COIL PARTNERS Announces Acquisition of AB Technology by SureKap

We are pleased to announce that our client AB Technology, Inc. ("AB Technology" or “the Company") has been acquired in an all-cash transaction by SureKap, LLC, a portfolio company of LFM Capital ("LFM”). Coil Partners acted as the exclusive financial advisor to AB Technology for the transaction.

Based in Los Angeles, California, AB Technology is an automation engineering company and an industry leader for high-speed labeling and padding systems focused primarily on the food packaging industry. The Company’s equipment is regarded as best-in-class due to its high performance labeling system and expert design/engineering. The Company has established a ~30-year history of manufacturing/engineering excellence and brand value serving the packaging industry's leading customers.

According Ante Baskovic Jr., AB Technology owner and EVP, "The alignment of AB Technology's and SureKap's business models and cultures is compelling. We are excited to extend our family legacy with SureKap to further serve our customers and scale the combined companies."

Advising the owners of AB Technology, Coil Partners was successful in managing a sell side M&A process that included positioning the Company’s value proposition to industry buyers, leading to structuring and negotiating the Company sale to SureKap.  

Baskovic Jr. added, "Coil Partners, led by Paul Donnelly, was instrumental in navigating the transactional and relational process with our leaders and those of SureKap and LFM. They were very effective in communicating our Company's value proposition to buyers, while walking alongside us at every stage of the process."

COIL PARTNERS Announces Acquisition of Krieger Specialty Products by Allegion

We are pleased to announce that our client Krieger Specialty Products LLC ("Krieger” or “the Company") has been acquired in an all-cash transaction by Allegion plc. Coil Partners acted as the exclusive financial advisor to Krieger Specialty Products for the transaction.

Based in Los Angeles, California, Krieger is a leading U.S. manufacturer of high-performance special purpose doors and windows for industrial, commercial and institutional markets. Krieger’s solutions include security, radio frequency, acoustical, forced entry, bullet, blast and thermal applications. The Company’s products are installed in a wide range of facilities ranging from data centers, hospitals, power plants and government offices to broadcasting stations, theaters, museums and banks.

According to Bob McCluney, Krieger’s owner and CEO, “The alignment of Allegion’s and Krieger's cultures is striking.” Allegion Americas’ Senior Vice President Dave Ilardi stated, “Krieger’s high-quality specialty products will add to the breadth of Allegion’s solutions, while our specification and institutional market expertise will fuel demand creation and growth for Krieger. Our businesses will also create greater manufacturing scale, leveraging our combined talented teams to best serve customers.” 

Advising the owner of Krieger Specialty Products, Coil Partners was successful in managing a sell side M&A process that included positioning the Company’s value proposition to industry buyers, leading to the structuring, and negotiating the Company sale to Allegion plc.  

2023: A Pivotal Year for "New Normal" M&A Valuations

by Paul Donnelly

Pursuant to our recent M&A transactions for Coil Partners (Crown Components and Industrial Valco) wherein both companies were acquired by strategic buyers, the valuation discussions with target buyers were less focused on the latest twelve months ("LTM") EBITDA and more focused on sustainable EBITDA and expected financial performance exiting 2022 and into 2023. This theme is consistent across most M&A transactions in this current environment in which sellers' business models during 2021 and 2022 were positively/negatively impacted in the aftermath of the pandemic, supply chain disruptions, and emerging inflation.

In prior M&A seasons, valuation metrics were often tied to a multiple of the sellers' LTM EBITDA. But now, buyers are focused on ascertaining sellers' sustainable EBITDA or New Normal EBITDA - and then applying a valuation multiple. This dynamic combined with higher debt costs is contributing to the current M&A deal volume softness. However, don't be surprised to see a strong rebound in deal volume entering the 3rd and 4th quarter of 2023 as we gain better visibility as to the New Normal, and impatient buyers flush with capital run out of patience.

So what does this mean for Buyers and Sellers...?

