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Exit Strategies Group Announces Successful Acquisition of Exoskeleton Maker suitX

/in , /by Al Statz

(Berkeley, CA) –  Exit Strategies Group, Inc. is pleased to announce that it recently served as exclusive M&A advisor to the shareholders of US Bionics, Inc., dba suitX, on their successful acquisition by Ottobock.

SuitX is a VC, industry and government funded company spun out of the Robotics and Human Engineering Lab at the University of California, Berkeley that produces advanced accessible exoskeletons for industrial and medical markets. Germany-based Ottobock is a global innovator of prosthetics, orthotics, and exoskeletons. The companies are combining their expertise and product lines to take the exoskeleton market to a new level and foster the worldwide adoption of exoskeletons. Tony Westfall and Al Statz led this project for Exit Strategies Group. Deal terms were not disclosed.

“Exit Strategies Group is honored to have delivered a positive outcome for founder Dr Homayoon Kazerooni and his talented team and investors. suitX products improve the quality of lives for people with musculoskeletal injuries, reduce workplace injuries and improve human productivity in manufacturing, logistics, construction and other work environments. It is exciting to see these firms join forces to become the world leader in occupational exoskeletons, and we wish them all the best,” said Al Statz, President of Exit Strategies Group. “This deal illustrates our continued commitment to providing strategic valuation and M&A advisory services to U.S. automation and robotic technology companies.”

Read Ottobock’s News Release >>

Exit Strategies Group (ESG) is a California-based provider of strategic merger and acquisition advice and execution, and business valuation services. Founded in 2002, with offices in San Francisco and Portland, ESG represents private companies on the sell-side and works with private equity, public and private companies and family offices on the buy-side. ESG has advised on well over 100 M&A transactions, in many industries. For more information visit www.exitstrategiesgroup.com

 

Buyer’s top focus is employee team

/in , , /by Al Statz

Employees. Finding them. Keeping them. It’s on everyone’s mind right now. And for the company or person who buys your business, it just may be their number one concern.

In the latest IBBA and M&A Source Market Pulse Report, a quarterly survey of M&A advisors, respondents indicated that employees were buyers number one due diligence concern so far this year.

Employee issues, specifically longevity, loyalty and work ethic, ranked ahead of other due diligence priorities like operations, revenue and customer concentration.

We’ve been hearing from sellers for a couple of years now that finding qualified employees is their number one barrier to growth. Many can’t find the talent they need to meet customer demand, much less open new divisions or expand to new territory.

This shortage of good talent is also one contributing factor in the strong M&A market right now. When businesses can’t grow organically, they look to acquisitions as a path to expansion. That’s why buyers are putting increased scrutiny into the quality of a company’s employee team.

As an industry, we’ve been talking for years about how important it is to have a well-developed management team in place before you sell. Buyers want a leadership group – or at least one key manager – who can maintain the business in the owner’s absence.

What’s interesting, is that in the recent Market Pulse Report, management team ranked number five on the buyer due diligence list. A good succession plan and backup support is still incredibly important to the saleability and value of your business, but it seems that the strength of your overall employee team is – at this moment in time – an even bigger priority.

Here are some of the issue areas buyers are looking at:

 

Retention

How long do employees stay with you? What practices do you have in place to keep people loyal and committed to your organization? People stay with their employer for more than salary and benefits. Buyers need to understand why employees are loyal so they can make sure it’s a good fit for their own culture and expectations.

Culture

Do employees have an ownership mindset? Do they pitch in and support each other in times of need? Have they built a self-policing culture of quality and performance? And again, will the factors shaping that culture mesh with the buyer’s workplace?

Learning and development

Millennials are currently the largest percentage of the U.S. workforce, and this employee group, more than any other, cares about training and growth. Workplaces with established learning and development programs, as well as those with an organic culture of internal mentoring and promotions, will win employee loyalty – and points with buyers.

Cross-training

COVID-19 shone a spotlight on the benefits of cross-training. When business conditions are changing rapidly, it’s critical to have the ability to move employees from role to role. What’s more, cross-training benefits your people by broadening their skillsets and enabling more flexible scheduling.

Cross-trained employees are better able to fill in and cover for colleagues who want time off, who need extra help during a busy shift, or those who are sick or quarantined and unable to come into work for an extended period of time.

Niche, high-demand skills

In a tight talent market like this, an acquisition can be a way for a company to gain access to highly skilled talent. In some cases, this can even be the primary reason for an acquisition.

If you have employees with hard-to-find skills and employees who could take on new challenges and help a buyer grow, think about how you can retain them and keep them engaged in the run-up to selling your business. That said, we generally do not advise disclosing your exit plans to employees in advance.

