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Why Cultural Synergy Is Imperative When Selling Your Business

When selling a company, of course the numbers are important. You want to obtain the most value in a sale and it can be easy to get caught up in revenue potential and expansion goals. But if you are truly concerned about the completion of a deal and the long-term success of the business, cultural fit between the converging companies is something that should never be underestimated or overlooked. 

M&A Culture Shock

The culture affects everyone in the company, from the CEO and management down to every last employee. Values matter, communication is critical, morale is extremely influential when it comes to productivity, and these topics become even more important in cross-border transactions. Synergy in this respect can directly impact the bottom line of the business. Culture clash can utterly shatter the prospects of the merger or acquisition’s success.Research shows that complementary competencies contribute significantly to the enhanced overall M&A performance.This is why cultural integration must be considered before a deal is done, and why many savvy acquirers have formulas in place to address the fusion of two organizations’ cultures.

 

Ready to explore your exit and growth options?

 

What Defines Company Culture?

The culture of a company is typically outlined by certain key factors:

  • How the company defines essential capabilities and competitive strategies
  • The normal behaviors of leadership and staff members
  • The business’s operating model including structure, accountability, supervisory systems, and day-to-day operation guidelines
  • National and regional customs, observances, language barriers, dress codes, work ethics and ideologies  

Talent Retention is Key

Talent is a major factor in the acquisition of a company, as is the retention of that talent. Cultural fit has proven to be a critical factor in the retaining key talent after a sale due to issues related to autonomy and disruption—all things that should be negotiated upon a transaction. Research demonstrates that giving decision-making autonomy to the acquired business can improve integration and overall acquisition performance. Routines, relationships, and processes that are already embedded in a target company’s culture need to be understood by a buyer to avoid potential disruptions and ensure performance that is conducive to success. This can be especially important in the acquisition of high-tech companies.

Studies have indicated that if national and corporate cultural differences are not properly addressed during pre- and post-acquisition integration, it can have disastrous consequences on the overall success of the M&A transaction.

How Cultural Differences Can Actually Help

Cultural differences in cross-border transactions are not always a bad thing. It has been demonstrated that these differences can actually enhance the competitive advantage of the combined firms when cultural integration is properly handled. These benefits include:

  • Access to distinct and valuable capabilities that may be rooted in the different cultural environment
  • Development of deeper knowledge structures
  • Lessened inactivity within the organization
  • Excellent source of learning, innovation and value creation
  • Greater manager involvement in social and cultural factors that are sometimes overlooked in domestic M&As 

“Cultural learning” can change negative stereotypes, create positive attitudes, and improve communication between the two companies. For this process to work, there should be a controlled dispersion of information between parties that enables them to obtain accurate information about each other in a constructive way. This eliminates misconceptions and shines a light on actual differences that can be seen as the best aspects of both cultures.

 

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Culture & the Due Diligence Process

Due diligence is crucial to every M&A deal, and this includes assessment of the cultural factors that may have impacts on the transaction and its success. Some questions to consider include:

  • Does the target company have the right talent to carry out the acquisition strategy?
  • Which team members are essential to continued value?
  • What are potential deficiencies within management that can hinder long-term success?
  • What is the overall cultural compatibility between the two organizations?

Cultural differences that can be deal killers need to be identified as early in the process as possible, keeping in mind that cultural differences can, in some cases, be beneficial. In any case, cultural differences should never be disregarded. Because they are so important to the success of a deal, they must always be evaluated and effectively managed.

Ready to Sell?

If you feel the time has come to sell your company, start the process off right by reaching out to the M&A experts at Benchmark International. Not only will we help you craft a winning exit strategy and use our global connections and proprietary methodologies to find the very best match for an acquirer of your business, but we can also ensure that you achieve cultural synergy before a sale. As a global company, we understand the importance of culture and know exactly what to look for in the alignment of two organizations.

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Benchmark International has Successfully Facilitated the Transaction Between Circum Limited and EA-RS Fire Engineering Limited

Benchmark International is pleased to announce the transaction between engineering and construction firms Circum and EA-RS Fire Engineering.

Circum designs, supplies, installs, commissions and maintains active fire protection systems including wet and dry sprinklers, wet and dry risers, hose reels, and gas and mist suppression systems.

EA-RS Fire Engineering provides a turnkey solution for clients’ fire safety and regulatory requirements. It is one of only five UK fire systems providers with the various accreditations to supply mechanical and electrical packages in one single client order.

Ready to explore your exit and growth options?