Buyer REALITIES:

• Ample capital - albeit more patient - available to deploy for acquisitions

• Growth through acquisitions versus organic growth still the preferred growth strategy

• Raising the performance bar for revenue growth and margins for target acquisitions

• Sustainable EBITDA and projected “New Normal” EBITDA are key valuation metrics

SELLER REALITIES:

• Sellers who experienced the COVID bump in 2021 and 2022 need to deliver sustainable EBITDA in 2023, identified as the “New Normal”

• Valuation multiples tied to EBITDA are down 1-3 turns, subject to industry sectors

• Yes, higher debt cost does impact your valuation

• Strategic buyers may once again take the top spot as the highest bidder, as Private Equity buyers experiencing higher debt costs take a more conservative view on valuations for acquisitions

COIL PARTNERS INSIGHT:

• Quality companies with quality revenues, margins and growth prospects will always have buyers available to pay a good price

• Markets matter: conditions, confidence and consensus are realities

• If you are thinking of selling, you have likely already made your decision!!

COIL PARTNERS VALUE PROPOSITION:

• $4.5 Billion in aggregate transaction value across 130+ client transactions

• We provide sellers with a clear understanding of their range of value and the metrics that impact value

• Our team understands how to identify and leverage sellers' value proposition to target buyers

• We have a successful track record of transaction closings at or above expected seller values through proper positioning and a customized transaction process that leads to buyer engagement and well informed buyer offers with low closing risk

Deal Experience Through MARKET Cycles

Paul Donnelly and the Coil Partners team have executed over 130 transactions through all stages of market and economic volatility. We specialize in delivering corporate finance advisory and investment banking services to emerging growth and middle market firms. Thanks to our extensive industry experience, we have the expertise to close the most complex of deals. Over the years, Paul and the Coil Partners team have completed over $4.5 billion in transaction values.

COIL PARTNERS Announces Acquisition of Industrial Valco by Texas Pipe & Supply

We are pleased to announce that Texas Pipe & Supply has acquired our client Industrial Valco, Inc. ("the Company") located in California. Coil Partners acted as financial advisor to Industrial Valco for the transaction.

Industrial Valco is a 75-year branded Master Distributor serving the industrial and commercial pipes, valves, and fittings (“PVF”) market. The Company inventories ~25,000 PVF SKUs from longstanding strategic relationships with domestic and international manufacturers to provide PVF products “as needed.” Industrial Valco’s e-commerce platform ivalco.com and direct sales channel serve over 2,000 industrial and commercial distributors. Operating out of nine fulfillment centers nationwide, Industrial Valco’s market success is directly attributed to its branded speedability® guarantee of “in stock, error free, 2 hours or less.” 

The Texas Pipe Family of Companies is an industry leader in the manufacturing of fittings and distribution of pipe, fittings, flanges, valves, and instrumentation tubing - in all grades. Founded in 1918, the Texas Pipe family now operates over 20 sales and distribution facilities and 3 manufacturing facilities in the U.S. with 3 international sales offices in the U.K., Singapore, and Abu Dhabi. The acquisition of Industrial Valco complements its Dodson Global subsidiary and helps strengthen its combined market position by adding inventory, people, and technology to its platform.

“The Coil Partners team led by Paul Donnelly proved valuable in helping navigate the Company selling process, leading us from the transaction preparation and outreach through the LOI negotiation and execution of the definitive agreements. They stayed fully connected through all stages of the deal, which was critical and comforting for a first time seller," said Rob Raban, owner and CEO of Industrial Valco.

Advising the owner of Industrial Valco, Coil Partners was successful in structuring and negotiating the sale of the Company to the privately held strategic buyer, Texas Pipe & Supply, which continues to build on its operating portfolio consisting of 11 branded companies for the manufacturing and distribution of PVF related products.

Recession Fears and M&A - Here We Go Again

by Paul Donnelly

Premium equity valuations and rising interest rates stress our markets on a fundamental basis that high consumer confidence and low unemployment in the U.S. ultimately cannot outrun. A brutal start to this year for markets only got worse in June. The S&P 500 closed out the first half of the year down nearly 21%—the steepest first-half loss seen in more than five decades, leaving the benchmark index firmly in bear market territory.

At the time of this drafting, the Fed Funds Rate has increased from .08% in February to 1.21% in June, resulting in higher corporate debt costs. Meanwhile the inflation rate is at 9.1% for the latest 12 months ending June of this year. The big “R” word is now in full play. Although, there is a wide debate gap as to the intensity and length of the pending recession. As history often does repeat itself, the equity markets do not need a recession as an excuse to correct. However, corrections often fuel fear and caution.

So what does this mean in terms of the M&A markets? Let's take a closer look.

