Business Pulse – December 2018
Prepare to win
As we look toward 2019 deal activity, we believe the prepared will win. Owners who take the time to understand the gems and warts of their businesses and how those dynamics affect value have a greater chance of winning in the current market than those who don’t. As we’ve mentioned in past articles, buyers are doing more due diligence on targets in the high-valuation market we are currently in. With this higher level of scrutiny, it may be challenging for middle-market companies to achieve full value right now. However, rolling equity into an M&A transaction remains a great strategy for creating future value for middle-market business owners. Bringing in a partner that can help grow and add sophistication to a business could be greater than the value created by selling 100 percent ownership in today’s environment.
Northeast Ohio deal flow remains strong. This month, several local acquirers took interest in both domestic and international middle-market targets. TPC Wire & Cable Corp., a portfolio company of Audax Group and PNC Erieview Capital, expanded its reach in North America with the acquisition of Canadian-based Milrail Inc. Applied Industrial Technologies Inc. expanded its portfolio of products and capabilities with the acquisition of Fluid Power Sales Inc., based in New York. And Vendors Exchange International Inc. acquired American Vending Machine, allowing the business to expand its capabilities to its customers and provide for additional manufacturing space.
Matt Roberts is a vice president with MelCap Partners LLC. MelCap Partners is a middle-market investment banking advisory firm. For more information on MelCap Partners, please visit www.melcap.com or email [email protected].