This transaction is of a strategic nature, allowing EA-RS Fire Engineering to expand its current service offering and grow inorganically.

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Check Out Our Newly REDesigned Website!

Benchmark International is very excited to announce the launch of our newly redesigned website - https://www.benchmarkintl.com/ 

Featuring a brand new look, and more customized information, we have built our new website with you in mind!

The streamlined user interface allows you to find the information you are looking for more quickly and efficiently than ever before! You can browse the website based on your interests and goals, meet our team, learn more about our services and success, and see how we give back to our communities. You can also browse resources, webinars, workshops, and articles relevant to you within just a few clicks. 

Check out our new website here

We can't wait for you to dive in and explore the new website. We hope you enjoy the fresh look and find that this portal serves as a valuable resource for you. 

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Benchmark International has Successfully Facilitated the Transaction Between Richlyn Systems Limited and Pennine Holdings Ltd

Benchmark International has advised on the transaction between bespoke software provider, Richlyn Systems, and Sheffield-based Pennine Holdings.

Established in 1983, Richlyn Systems is a specialist software and web developer, providing industry tailored software development, standalone software packages and contractual software maintenance to a diverse range of niche B2B clients in industries such as commercial property, health, manufacturing and distribution.

Do you have an exit or growth strategy in place?

Pennine Holdings focuses on acquiring and developing IT related businesses with a view to creating synergies and improving performance.

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Benchmark International Facilitated the Transaction of BobCAD CAM, Inc. to Harris Computer Corporation

Benchmark International has facilitated the transaction of BobCAD CAM, Inc. to Harris Computer Corporation.

BobCAD-CAM, Inc. based in Clearwater, FL, is a leader in CNC programming software for milling, turning, routing, and wire EDM. It combines CAD (computer-aided-design) and CAM (computer-aided-manufacture) functionality into a single interface. Through its proprietary software, the company provides manufacturers a powerful and easy to use CNC (computer numerical control) programming software.

Larry Pendleton, CEO of BobCAD Cam, Inc. commented regarding the transaction, “We are excited to enter this new phase of our company’s growth. We’re especially thankful to the entire Benchmark International team that supported us in the process. As our M&A advisors, they were extremely knowledgeable, thorough and professional during the entire transaction. The Benchmark International team helped us secure multiple offers from strategic, financial, domestic and international buyers, and we couldn’t have gotten this transaction done without them."

Ready to explore your exit and growth options?

Harris Computer Corporation provides mission critical software solutions for utilities, healthcare, local governments, public safety, and schools throughout the U.S. and Canada. Harris has offices throughout North America. Harris is a wholly owned subsidiary of Constellation Software, Inc. CSI is a publicly traded company on the Toronto Stock Exchange. Trading symbol CSU.

This acquisition represents a tremendous opportunity for both businesses and their teams to strategically accelerate the rate of profitable growth.

Benchmark International's Transaction Director, Leo Vanderschuur commented, "It was a pleasure to represent BobCAD CAM in this transaction. Throughout the process, Larry and his team were exceptionally responsive, diligent, and professional. This acquisition represents a tremendous opportunity for both businesses and their teams to strategically accelerate the rate of profitable growth. On behalf of the numerous Benchmark International personnel that worked on this opportunity, we congratulate both teams on reaching this goal."

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M&A And The Big Data Industry

“Big data” has revolutionized the once traditional methods of analyzing data, making it possible to source more data at a much faster rate and with a great deal of variables. Companies that curate these massive databases do so to help businesses across all industries make more carefully calculated business decisions.

Big data sources revenue from software, hardware and professional services. It encompasses security, storage, infrastructure, networking, discovery tools, applications, and analytics, just to name a few.

The power of big data has grown with the widespread use of smartphones, social media and apps, and its technology continues to grow into edge environments, such as network nodes and industrial machines. Data is flowing between organizations of all sizes to help save time, save money, improve relationships, provide valuable insights, and advance technology. Big data is a major player in automation, artificial intelligence, cloud computing, and the Internet of things—innovations that are impacting virtually every industry in the world.

In an increasingly digitized society, everyone is looking to get a piece of the data pie. Technology companies are built on and around data. Advertising agencies look to acquire data companies in order to gain a competitive edge when it comes to understanding consumer behavior and targeting ads to audiences. Healthcare companies are spending billions on data companies to transform everything from precision medicine to medical records. In education, teaching and learning methodologies are being transformed by the use of big data. Mergers and acquisitions firms are using big data to improve target company searches and results. Essentially, there is no industry that is not somehow touched by the use of big data, and that results in sweeping opportunities for M&A transactions.