Recession Buyers’ Flight to Quality

Deal activity does tend to decrease during times of economic turbulence. Credit becomes harder to secure and declining stock market values do spill over onto private company valuations. Many buyers take the “flight to quality” route, buying companies or assets that are perceived to be best-in-class with mission critical value propositions and operating leverage that provides opportunities to capture market share gains from weaker competitors.

Recession Buyers Often Reap Long-term Rewards

While turbulence brings challenges, it also creates opportunities. Companies that are in a solid financial position can profit from downturns by seeking opportunistic acquisitions. Firms seeking to grow via the right deal will often find no better time to strike a bargain than during a recession.

However, these buyers must be disciplined to overcome short-term fears and capitalize on long-term rewards. Fewer buyers and tighter credit create an atmosphere of urgency that pushes targets to sell. Tough economic conditions can also allow strategic buyers to pick up troubled companies at a substantial discount. With strategic precision and a farsighted view, buyers can accelerate their market position and strengthen their financial profile even when broader economic conditions lag.

Best-of-Breed Recession Sellers Can Still Reap Premium Valuations

During a real or fear-based recession, companies that are excelling based on their current and projected revenue and EBITDA growth will continue to be met by buyers with enthusiasm and valuation premiums. Strategic buyers with big balance sheets can camouflage their own headwinds or real earnings challenges by announcing strong performing strategic acquisitions. Private equity, with an excess supply of capital, tends to put self-imposed pressure on itself to continue investing or risk returning capital to their investors. Private equity has learned that buying best-of-breed companies at premium prices still works during a 7 to 10-year fund cycle, no matter the market conditions.

Pressured Recession Sellers Can Seek a Merger of Peers

Companies that are being challenged during a recession or companies that are facing bank covenant pressure and lack a strong balance sheet or a deep pocket equity partner, are often compelled to consider a merger with a peer company. A synergistic peer company can ultimately provide a healthier, more competitively restructured business often with greater scale and better operating leverage to survive - and prosper – despite an economic recession.

Deal Experience Through Economic Cycles

Paul Donnelly and the Coil Partners team have executed over 130 transactions through all stages of market and economic volatility. We specialize in delivering corporate finance advisory and investment banking services to emerging growth and middle market firms. Thanks to our extensive industry experience, we have the expertise to close the most complex of deals. Over the years, Paul and the Coil Partners team have completed over $4.5 billion in transaction values.

COIL PARTNERS Announces Acquisition of Crown Components by U.S. LBM

We are pleased to announce that U.S. LBM has acquired our client Crown Components ("the Company") located in Arizona. Coil Partners acted as financial advisor to Crown Components for the transaction.

Founded in 2014, Crown Components serves framing and building contractors for residential, multi-family and light commercial projects. Crown Components manufactures all types of pre-assembled roof and floor wood trusses in a variety of shapes and systems, and provides full turn-key manufacturing services including materials takeoffs, truss design and jobsite delivery. Crown Components operates a nine-acre facility in Tolleson, Arizona that services the Phoenix-Mesa-Scottsdale market.

U.S. LBM is the largest privately owned, full-line distributor of specialty building materials in the United States. Offering a comprehensive portfolio of specialty products, including windows, doors, millwork, wallboard, roofing, siding, engineered components and cabinetry, U.S. LBM combines the scale and operational advantages of a national platform with a local go-to-market strategy through its national network of locations across the country.

“The Coil Partners team proved valuable in helping us navigate the Company selling process and leading us from the LOI negotiation to the execution of the definitive agreements. They stayed fully connected through all stages of the deal, which was critical and comforting for first time sellers," said Jeff Oitzman, Co-Founder of Crown Components.

Advising the owners of Crown Components, Coil Partners was successful in structuring and negotiating the sale of the Company to the private equity-backed strategic buyer, U.S. LBM, which continues to build on its operating portfolio and expertise within the building materials industry.

COIL PARTNERS Announces Acquisition of Harbor Division by KC Piggyback Holdings

We are pleased to announce that KC Piggyback Holdings ("KCP") has acquired the stock of our client Harbor Division ("the Company") located in Southern California. Coil Partners acted as financial advisor to Harbor Division for the transaction.

