Monthly Update – June 2017 – Private Equity – Available Capital and Active Investors
Featured Clients this issue:
**Details of each client below article
– Multi-Location Home Accessories Distributor #2416
– Custom Building Products #2616
– Interior Demolition and Construction Debris Removal Business #1316
Private Equity – Available Capital and Active Investors
I recently attended an M&A conference in Dallas, TX and was very impressed with the current amount of interested buyers and collective capital that exists among Private Equity Groups. These active investors, numbering in the thousands, are searching right now to purchase viable companies in cities, both large and small, throughout the United States.
According to the 2017 Spring Annual Report, published on the Investment Council.org website to illustrate components of the Private Equity Industry, there are over 4,000 PE firms in the United States spread from coast to coast. Collectively, they own over 14,000 companies, employ millions of Americans, invested over $600 billion in 2016 alone, and have over 1 trillion dollars in capital to continue to acquire companies. (The amount used at the conference was $1.5 trillion, which is the highest amount that I have ever seen). Due to the populist politics of the industry, however, despite their widespread influence and reach, this group is still often perceived as beginning and ending solely in “Wall Street” and acquiring companies or buildings primarily in downtown Manhattan. This simply is not the case in today’s world.
Current efforts by PE firms everywhere have expanded far beyond talking with close networking ties to discover and approach stable companies to acquire. They scour online data to build spreadsheets and analytical reports, measure city, county and state economic activity in all parts of the county – including the Front Range of Colorado, research industry trends, and even dive into the personal stories of people that work in local companies they acquire. Such characteristics highlight, even more today than in times past, the importance of having an experienced professional who knows what these PE firms are looking for and present your company in the best possible light; which, typically translates into closing the deal with terms that are as favorable to the seller as possible.
The detailed and comprehensive amount of information these PE firms require add to the perception that while capital might be available in the marketplace, it is out of reach for many companies looking to sell. While this process of due diligence can be extensive, it’s purpose is both reasonable and responsible. In addition to showing how their investment is very likely to provide a positive return, they also want to do well within the community they are located.
The Investment Council.org Spring 2017 report explains how “many PE portfolio companies are rooted in communities that likely know their history; their successes and their failures. When a PE firm acquires a company, they are not only investing in that company’s future, but those connected with its past – employees and consumers it serves.” In the past five years, cities along the Front Range (Ft Collins, Denver, Colorado Springs, etc.) have consistently been rated among the top five or top ten areas to live and work. Colorado has recently been identified as the state with the best economy in the nation and we are high on the radar screen for many acquirers.
If you feel that now might be the right time to sell your business, give us a call for a free, confidential, no obligation consultation. Private Equity firms and other acquirers are actively searching to find successful businesses to acquire and help grow. An experienced intermediary firm like The FBB Group, Ltd., with roots in Colorado dating back to 1982, enables sellers to be positioned in the market to be attractive to Private Equity Groups, strategic acquirers, family offices, and high net worth buyers.
The majority of our business is derived from referrals. Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.
Ronald V. Chernak
Inspiring business relationships since 1982!
Congratulations to Robert Amerine!
In May, Robert attended the 2017 IBBA Annual Conference in Dallas, Texas, where he was granted the Certified Business Intermediary (CBI) certification from the International Business Brokers Association (IBBA).
The CBI is highly regarded by the IBBA community and by business professionals worldwide. Founded in 1983, the IBBA is the largest non-profit association specifically formed to meet the needs of people and firms engaged in various aspects of business brokerage and mergers and acquisitions.
Multi-Location Home Accessories Distributor #2416
This well-established distributor of home accessories and follow-on services continues to generate increasing profits in the home accessories industry. Over the past four years, sales have increased nearly 35%, resulting in over a 110% increase in Adjusted EBITDA. With experienced second level management in place, we believe this business is poised for expansion in Colorado and surrounding states. Sales for the first nine months of the 2016 fiscal year are $15,787,533; up approximately 12% over the same period in 2015. Adjusted EBITDA of $2,392,715 is up 27.5%. While a stock sale is preferred, owners would consider an asset purchase. Real estate valued at $6M+ (subject to appraisal) can be purchased with the business.
For more information contact Robert Amerine firstname.lastname@example.org.
Custom Building Products #2616
This company, located in a high-end mountain community, offers decorative finishes necessary for most remodels, upgrades, and new construction projects. With the growth in new construction and expansion of its product line, this company has seen an increase in sales year over year since 2011! The business continues to expand into new geographic markets through its motivated sales staff. Through its highly effective website, designers from around the world have discovered this company and the unique, quality products it offers.
Interior Demolition and Construction Debris Removal Business #1316
This highly regarded demolition, construction debris removal, and recycling company works with construction firms and general contractors to remove existing tenant finishes and equipment from retail businesses, office complexes, and other commercial buildings. Most of the demolition work is indoors and doesn’t include the exterior of the building. The company has the experience and owns the equipment to perform large demolition projects. Revenue has increased significantly in 2016 and there are many new jobs in the pipeline scheduled to be completed in 2017. The sellers are forecasting a strong 2017 with current industry activity on the rise. We believe this would be an excellent acquisition candidate for an industry buyer, a current manager of a construction company, or a sales-oriented entrepreneur ready with marketing experience.