 

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Big Data’s Impact on M&A

While individuals, companies and governments across many different business sectors are using big data more frequently, new techniques are making it possible to analyze big data more effectively. This can have a significant effect on certain areas of M&A, such as strategy, business model validation, and valuation.

  • M&A strategies include value creation, operational synergies, risk arbitrage, and company turnaround. An M&A strategy is defined by the goals of the company, the skillsets of the M&A team members, and market factors that determine timing and viability. These factors are becoming more data driven in the making of strategic choices.
  • Big data is greatly improving M&A target searches and screening processes. Better screening can lead to better matching of buyers and sellers, leading to a higher percentage of successful deal closings.
  • Big data is making it possible to get a more detailed analysis of a company’s core business model regarding growth, market patterns, customer preferences, and market reaction to products.
  • Combining big data with market-based valuation techniques will make it possible to extract multiples from much wider market databases. It will also make it faster and more reliable to compare a target company and the company’s valuation reference set.

Regulatory and Privacy Issues

While big data offers major benefits for companies of all industries—with benefits that are passed on to customers through a heightened understanding of their needs—there can be certain challenges when it comes to legal issues that concern privacy, government regulations, international access, and increased scrutiny of information collection practices. 

A prime example of what big data must contend with is the changing privacy laws in Europe. In 2018, the European Union’s General Data Protection Regulation (GDPR)replaced an older law from 1995, creating a new regulation for privacy that affects organizations within the E.U., as well as organizations outside of the E.U. that offer goods and services to residents of the E.U. In addition to requiring clear privacy notices for users, the law also requires that organizations give 72-hours notice of a data breach. Users must also be given certain information about how their data will be used and are allowed to request deletion of their content.

The GDPR law is limited in that it only regulates data pertaining to individuals and not organizations, but it does have the potential to limit the type of data gathered. With such a rapidly growing industry that affects so many people and industries, it can be expected that other countries will take similar actions to regulate the use of big data, especially in the United States.

 

Ready to explore your exit and growth options?

 

Contact Us

We do things differently. Please reach out to our M&A specialists at Benchmark International if you are thinking of selling a company in the middle and lower middle markets. We will formulate a partnership that works in your best interests, using our unique databases to thoroughly identify every possible option until we find the perfect solution for you and your business.

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Don’t Delay Your Exit Strategy

In the latest to happen in the rollercoaster that is Brexit, another delay has been granted to the UK with EU members agreeing to an extension until the 31st January.

Meanwhile, reports from the EU are warning that economies may be falling into a recession with the potential decline in part due to Brexit, with countries particularly struggling when dependent on exports.

Despite this, M&A activity has not halted as there are still plenty of opportunities as it’s a way for companies to grow and develop and dealmakers are always on the lookout for strategic acquisitions. In fact, while dealmakers may be cautious and their timelines may be extended on deals, the uncertainty caused by Brexit has carved opportunities for dealmakers as they are ready to take advantage of factors such as the weak pound sterling making for cheap UK assets. This has resulted in the corporate mid-market remaining relatively robust with last year’s figures at record highs.

Feel like it's a good time to sell?

Therefore, if thinking of an exit strategy the time to act is now before it is too late. Potential recession could be a sign of things to come and while M&A has prospered so far despite Brexit, too many business owners are leaving their planning for Brexit until the last minute to wait for certainty from politicians. If certainty is guaranteed, this could lead to the market becoming saturated once a deal has been agreed or, if uncertainty continues to persist more and more economies could fall into recession – so it’s best to strike while the iron is hot.

Still unsure if now is the best time to sell? Read the below: 

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Benchmark International is proud to be a part of the OCFO Founders Conference 2019

Benchmark International is proud to be a part of the 2019 OCFO Founders Conference, taking place on November 7th at the Ideas Cartel in Cape Town, South Africa, during Global Entrepreneurship Week.

The conference aims to bring together the top business people, investors and entrepreneurs in South Africa for an evening of meaningful networking, learning and inspiration.

As part of the event, Dustin Graham, Managing Partner of Transactions for Benchmark International's South Africa offices will be speaking on the topic of preparing one's business to go to market and extracting its true value.

We wish the hosts and attendees well during the event.

