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Recent Transactions:
Grow or Begin to Stabilize Company Revenues &
Profits in 2009 – Purchase a Company
The headlines appearing on the news, internet web sites and cable news channels all say the same “Doom & Gloom”, that we are in a recession. No kidding where were they last year? Growth for companies in 2009 & 2010 is not going to come from existing markets, new products, product discounts, and layoffs or not filling empty personnel slots. Growth in 2009-10 will occur by well managed companies purchasing another company or major product line.
In January 2009 many news outlets reported that CEO’s of major companies felt that the only way they could stabilize revenues and profits and begin to turn things around was thru the acquisition of a company.
1. What Kind of Acquisition Makes Sense?
An acquisition makes sense in good times and bad times if it is complimentary in many respects to the acquiring company. Where some companies get into trouble is by purchasing a company that they know very little about, or the profits of the candidate company dilute the earnings of the parent company, or they just plain failed in the integration and implementation of the new companies.
2. Complimentary Products – Markets – EBIT:
If your product sales were down in 2008 you know what you can expect in 2009. Depending on your products and markets you may want to consider purchasing a competitor or purchasing a company that doesn’t compete with you directly – but does manufacture like products or runs parallel to your existing distribution.
Conversely, if your sales were down in 2008 and 2009 revenues won’t be anything to be excited about – look at purchasing a company that does business in different markets with different products or services. In pursuing this acquisition strategy it’s key that the senior management of the company stays and that you learn everything about the acquiring company & their markets
Lastly, don’t let the gross margins, net income or EBIT of your company be diluted by that of the acquiring company.
3. Companies & Markets That Make Sense in 2009-10:
It can generally be said that most companies in most markets are down 25-35% in revenues and profits. The more commodity product focused you are - the deeper the drops.
Focus on companies that are closely or privately held:
• Business service providers
• Communications market (wireless, broadband, CLEC’s)
• Internet web sites offering products or services
• Manufacturing (proprietary products)
• Medical products or services
• Security market products & services
• Software companies (.net or featuring proprietary products
or services)
4. Financing an Acquisition:
• Certainly 2009 represents a challenge to the capital markets. However, we are continually being contacted by Private Equity Groups (PEG’s) that have cash to infuse.
• Foreign investors from Canada, England, Germany, Japan, Korea, China, Saudi Arabia, & Sweden, continue to look for good investments in the United States.
• Private Investors no longer willing to participate in the stock market our also an excellent source of financing.
5. Maximize the Success Rate of Your Acquisition:
You will substantially increase the success of the acquisition by assigning one person in each company to monitor the department heads involved in the M&A integration – implementation.
About Hartford Business Partners:
Hartford Business Partners is an M&A Firm, sometimes referred to as an “M&A Intermediary” specializing in companies in "the middle market" that are privately owned or closely held. We represent the Seller of a Company in an M&A transaction; we can also represent Buyers through a dedicated acquisition candidate search whereby we become you’re “Hired Gun”. We will not represent both the seller and a buyer in an M&A transaction - it’s just the way we do business – ethically.
Hartford Business Partners works in the “middle market” of M&A, which is commonly referred to as the $10-$75 Million dollar revenue range. We will go as low as $5 million in company revenues if the company would be extremely attractive to potential buyers, or occupy a niche or be in a rapid rising market.
We accept engagements to sell companies anywhere in the United States - or work with buyers worldwide on directed searches, so that we can stay “fresh”; that every engagement is as exciting to us as the very first one.
M&A firms “M&A Intermediaries” value the company prior to sale, package the company by preparing an “Executive Summary” or offering memoranda” as it is sometimes referred to; then solicit potential buyers.
We will actively purse potential buyers and sellers; and at the same time guard your Confidentiality. Our idea of a confidential sale is when no one outside of the deal finds out about it until after the closing.
We screen every potential buyer, attend every meeting; work with buyers who want to submit an offer to purchase your company. Once you accept the Offer to Purchase we will be the liaison for Due Diligence information then work with the attorneys on the preparation of the Purchase & Sale Agreement.
Consider hiring ‘the professionals” at Hartford Business Partners. Let us interview for the position of your M&A firm. Contact Jeff Curtis, Managing Partner at 860-677-1241.
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