Founded in 1986, Harbor Division provides drayage services of ocean containers and intermodal equipment storage serving the Los Angeles market and regions in Southern California. The Company’s core competencies include the efficient navigation of the port gauntlet to expedite container delivery. Harbor Division complements it drayage operations with 27 acres of paved, secure storage space for intermodal equipment such as trucks, containers and chassis. The Company’s market leadership and customer loyalty stem from a reputation as “the hardest working guys in the harbor.”

KCP is a holding company formed by the private equity group Arc Industries, Inc. Through its operating companies located in Kansas City, MO and Northern California, KCP provides drayage trucking services for steamship lines, freight forwarders and other customers requiring transport of cargo.   

Advising the owner of Harbor Division, Coil Partners was successful in structuring and negotiating the sale of the Company to the private equity-backed strategic buyer, KCP, which continues to build on its operating portfolio and expertise within trucking services.

COIL PARTNERS Announces Acquisition of Lisi Medical Jeropa by ARCH Global Precision

We are pleased to announce that ARCH Global Precision ("ARCH”) acquired our client LISI Medical Jeropa ("the Company") located in Escondido, California. Coil Partners acted as financial advisor to LISI Medical for the transaction.

A subsidiary of LISI Medical, the Company is a leading contract manufacturer of high-precision medical implants, instruments, and other devices serving a variety of segments in the orthopedic, dental, and cardiovascular markets. The newly acquired plant and operations will join ARCH Medical Solutions, bolstering ARCH as a diversified supplier noted for growth and scale within the medical device market.

“LISI Medical Jeropa broadens the portfolio of products and end markets served by ARCH Medical Solutions,” said Paul Barck, president of ARCH Medical Solutions. “We are excited about this new location, which becomes ARCH Medical Solutions – Escondido, and the capable team that will be joining AMS. The added capabilities in micro-machining, tight-tolerance instrument assemblies, and operations that span prototype to production scale dovetail nicely with our growing customer base and medical device contract manufacturing service offerings.”

Advising the LISI Medical executive team and the leadership at Jeropa, Coil Partners was successful in running a M&A process that led to structuring and negotiating the sale of the Company to strategic buyer ARCH, a private equity-backed consolidated contract manufacturer delivering engineering expertise and precision-machining technologies to serve the medical, aerospace and defense, and industrial markets.

COIL PARTNERS Announces Acquisition of ISLAND TRUSS by CANWEL

We are pleased to announce that CanWel Building Materials Group Ltd. (“CanWel”) has acquired our client Island Truss (the “Company”), through its Honsador Group of Companies. Coil Partners acted as financial advisor for the transaction.

Established in 1995, privately owned Island Truss has been Kauai’s only on-island truss manufacturing plant, providing the entire island with a great assortment of truss designs and products. With a reputation of distinction, Island Truss services many of Kauai’s top hotels, resorts, homes and schools.

“Island Truss is a very reputable and well-respected brand on Kauai and in surrounding markets, and we are very pleased to be able to further solidify and expand our presence in the Hawaiian market with this acquisition,” said Amar Doman, Chairman and CEO of CanWel.

Advising the owner of Island Truss, Coil Partners was successful in structuring and negotiating the sale of the Company to strategic buyer, Canwel, a fully integrated national distributor of building materials with annual revenues of $1.3 billion. CanWel operates multiple treating plant and planning facilities in Canada, the United States, and in 14 locations across the State of Hawaii through its wholly owned Honsador Building Products Group. continues to strengthen its balance sheet to support its organic growth and acquisition initiatives.

COIL PARTNERS Announces $40 Million Debt Financing for Trend Offset Printing

We are pleased to announce the $40 million senior debt financing for our client, Trend Offset Printing. Coil Partners acted as financial advisor for the transaction.

Established in 1955, Trend Offset Printing (the "Company") is a leading fully integrated commercial and retail printer specializing in offset and digital print services. Through its eight locations, Trend services clients' print media needs including magazines, catalogs, direct mail, and retail inserts on both a national and local level.

Advising the owners and Trend management, Coil was successful in positioning the Company and its integration plan to commercial lenders pursuant to Trend's recent acquisition of LSC's retail offset printing facilities. The completion of this debt financing provided by Bank of America represents an important milestone for both the Company and its management team, as the Company continues to strengthen its balance sheet to support its organic growth and acquisition initiatives.

