caught up in details that tend to slow a deal down. PEGs will often issue a letter of intent within days of first meeting with a seller.

    • To private equity groups, buying companies is their business. Most buyers, including business owners pursuing a strategic acquisition, are not experts in the process and can not devote full time to getting the deal done.. This of course, stretches the time it takes to complete an acquisition. Private equity buyers, on the other hand, know the business buy/sell process and have the resources in place to consummate an acquisition deal. Running their business means making the acquisition.

  • Committed Funds

    • Some private equity groups are fortunate enough to have committed funds for acquiring businesses. That is, investors have committed to provide funding up to a stated amount upon request. They have made their commitment in advance, in essence agreeing to accept the judgment of the PEG management for any acquisition it wants to make. Upon request of the PEG, they must send in a check for up to the amount they committed to within a short period, such as 30 day. This is a bit of an over-simplification, but as a practical matter it works as described. Note that not all PEGs have committed funds for acquisitions; we know the ones who do.

  • Financing (without committed funds)

    • Those groups that are not in the position of having pre-committed funds for acquisitions, usually have very solid banking relationships. The banks know them and they know which banks will finance which kinds of acquisition deals. In a nutshell, a private equity acquisition deal, even one that needs bank financing, is likely to get done and get done much more quickly than a non-PEG acquisition.

Is your business right for private equity acquisition?

Unfortunately, only some companies are good candidates for sale to private equity. Even many fine and profitable companies just aren't appropriate as PEG add-on acquisitions. We specialize in this type of business acquisition, so we can help you determine if your business can be packaged as an attractive private equity add-on.

  • We know the type companies they are looking to acquire: We know what several groups are looking for in the way of add-on acquisitions. Equally as important, they know us. Many PEGs know us and know that when we bring them a selling company to consider, it will be an acquisition deal that is well presented and well worth looking at. Few PEGs have the time to sift through acquisition proposals that are not presented in their preferred format.

  • We know the business buyers from the wannabees. Anyone can hang out a shingle and call themselves a private equity group. We know who the real buyers are versus the ones who are looking to make an acquisition offer and then go looking for the financing. We know which ones have committed funds, which ones are readily financable, and which ones have to start from the very beginning to obtain the needed acquisition funding.

Let us evaluate your business at no charge

To find out if your business may be right for private equity acquisition, fill out this simple form or call us at 401-751-3320.

We focus on (but do not limit to) the New England States: MA, CT, NH, RI, VT, ME.

Without cost, obligation or sales pressure, we will evaluate your business and advise you if it may be a good candidate for private equity acquisition. If it is, we can discuss M&S representing your company for sale. If not, we may be able to help you find appropriate business broker representation for your business.

We have many years experience with selling companies in the $1MM to $20MM range that we can bring to bear on getting you the best price for your business quickly and confidentially.

Free initial consultation and evaluation for business sellers

39 Brenton Ave.
Providence, RI 02906
Phone ~ 401-751-3320
Fax ~ 401-489-7339

E-Mail ~

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