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M&A In The Global Health and Life Insurance Industry

Common drivers of mergers and acquisitions in the global health and life insurance industry include the entry into new markets, access to new technologies, valuation trends, and reaction to regulatory changes. With growth strategies leading the charge, market expansion is often made possible through the acquisition of target companies that optimize product portfolios and customer bases, especially those that provide relatively easy yet quite valuable add-on opportunities, as organic growth does not come easily in the insurance space.

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The Digital Marketing Industry and M&A

The trillion dollar advertising space is a rapidly changing industry with most of the action happening on the digital marketing side. As the world’s digital advertising revenues increase, there is a global demand for more online content. Lead generation, advertising, search engine optimization, and affiliate partnerships are major drivers of income in the 21st century marketing industry. This demand drives up the value of content-related businesses and digital marketing agencies in an era where everyone is glued to their connected devices. All of this screen time has caused traditional advertisers (print, TV, outdoor, radio) to shift their largest spends to digital marketing tactics and mobile internet advertising, even outspending television ads.

Worldwide digital advertising spending is predicted to reach $517 billion by the end of the year 2023.

The robust growth, sheer size, and high fragmentation of the digital marketing sector has led to healthy mergers and acquisitions activity involving digital agencies. Everyone from traditional advertising agencies to private equity investors is seeking target companies that offer growth benefits.

The establishment of digital capabilities and relationships has become a major priority for traditional ad agencies and their large holding companies as they look to grow their digital revenue and expand their portfolios. As conventional media continues to be displaced by digital marketing, the percentage of media spend on digital marketing on behalf of traditional ad agencies will continue to grow.

Evolving Technologies

In the digital marketing industry, there is also growing popularity of technologies that offer individualized features and more in-depth experiences. Brands are being pushed to invest and acquire these types of technologies while post-sales marketing has become a more prominent element along the customer journey.

  • The use of chatbots and personalized messaging is enhancing customer experiences.
  • Audio queries made possible by smart devices and digital assistants are driving voice search.
  • Online video advertising is a quickly growing segment.
  • Artificial intelligence analytics are helping to better target marketing strategies based off of real-time data. This data leads to meaningful insights that are used to improve customer interaction, and optimize media budgets and marketing strategies.
  • Social search is changing e-commerce and vehicles for product reviews and recommendations.

This industry is sure to see more and more future technologies that have yet to be developed, continuing to drive rapid change and growth, and create opportunities for M&A.

Large User Platforms

Giant platform companies such as Google and Facebook provide free digital products and services but are still able to profit because they reach such massive audiences.

The larger the platform, the more consumer data is collected. The more a consumer uses the platform, the more information is gleaned about them. And with more data, the platform can better tailor the content consumers see, and keep them on the platform longer. This results in improved customer experiences and more advertising capacity, which means better understanding of consumers, heightened influence, and more revenue from targeted advertising.

Affiliate Partnerships

Affiliate partnerships use affiliate websites to promote products or services that belong to another company. The valuation of an affiliate website depends on the specific terms of the affiliate program. These factors include longevity, product category and seasonality, commission tiers, high caliber content, and the link portfolio. Websites that fulfill these attributes often have the better earnings, margins and lifecycle, which are attractive to investors. For valuation purposes, advertising agencies are similar to affiliate businesses because they are dependent upon content and end-user action to produce revenue.

These types of partnerships that monetize content also apply to offline businesses that need new and better ways to generate access to audiences. Investors also tend to be drawn to this segment based on existing relationships that can be used to an advantage.

Exit Opportunities

Some digital marketing agencies are being established with the goal of selling in mind. There are extremely low entry barriers when it comes to creating a digital marketing firm, but there are also limited benefits to growth. Some brands do not wish to work with a huge firm. And low employee tenure means lower retained corporate knowledge in an industry where talent retention is already incredibly challenging.

An agency with strong historical growth and projected growth of more than 20% can lead to strong multiples. The purchase of smaller agencies offers opportunities for growth for the large advertising agency groups and an easy way to cash out for the leadership of the smaller agencies.

Contact Us

Please feel free to contact our M&A advisors at Benchmark International to discuss your next move. Our industry expertise and global connections are true game changers when it comes to selling or growing a company, and forming an exit plan.

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The Global Packaging Industry and M&A

Manufacturers in the global packaging industry produce items such as bags, films, air pillows, bubble cushioning, heavy plastics, aluminum foil, paperboard, and corrugated materials.