COIL PARTNERS Announces Majority Recapitalization of Reliant Account Management

We are pleased to announce a majority recapitalization for our client, Reliant Account Management, by Westshore Capital Partners. Coil acted as exclusive financial advisor to Reliant Account Management.

Founded in 2009, Reliant Account Management ("RAM" or the "Company") is a specialized independent third-party payment processor and trust accounting company. Utilizing a best-in-class software platform that seamlessly integrates into multiple counterparty management information systems, RAM is rapidly growing into the industry leader and gaining market share as the payment processor of choice for consumers and debt resolution companies.

"The Coil team proved to be uniquely invaluable in navigating us through all stages of the transaction," said Greg Winters, President of RAM. "We now understand the importance of retaining an investment banking team that has the depth of knowledge and capabilities in managing both the transactional and the relational elements of bringing on institutional capital partners."

Advising the owners and RAM management, Coil was successful in sourcing the Company's first institutional capital partner with Westshore Capital Partners, a leading private equity firm focused on small-to-midsized growth companies. The completion of this majority recapitalization, which included debt financing from Capitala Group, represents a significant milestone for both the Company and its management team and positions RAM to aggressively pursue its growth objectives.

Missions.Me 1Nation1Day Campaign in Peru

WATCH 1Nation1Day Video

The vision of 1Nation1Day is to unite the global church for the salvation and transformation of nations.

In June 2019, the country in focus shifted specifically to Peru, where 10,659 missionaries from 43 different nations spent 1 week serving and witnessing tin over 30 different cities throughout Peru. Missions.Me's 1Nation1Day campaign's goal is to work with local churches to meet local needs through relationships and partnerships with the global church, businesses, and organizations. In order to open the door to a nation's heart, one must reach the practical needs of the nation, so missionaries conducted over 14 medical clinics that serviced over 90,000 people, built 47 clean water systems, encouraged and witnessed to over 500,000 children in schools across the country.

The goal was to ignite a movement carried on by the local leadership and churches, uniting them together with Christ's love and truth as the foundation. Over 1.1 million Peruvians were met face-to-face in outreach throughout the week and at the culmination, 10 simultaneous stadium events across the nation. Paul and wife Gerri Donnelly served faithfully in medical clinics and schools in the capital, Lima.

"We have never experienced such a large endeavor with such a level of God’s intimacy with us and the people we were able to touch," says Paul.

Overcoming Obstacles & Planting Hope in Madagascar

Helicopter or private plane is sometimes the only way to access remote villages in Madagascar, to provide supplies, medical attention and share the Hope of Jesus Christ.

In 2015, the Optivest Foundation was first led to Southern Madagascar alongside ministry partner Dynamic Church Planting International, where one particular Board member’s heart was captured by the needs of many unsupported people who live across the country's vast, rugged terrain. The ethnic group in this region is defined in church planting language as an ‘unreached people group’ because it does not have an indigenous, self-propagating Christian church movement. Other contributing factors to this definition are the remote location, absence of national support, severe drought- prone topography and little to no agricultural development.

Since 2015, members of the Foundation have traveled with DCPI annually and developed a personal relationship with local missionary and leader of the Jesus Family Kingdom ministry, Sedera Rakotoaritsifa. Together, they've developed strategic plans to access remote villages to provide clean water wells, medical and dental care, and plant churches that Sedera continues to foster.

Recession Fears and M&A

by Paul Donnelly

Premium equity valuations and rising interest rates stress our markets on a fundamental basis that high consumer confidence and low unemployment in the U.S. ultimately cannot outrun. A brutal start to this year for markets only got worse in June. The S&P 500 closed out the first half of the year down nearly 21%—the steepest first-half loss seen in more than five decades, leaving the benchmark index firmly in bear market territory.

At the time of this drafting, the Fed Funds Rate has increased from .08% in February to 1.21% in June, resulting in higher corporate debt costs. Meanwhile the inflation rate is at 9.1% for the latest 12 months ending June of this year. The big “R” word is now in full play. Although, there is a wide debate gap as to the intensity and length of the pending recession. As history often does repeat itself, the equity markets do not need a recession as an excuse to correct. However, corrections often fuel fear and caution.

So what does this mean in terms of the M&A markets? Let's take a closer look.

