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As a professional M&A intermediary I am amazed when I hear others in my profession at industry meetings proclaim, "I don't work with individual buyers." They put it out there almost like a badge of honor or an indication of reaching a higher level of professionalism. My first reaction is, shame on you.
My second reaction is, how short sighted. My third reaction is to understand why and to advise buyers on the preparation necessary to gain credibility, traction, and support from a qualified business broker or M&A Professional. The purpose of this article is to give the first time buyer some action items to complete before they approach a M&A professional to improve the likelihood of garnering professional support.
First of all, please recognize that there is tremendous competition at the Main Street Level (transaction value under $1 Million) for business acquisition. This phenomenon is the result of down sizing and early retirement of mid level and senior executives in their forties and fifties. These people have exited with a war chest of a half million dollars and have vowed to never again be a victim of a corporate restructuring. They want to control their destiny, run their own show, buy and run a business. Most of these people are looking to buy a job.
You and 10 million other buyers:
I am looking to buy a niche manufacturer or distributor with $3 to $10 million in revenue and $500 K to $1.5 Million EBITDA and I don't want to pay more than a 3.5X multiple. I have about $350 K of my own to put into the deal and I have investors lined up for another $1.5 to $2 Million. Pleeeeeeese! Do me a favor. When you have a first meeting with an intermediary and you deliver this message, make sure you are on the first floor. I hate to see my colleagues leaping from tall buildings.
Do your Homework:
There are several things you can do to improve your chances of getting and keeping the attention of a broker.
Dave Kauppi is a Merger and Acquisition Advisor with MidMarket Capital Advisors, LLC. MMCA is a private investment banking and business broker firm specializing in providing corporate finance and business intermediary services to entrepreneurs and middle market corporate clients in a variety of industries. The firm counsels clients in the areas of M&A and divestiture, family business succession planning, valuations, minority interest shareholder sales, business sales and business acquisition. Dave is a Certified Business Intermediary (CBI), a licensed business broker, and a member of IBBA (International Business Brokers Association) and the MBBI ( Midwest Business Brokers and Intermediaries). Contact Dave Kauppi at (630) 325-0123, email davekauppi@midmarkcap.com or visit our Web page www.midmarkcap.com.
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