In a segment that is greatly influenced by transportation and logistics costs, strategic buyers look for options that offer attractive margin profiles, cost-savings manufacturing advantages, shareholder growth options, and deals that broaden industry presence and consolidate business lines. Private equity buyers are inclined to focus on niche opportunities that leverage unique and proprietary capabilities and offer strong returns.

In this particular sector, lenders tend to show willingness to finance deals among packaging companies, which boosts healthy valuations. This is because packaging manufacturers are able to generate strong cash flow and are not overly vulnerable to economic downturns.

Growth from E-commerce

As long as e-commerce continues to thrive and the world demands sustainable and cost-efficient packaging solutions, the demand for packaging products will persist, driving mergers and acquisitions activity in this highly fragmented industry.

Protective packaging solutions are naturally of significant interest to e-commerce companies, as is machinery that uses automation to improve packaging processes. There is a demand for packaging companies that can offer innovative and attractive packing solutions that are protective but lightweight and focused on reducing package footprint size.

 

Ready to explore your exit and growth options?

 

Fast-Moving Consumer Goods (FMCG)

The FMCG segment involves high-volume, low-cost products that move quickly off the shelves of stores, such as paper products, cosmetics, medicines, detergents, and plastic goods. Packaging is top priority in the FMCG market because of how it directly affects brand positioning, differentiation, and high visibility through the use of graphics and product information. It plays a major role in consumers’ purchase decisions in a very competitive environment.

FMCG packaging makes up a large share of the costs involved in product manufacturing. Companies must look to innovation in packaging to reduce operational costs.

Increasing populations, technological advancements, and a demand for eco-friendly packaging are all key drivers of growth in the FMCG sector. Food and beverage is the largest market for investment from packaging companies.

On the supply side, the FMCG packaging market is highly fragmented with fewer companies having a substantial share in the overall market, leading to fewer barriers to entry. Additionally, the challenges for growth in this sector include issues surrounding skilled labor, equipment and machinery.

Healthcare and Pharmaceuticals

Medical plastics are a major driver of high valuations in the packaging sector. The healthcare industry is subject to significant regulatory and technical requirements and there is a need for companies that can fulfill their specific and complex packaging needs, which include thermoforming and injection molding techniques. The injection-molding sector is especially fragmented and highly competitive with steadily growing revenues and opportunities for consolidation.

There is also a demand for smart packaging technologies that help to combat the counterfeiting of medicines.

Packaging companies that serve medical device and component companies tend to enjoy stronger customer relationships, steadier revenue, better pricing power, and higher valuations. M&A activity in this area is highly focused on technology and expansion of capabilities.

 

Feel like it's a good time to sell?

 

Sustainable Solutions

Sustainability is an important factor in the packaging industry at every step of the value chain, as consumers and regulators apply pressure regarding environmental impacts of packaging applications. In addition to functionality and convenience, it is a key criterion in purchasing decisions. This demand for novel solutions and green technologies creates a noteworthy opportunity for industry players. 

Plastics are cost-efficient, convenient, and have useful characteristics in packaging, so their use remains in demand. However, there is a sweeping campaign to reduce the use of plastic in packaging materials.

Airless packaging systems are a growing market. They are designed to limit waste and contamination while improving product shelf life. These packaging products include bags, pouches, bottles, jars, and tubes.

As there is a growing need for packaging companies to lessen the environmental effects of their products, those that stay ahead of the curve by incorporating these solutions will benefit from substantial growth opportunities and will draw plenty of attention for M&A activity.

Contact Us

If you feel the time has come to enter into a merger or acquisition, reach out to our specialists at Benchmark International to get the ball rolling. Our customized solutions, global buyer network, and proprietary methodologies have the power to execute deals that are designed to always exceed seller expectations. 

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M&A In The Global Medical Services Industry

Globalization of healthcare contributes to a continually developing global medical services industry that encompasses hospital, physician and clinical, nursing and continuing care facilities, home healthcare, surgical facilities, emergency services, laboratories and other providers.

Value-based Care

An industry that was once about volume-based care has strategically shifted to value-based care. Because this requires improvements in facility efficiencies and quality, it also calls for more specialized external service providers. One tactic that medical services companies are using to gain competitive advantage is to keep their core caregiver and third-party caregiver groups under the same roof. As medical services must now deliver on value-based care, there is an increased need for integration of care and management of financial constraints.

 

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Workforce Demand

As populations increase, especially aging populations, and chronic diseases remain prevalent, the demand for medical services increases, and so does the demand for specialized medical caregivers.