Recession buyers flight to quality

Deal activity does tend to decrease during times of economic turbulence. Credit becomes harder to secure and declining stock market values do spill over onto private company valuations. Many buyers take the “flight to quality” route, buying companies or assets that are perceived to be best-in-class with mission critical value propositions and operating leverage that provides opportunities to capture market share gains from weaker competitors.

Recession buyers often reap long- term rewards

While turbulence brings challenges, it also creates opportunities. Companies that are in a solid financial position can profit from downturns by seeking opportunistic acquisitions. Firms seeking to grow via the right deal will often find no better time to strike a bargain than during a recession.

However, these buyers must be disciplined to overcome short-term fears and capitalize on long-term rewards. Fewer buyers and tighter credit create an atmosphere of urgency that pushes targets to sell. Tough economic conditions can also allow strategic buyers to pick up troubled companies at a substantial discount. With strategic precision and a farsighted view, buyers can accelerate their market position and strengthen their financial profile even when broader economic conditions lag.

Recession sellers can seek a “Merger of Peers”

During a real or fear-based recession, companies that are excelling based on their current and projected revenue and EBITDA growth will continue to be met by buyers with enthusiasm and valuation premiums. Strategic buyers with big balance sheets can camouflage their own headwinds or real earnings challenges by announcing strong performing strategic acquisitions. Private equity, with an excess supply of capital, tends to put self-imposed pressure on itself to continue investing or risk returning capital to their investors. Private equity has learned that buying best-of-breed companies at premium prices still works during a 7 to 10-year fund cycle, no matter the market conditions.

Deal experience through economic cycles

Paul Donnelly and the Coil Partners team have executed over 130 transactions through all stages of market and economic volatility. We specialize in delivering corporate finance advisory and investment banking services to emerging growth and middle market firms. Thanks to our extensive industry experience, we have the expertise to close the most complex of deals. Over the years, Paul and the Coil Partners team have completed over $4.5 billion in transaction values.

Brand or Experience: How to Select Your M&A Advisor?

by Paul Donnelly

Choosing the right M&A advisor is perhaps the most critical variable in the success or failure of any deal. A good advisor has the skills, experience, contacts and industry competence to manage a successful M&A process that delivers transaction options that align with the client.

When many emerging growth and middle market firms begin this process, their decision makers are often enticed by the attention of the "big brand" investment banks. We used to refer to them as the “bulge bracket” or “super regionals.” And, if you aren't particularly well-versed in the M&A sector, attention from the “big brands” may fuel a false expectation of value.

The truth, however, is that business owners in this situation are almost always better off choosing to forego the big brand in favor of an advisor with the right experience and enthusiasm -- and here's why.

Brand vs. Experience -- and Why It Matters

The M&A sector is no different than any business space in that people often equate size with competency or quality. And while this might make sense at first glance, it doesn't pass muster upon closer inspection.

Consider this: If a middle market company seeking an advisor takes its business to a large Wall Street firm, there's an excellent chance that things get lost in the shuffle. Big brand investment banks also have big brand enterprises for clients, and it's unlikely that smaller companies and smaller deals are going to take priority.

Additionally, the big brands are going to assign their most talented staff to their largest (and most profitable) clients. While that may be good business, that's little consolation to the middle market company that gets assigned the B or even C team while the A teams are busy servicing larger clients.

Now let's consider the other side of that equation: Companies that partner with reputable and deeply experienced boutique advisories are going to receive a level of customer service from more experienced advisors that big brands are simply incapable of matching.

• Smaller advisors are often nimbler, more attuned to deal dynamics and capable of quickly changing course when conditions call for it. Businesses are much more likely to get the best a smaller advisory firm has to offer.

• When you combine these advantages with the right level of experience, you have an ideal situation for middle market firms. That equates to great customer service, access to high-quality advisors with enough experience to possess both keen insight into industries and the skill to identify and close deals.

By considering core questions such as these, business owners can ensure they are paired up with a knowledgeable and experienced partner with the deal-making chops to close.

Looking for an Experienced Partner?

Paul Donnelly and the Coil Partners Team offer corporate finance advisory and investment banking services for emerging growth and middle-market firms. We have a demonstrated record of deal-making success, closing more than $3.75 billion in transaction value.

