Mirus Capital AdvisorsMirus Capital Advisors

Pre-sale Planning, Selling a Business, Strategic Advisory

Who would buy my company?

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Many business owners are surprised to learn that large, often global, companies are active acquirers of lower middle market businesses.  A company much larger than yours may be the right acquirer for your business.

There’s a rule-of-thumb in M&A that the likely acquirer for a business is 3-10x larger than the seller.  Large enough to have the wherewithal to do the deal, but not so large that the transaction won’t “move the needle” on the acquirer’s financial results.  In many cases, that rule-of-thumb does prove true, but in some interesting deals, it doesn’t.  In the exception that proves the rule, we’ve seen large corporates outbid others for relatively small businesses that significantly enhance an important area of the acquirer’s business or give them a meaningful entree to a growing market (e.g. product, geography, or service).

In the past few years, we’ve closed six transactions with global fortune 500 and other large public companies for lower-middle market clients whose size averaged under $20 million in revenues. The revenues for the acquirers? Typically over $1 billion.  That’s more than 50-to-1.

While many M&A clients choose to sell to closely-held (often private equity backed) companies and financial sponsors, for some, the large corporate acquirer provides the best offer in price and terms.   Transacting with large public companies can be challenging, but the benefit for clients in valuation, structure and alignment of personal goals with business strategy often make them the best choice.  Our experience preparing clients for a process with a global acquirer and our expertise in negotiating with these large corporates are a couple of reasons clients choose Mirus.

You can find more of Alan’s perspectives at www.merger.com or contact him at fullerton@merger.com.