A pending sale can cause anxiety among your employee group. Some will look for a new job rather than risk an uncertain future with a new owner. Talk to your M&A advisors about your key employees, stay bonuses, and what kind of succession planning is right for your situation.

Depending on your exit goals, we may be able to target buyers who will offer small equity positions to key employees. For the right employees – the opportunity to gain a real ownership stake in your business could be a meaningful incentive that keeps them committed to your company.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.

M&A Advisor Tip: Buy your buddy a beer, not experience

/in , /by Al Statz

I’m all for friendships, but I wouldn’t risk my financial future on one. Unfortunately, many business owners do just that. If you’re like me, many of your professional advisors have become your friends, and you want to honor those relationships.

But M&A is a specialist’s world. If you engage your usual advisor (e.g., attorney) to conduct a business sale and they are not a specialist in M&A transactions, you could be risking everything you worked so hard for. Think of this as brain surgery. You wouldn’t use your general doctor who has done your annual physical for the last 25 years. So why would you not bring in a specialist with the largest financial transaction of your life?

Find someone with the right experience to protect you, your family, and your employees. When the sale is done, you’ll have the resources to throw some new business (and some beers) your friend’s way.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.

Exit Strategies Group Announces Successful Acquisition of Tri-Phase Automation

/in , /by Al Statz

(Milwaukee, WI) – Exit Strategies Group, Inc. is pleased to announce that it recently served as exclusive M&A advisor to the shareholders of Tri-Phase Automation, IMAC Motion Control and i-Tech (“Tri-Phase”) on their successful sale to Flow Control Group (FCG), a portfolio company of KKR & Co. Tri-Phase is a leading regional automation solutions provider in the upper Midwest. The acquisition expands FCG’s geographic footprint and custom control panel capabilities in the industrial automation segment of their business. Deal terms were not disclosed.

Founded in 1992 by Matt Miller, Tri-Phase is a leading value-added distributor and integrator of industrial automation technologies serving Wisconsin and Illinois. The firm provides advanced industrial automation technologies from many premier global manufacturers, including motion control, robotics, vision systems, machine controls, safety and sensors, and electrical panel components. Tri-Phase also designs and builds custom industrial control panels, sub-assemblies, and mixed technology systems. Its engineers serve as an extension of their client’s engineering departments to solve technical problems, reduce time to market, increase productivity and profits, maximize investment returns, and gain a competitive edge in their marketplace.

“Our relationship with Exit Strategies began with them providing an independent value and sale-readiness assessment about a year before we went to market. Al’s insights were invaluable in helping us position the company for a more successful sale,” said Matt Miller, founder and CEO of Tri-Phase. “Their sale process produced several strong offers, and they were instrumental in helping us choose the right partner and negotiate and close a deal that met the needs of our entire team.”

Flow Control Group is a leading solutions provider focused on technically oriented products and services for the flow control, fluid handling and process and industrial automation sectors with locations throughout North America. As a critical intermediary between suppliers and customers, FCG’s distribution and technical services serve an essential function in the movement of mission critical components to a diverse array of end markets and applications.

“Exit Strategies is incredibly pleased to have partnered with Matt Miller and the Tri-Phase shareholders. Tri-Phase Automation is an innovative company doing important work, and we share many of the same values. We are delighted to have helped them navigate this process and we wish them all the best in the future,” said Al Statz, President of Exit Strategies Group. “This deal illustrates Exit Strategies’ continued commitment to providing strategic valuation and M&A advisory services to U.S. industrial automation technology companies.”

Exit Strategies Group (ESG) is a California-based provider of strategic merger and acquisition advice and execution, and business valuation services. Founded in 2002, with offices in San Francisco and Portland, ESG represents private companies on the sell-side and works with private equity, public and private companies and family offices on the buy-side. Our industry expertise spans all areas of industrial automation products and services. Since inception, ESG has advised on well over 100 M&A transactions. For more information visit www.exitstrategiesgroup.com

Employee Retention Raises Business Value, Especially Now

/in , /by Al Statz

“To win in the marketplace, you must first win in the workplace.” Those words of Doug Conant, business leader and former CEO of Campbell Soup Company, ring particularly true today.

The talent market was tight before the pandemic, but now we’re in a critical state. Finding employees, and keeping them, is a challenge for everyone. And if you’re selling your business, it just might be the buyer’s number one concern.

In the latest IBBA and M&A Source Market Pulse Report, a quarterly survey of M&A advisors, employee issues topped the list of buyer due diligence concerns. Employees, specifically longevity, loyalty, and work ethic, ranked ahead of other priorities like operations, revenue, and customer concentration.

When businesses don’t have enough talent to grow organically, they may turn to acquisitions instead.

But buyers know that to make that strategy work, they need to acquire a fully staffed, stable employee team and a culture of retention.