If you have any questions about finding the right M&A advisor, we urge you to contact us today: (949) 596-7172

Is Your M&A Advisor Killing Your Deal?

by Paul Donnelly

Few business owners have the necessary experience, connections and free time available to effectively orchestrate the purchase or sale of a firm. That's why an M&A advisor plays such a key role in this process. By partnering with a professional dealmaker, business owners can minimize the risk of errors occurring and help ensure the sale or purchase process runs as smoothly as possible.

It's not enough to simply hire an advisor, however. You also need to make sure you're partnering with the right person, as the wrong one can easily kill your deal.

How the Wrong Advisor Can Kill Your Deal's Momentum

Great dealmakers share a number of the same attributes. By the same token, ineffectual advisors also tend to suffer from the same deficiencies. By identifying these characteristics early on, you can help ensure you're paired with the right partner.

Advisory Capabilities and Value Added Capabilities

Some of the key questions to consider when evaluating an advisor include:

• Does my advisor have the experience, skills and resources to run a deal process? Deal processes combine art and science. Should you run an auction or a negotiated vs. preemptive deal process? Is your advisor skilled at developing and communicating the proper set of deliverables (i.e. confidential information memorandum, management presentation, virtual data room, business analytics, financial model, et al.)? Your advisor’s ability to manage the art and science of a deal can materially affect the outcome.

• How well does my advisor know my industry? In today’s information access world, industry expertise is important but can be overvalued relative to the overall capabilities required for a deal process. As or more important is knowing how to position the client to the right buyers who will assign value to the client’s solution to a buyer’s problem, or see an opportunity the client provides the buyer that can be quantified. The right advisor should know how to tactically position your company, access buyers and quantify the overall value proposition underpinning the transaction.

• Does my deal align with my advisor’s capabilities and fee structure? The larger “bulge bracket” advisors and smaller investment banking boutiques each have different infrastructures, deal size and fee size requirements. The bottom line is this: larger transactions tend to be more process oriented which often requires more resources, while smaller deals – which do require good process skills – often rely on more relational capabilities and hand-holding of the owner operators, who may be doing their first and only M&A transaction.

Some of the value added capabilities to consider when evaluating an advisor include:

• How in tune is my advisor to the social issues of a deal? More deals lose momentum or die based on social issues. Social issues are the human, emotional and relational factors in a deal. Getting to know the client’s members and leaders is critical in helping all parties to understand each player’s value and role (or lack thereof) during and post transaction.

• Is my advisor a skilled negotiator? Dealmaking is an art; a great advisor knows precisely when to push and when to parry, when to demand and when to concede. A great advisor can jumpstart a stalled deal through skilled negotiation. A poor advisor can kill a deal that benefits all parties by alienating the other side or by being intractable, apathetic or unreasonable.

• Is my advisor willing to negotiate with me? It is rare in the deal process not to experience a gap in value between the seller and buyer. Experienced, value added advisors understand that this often requires separate negotiations with both the buyers and the client (seller) to close the “expectation gap.” Competence, experience, expertise and trust are key factors in these discussions. Do you trust your advisor to be forthright with deal expectations or will your advisor avoid the tough conversations until the final stages of the process, where you have the least leverage with your position?

By asking core questions such as these, business owners can ensure they are paired up with a knowledgeable and experienced partner with the deal-making chops to close.

Reach out and find the right M&A Advisor:

Paul Donnelly and the Coil Partners Team offer corporate finance advisory and investment banking services for emerging growth and middle-market firms. We have a demonstrated record of deal-making success, closing more than $3.75 billion in transaction value.

If you have any questions about finding the right M&A advisor, we urge you to contact us today.

Lifestyle or Value Creation Business

by Paul Donnelly

Are you creating a lifestyle or a value creation business? These are two different types of businesses an entrepreneur or owner operator (my preferred term) might operate. Your approach to wealth creation should fit your business model, its goals, and the way your business defines success.

Lifestyle Business

The term lifestyle entrepreneur, coined by Bill Wetzel, describes a business founder whose venture probably won't create financial returns at the level that attracts outside investors or potentially buyers. However, lifestyle businesses, which are often viewed as “mom and pop” shops can also include larger businesses that generate strong cash flow. Statistically speaking, most businesses are lifestyle businesses — with more owner operators entering the arena every day.

• The term "lifestyle" signifies that the business income works for the location and mission chosen by the owner operator. It can also mean a measure of flexibility, to mesh income-generating and household-related obligations and goals.

• For the lifestyle owner operator, the business is not an end in itself, but a means to a sustainable livelihood. Yet some business owners would take the term "lifestyle" to task for emitting a casual tone that downplays their diligence and financial commitment.

• The lifestyle business has a profit mission, but it might have nothing to do with rapid expansion or appealing to buyers down the road.

• Many of today's lifestyle owner operators understand that wealth creation is generated by using the cash flow generated by the business and investing it in other investment assets that can produce both investment diversification and future capital gains.

When the lifestyle business requires additional capital, investment by the owner or debt financing are the usual methods. Because outside investors are often looking for capital gains and future liquidity generated by a corporate sale, equity investments or an exchange of equity in lifestyle businesses are often limited to succession planning and the transfer ownership to either family members or employees.

Value Creation Business

The founders of a value creation business define success in terms of wealth accumulation resulting in capital gains. Here, the owner seeks to create a business that can be sold — generating liquidity or cash, or a path to liquidity in the form of seller notes, equity shares and/or performance based cash earn outs. Success means increasing market value and enterprise value over time. Thus:

• The business focuses on a space with potential for high growth and a defendable market position.

• The business model delivers sustainable leverage, which may be the result of a proprietary technology, competitive cost advantage, brand leadership, recurring revenues and/or customer stickiness or retention.

• Properly executed, this dynamic generates strong profit margins, financial metrics and overall growth within the company, all of which position the company for an exit or liquidity event that delivers an increase in ownership value.

Value creation businesses are often attractive to angel/seed, venture capital, and private equity investors. Their milestones, which includes an exit event, are often achieved through an M&A transaction, private equity recapitalization or buyout, or an initial public offering.

Most such businesses, without overpromising, position themselves in markets conducive to delivering earnings before interest, taxes, depreciation and amortization (EBITDA) that can scale to $5+ million and beyond.

About Optivest Investment Banking

Paul Donnelly is Senior Managing Director of Coil Partners.  Coil Partners provides corporate finance advisory and transaction based investment banking services for emerging growth and middle-market companies. The Coil Partners team has completed over 90 client engagements representing $3.75 billion in transaction value. Visit optivestib.com to learn more.

90 transactions from COIL PARTNERS principals representing over $3.75 billion in value delivered to clients and shareholders

Current Client Engagements Include:

• Location Based Entertainment/Casual Dining Restaurant Company

• C&D Waste Processing Company

• Video Centric Creative Agency Company

• Value Added Distributor of Rubber Based Compounds and Polymers

(Click on image above to enlarge/view pdf.)

PB&Jesus Delivers Health & Hope in Malawi

Since its beginnings in 2011, PB+J Foods, Inc (Peanut Butter and Jesus) has been able to reach thousands of children in the Nkhoma valley of northern Malawi assisting them out of malnutrition and starvation with a fortified peanut butter mixture. Along with delivering this much needed food product, PB+J shares the Good News of Jesus Christ to those who have not heard His gospel of love.

In addition to providing funds for expanded plant capacity, the Optivest Foundation recently provided funds toward the completion of a nine unit guesthouse located next to the local village hospital where the PB+J manufacturing plant is located. The new Hope’s Inn provides housing for visiting medical personnel, students and guests as well as a stream of income to subsidize the cost of the freely distributed food product.

Coil Partners Announces Callaway Golf Company Acquisition of TravisMathew, LLC

We are pleased to announce the acquisition of our client, TravisMathew, LLC, by Callaway Golf Company for $125.5 million in an all cash transaction. Coil Partners acted as financial advisor to TravisMathew.

Founded in 2007, TravisMathew is an iconic men's sportswear brand with premium domestic distribution in better department stores, high-end country clubs, resorts and TravisMathew's experiential retail stores. TravisMathew draws its inspiration from all aspects of Southern California culture and lifestyle. With a focus on constant innovation and extraordinary quality, TravisMathew designs and sells premium men's apparel for work and play. "TravisMathew is throwing a party, and you're invited."

Callaway Golf Company creates products designed to make every golfer a better golfer. Callaway Golf Company manufactures and sells golf clubs and golf balls, and sells bags, accessories and apparel in the golf and lifestyle categories, under the Callaway Golf, Odyssey and OGIO brands worldwide.