Employee issues buyers care about right now:

Turnover: Buyers are looking at turnover and retention trends. If you’re constantly in hiring mode to replace departing talent, buyers will see that as an element of risk.

Culture: People stay in a job for more than salary and benefits. Buyers want to know what it is about your workplace that makes people stay – and will it mesh with their own culture?

Training: A strong learning and development program is one way to keep people loyal and engaged. Buyers see value in companies with a culture of internal mentoring and promotion, particularly if you can show how it’s linked to employee retention.

Cross-coverage. COVID-19 shone a spotlight on the benefits of cross-training. Cross-trained employees are better able to fill in for workers who want time off, who need extra help during a busy shift, or those who are sick or quarantined and unable to come into work.

Leadership potential. If you have employees who could take on new challenges and help a buyer grow, think about how you can retain them and keep them engaged in the run-up to selling your business.

However, we do not recommend disclosing your exit plans to employees. If employees find out your business is for sale, they may look for another job rather than risk an uncertain future with a new owner.

Depending on your goals, we may be able to find a buyer who will offer equity positions to select team members. The chance to get a real ownership stake in your company could be just the incentive your top talent needs to stay.

Talk to your M&A advisor about your key employees, stay bonuses, and what kind of succession planning is right for your situation.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.

M&A Advisor Tip – Know Your Priorities

/in , /by Al Statz

The market is still strong, and sellers are receiving multiple offers, but the buyers they choose aren’t always the ones with the biggest checks.

Would you take a lower price to ensure that the buyer’s culture fits yours? How about a million-dollar price cut if it meant getting all cash at close and avoiding years of seller financing? Or trading $100,000 in salary to for an extra $1 million in sale price?

Sellers face these kinds of choices all the time. Potential deal structures should be carefully considered and explored, long before you reach the negotiating table. Whether or not you realize it, you’re positioning and negotiating from day one of a sale process. If you don’t have your priorities figured out, you might give a buyer the wrong impression … and that can spoil a deal.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.

Exit Strategies Group Advises Shaltz Automation in Sale

/in , /by Al Statz

(Flint, MI) — Exit Strategies Group, Inc. recently served as the exclusive financial advisor to Shaltz Automation, a leading regional industrial automation solutions provider, in its acquisition by Flow Control Group (FCG), a portfolio company of KKR & Co. Inc.  Deal terms were not disclosed. 

Headquartered in Flint, Michigan, Shaltz Automation provides advanced industrial automation products from many global manufacturers. Final mile assembly, manufacturing, engineering services, system integration, application know-how and technical support feature prominently in their business model. Technologies include pneumatics, vision systems, robots, machine controls, sensors and other advanced industrial automation technologies. Founded in 1975, Shaltz is a critical partner to major OEM and end user manufacturers in Michigan and Ohio serving diverse end markets such as medical device, food and beverage, automotive, electric vehicle, electronics and packaging.

“We were looking to partner with a like-minded M&A advisor who could understand and promote our unique capabilities, market position and growth potential. Exit Strategies adeptly connected us with potential partners and ensured that we selected the best option and optimized deal terms. Al Statz and Adam Wiskind were with us at every critical step,” said CEO Phil Shaltz.

Flow Control Group is a leading solutions provider focused on technically oriented products and services for the flow control, fluid handling and process and industrial automation sectors with locations throughout North America. As a critical intermediary between suppliers and customers, FCG’s distribution and technical services serve an essential function in the movement of mission critical components to a diverse array of end markets and applications. This deal expands FCG’s market coverage in the industrial automation segment of its business.

“Exit Strategies was incredibly pleased to partner with Phil, Chris Carpenter and the Shaltz Automation team, as this acquisition provides the right opportunity for Shaltz to continue its impressive growth trajectory,” said Al Statz, President of Exit Strategies Group. This transaction illustrates Exit Strategies’ expertise and continued commitment to providing strategic merger and acquisition services to leading industrial automation technology companies.

About Exit Strategies Group

Exit Strategies Group (ESG) is a California-based firm that offers strategic mergers and acquisitions advice and execution, and business valuation services. Founded in 2002, with offices in San Francisco and Portland, ESG represents private companies on the sell-side and works with private equity, public and private companies and family offices on the buy-side. Our industry expertise spans all areas of industrial automation products and services. Since inception, ESG has advised on well over 100 transactions. For more information visit www.exitstrategiesgroup.com

Management Buyouts are a great option, but consider the risks

/in , /by Adam Wiskind

One of the more attractive exit options for you as a business owner is a management buyout (MBO). That is when your management team works together to buy either a total or a majority stake in your company, thus taking control of the company themselves.

There are several benefits to selling your company to your management team:

  • You can reward loyal managers with an opportunity to gain equity in the company. Managers are more likely to maintain the corporate culture and honor your legacy than an unknown buyer.
  • The management team already knows the company intimately, so you’ll have less to disclose; and the managers will be less concerned about due diligence, representations and warranties, and indemnity.
  • The management team has experience in the business, so you’ll have less of an obligation to train them and can transition out of the business faster after the sale.
  • Information about the company can remain more confidential as sensitive information does not have to be divulged to external parties.
  • Though you may not get a strategic price premium for the business, you should at least get fair market value.
  • With thoughtful planning and early preparation, the sale can be carried out on your timeframe.

However, management buyouts also present some unique risks that must be addressed to avoid derailing the deal.

Management Team Composition

Even if they are effective managers not all teams have the collaboration, leadership, financial positions, and motivation to acquire a business. You should make an unbiased assessment of your management team’s abilities and plans prior to committing to sell your business to them. Many of the tips found in this article on assessing buyer prospects apply to MBO teams as well. Also, be aware of managers who are not invited to join the MBO team, as they can disrupt a deal that they feel that they should have participated in.

Team Organization

MBO team members have very often not acquired a business before. They may need professional help to organize themselves to write a business plan, create a shareholder agreement and locate financing. The team will need to consider how their positions and responsibilities will change once they become owners.

Business Performance

The MBO team needs to maintain the profits and prospects of the company while they are navigating the deal process. A deterioration in business performance could scare off financial backers of the transaction and put undue stress on the deal.

Plan for Failure

Clearly there are benefits to selling your business to your management team rather than to an unknown buyer; however, if the deal with management falls apart, the repercussions can be severe. What happens to your business value if one or more of your managers leaves because of a deal gone bad?  Be sure to have contingency plans in case the buyout doesn’t work.

Having the right professional advisors increases the likelihood of a successful buyout. For advice on exit planning or selling a business, contact Adam Wiskind, Advisor at Exit Strategies Group, Inc., at awiskind@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.

 

The happiest business owners know what’s next

/in , /by Al Statz

I had the privilege of chatting with Bo Burlingham, former executive editor for Inc. magazine and author of several books, including Finish Big: How Great Entrepreneurs Exit Their Companies on Top.

We talked about one of the key discoveries that led to the book, namely that so many business owners were unhappy after selling their companies. It didn’t really matter how much someone got for their business – some sellers were delighted while others were depressed and miserable.

What made sellers unhappy? Burlingham spent years doing interviews to find that out. And one of the biggest issues he found is that people didn’t have a place to redirect their passion and energy.

For many entrepreneurs, the business becomes their identity. It gives them direction. Without that outlet, some former business owners become unmoored. Suddenly, their phone isn’t ringing as much. No one needs them to make hard decisions anymore, and that can be troubling for some folks.

Burlington describes these owners as “wandering the desert.” They’re searching for that new thing to get excited about, and some of them take years to find it.

You might think a little wandering sounds fine, but retiree beware! There’s actually research that shows early retirement can increase your chance of early death.

A 2019 study conducted by economists at Harvard and State University of New York found that cognitive decline accelerated when people left work. Researchers contributed it to the loss of social engagement and connection that many people find in the workplace.

And yet business owners should not delay selling. Ironically, the best time to sell is when you’re engaged and excited about your business.

Buyers pay for the future cash flow of the business, and that means you’ll get the most value when you go out on the upswing. Buyers feed off your energy, so you want to show them someone who’s really truly passionate about where their company can go.

But the kicker is, you need to be passionate about your next steps, too. It’s important to know what you’re headed for, not just what you’re leaving behind.

When an entrepreneur’s identity is wholly tied up in their business, that can be a red flag. It’s a sign they might hold on to the business too long, past the point where their leadership is the best thing for the company and its value.

That’s why we ask sellers to go through a “bucket list” exercise. Think about what you want to be remembered for. What captures your interest and enthusiasm, besides your business?

Selling your business should be the first step in your best chapter ever. You’ll have the gift of time and money – and the opportunity to do anything with it you want. The best thing for your health, your happiness, and the value of your company is to know the next chapter you want to write.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.

M&A Advisor Tip: Time Kills All Deals

/in , /by Al Statz

More than purchase price or structure, time is the most likely reason a business sale will fail. Time breeds frustration and fatigue. From irascible attorneys to disorganized brokers and licensing issues, plenty of factors can bog down a deal.

Sooner or later one party or the other gets fed up and rationalizes, “It wasn’t meant to be.”

Your advisor should have a reasonable client load (no more than four or five is ideal) so they can give you the time and energy you deserve. Look for an office with a manager dedicated to closing details. You need someone organized and proactive, looking several weeks and months in advance.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.