By the year 2030, it is estimated that the global demand for health workers will reach 80 million workers, while the supply of health workers is only expected to reach 65 million over the same period. This will result in a worldwide shortage of 15 million health workers. 

Regulatory Factors

When regulatory burdens on healthcare companies are reduced, technological advancement escalates, creating opportunities for medical technology companies including mobile and wireless providers. Also, advancements in surgical techniques result in less invasive treatments and shorter recovery times, altering the traditional hospital model. Additionally, third-party lab providers and research companies grow in demand along with the need for more complex clinical tests and services.

M&A Due Diligence

Mergers and acquisitions in the medical services industry require especially savvy due diligence in order to obtain a completely accurate assessment and valuation. Deals can be particularly complicated between hospitals and health systems.

As a seller, it can be extremely important to have sell-side due diligence conducted. Getting ahead in the process months in advance can be well worth the costs. When it comes to the medical services industry, billing and coding issues can trigger major delays in any M&A transaction.

Other benefits of sell-side due diligence include:

  • Enhanced credibility and positive reputation of the seller on the market
  • The increased possibility of higher bids
  • Adequate preparation for management and employees so that there is minimal disruption in workplace operations
  • The potential of a shorter due diligence cycle on the buyer’s side
  • A decrease in the chances of surprises that can derail a deal, which can increase the likelihood of the transaction being a successful one

Medical Services M&A Drivers

Among the key drivers of M&A activity in the global medical services industry, the top reasons include:

  • The goal of increased market share to broaden networks and patient access
  • Improved integration across the continuum of care
  • Keeping pace with increasing prevalence of consumerism, which includes more convenient, non-traditional care settings
  • Gaining access to capital for investment in staff, new technologies, medical equipment, and improved operations
  • A way to improve efficiencies and enhance patient satisfaction
  • Reaction to rising consolidation among insurance payers
  • A growing need for alternative payment models, which reimburse providers based on value rather than volume of services

 

Ready to explore your exit and growth options?

 

Traits of High-value Targets

In this sector, the attributes of high-value M&A transactions can vary greatly, however certain characteristics can be found to be consistent across most successful deals:

  • A defined operating model with strategic vision and revenue-growth and cost-reduction strategies
  • Transparency in communications regarding culture and organizational goals
  • Focused integration planning that aligns with the deal’s rationale

M&A in Diagnostics

Diagnostics present unique circumstances for M&A activity apart from the medical services industry. Clinical laboratories in the medical services industry vary in size, business model, areas of concentration, R&D capabilities, as well as in their relationships with providers and payers. With countless labs in operation, acquiring the right one can be challenging. Large public labs tend to focus on deal volume, while other buyers are interested in the laboratory testing market, and private equity leans towards companies with attractive cash flow yields. In many cases, because diagnostic manufacturers, life-science companies, and big pharma all need access to patient and pathology samples for research and development, labs are strategically acquired by non-laboratory healthcare companies.

Contact Us

If you are looking for exit and growth strategies, Benchmark International offers unique ways to identify the perfect buyer, take your company to the next level, and create dream exits. We look forward to working with you.  

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Benchmark International Successfully Facilitated the Transaction of Jordan Human Resources To Vinton Holdings

Jordan HR is a niche human resources firm that specialises in the recruitment of medical practitioners, with a keen focus on Locum Pharmacists.

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Why You Shouldn’t Wait For The New Year To Sell Your Company

A new year always conjures up the feeling that it’s a clean slate, so that may seem like a good time to take your business to market. And, yes, timing is everything, but waiting for the new year could mean that you miss out on the opportunity to get the maximum value for your business.

Get Ahead of Economic Uncertainties

No one can say for sure what the state of the global economy will be next year. But we do know what it is NOW. These are certainties that we know, understand, and can work within. We know what M&A strategies can be advantageous today based on the level of:

  • Buyer demand
  • Bank generosity
  • Current valuations
  • Tax breaks
  • Interest rates
  • Retiring competitors
  • Inflation
  • Political unrest

It is not uncommon for business owners to want to postpone a sale with hopes that they can sell at a higher price in the future. This can be a dire mistake. 

 

Ready to explore your exit and growth options?

 

Waiting too long could mean that you end up trying to sell during a recession, a down cycle, or under other unfavorable circumstances that result in you not getting all that your company is truly worth. It can also mean that if you miss out on your ideal window of opportunity, you may have to wait five to seven years for such an opportunity to arise again.

Take Advantage of a Seller’s Market

What may be a seller’s market today, can just as easily become a buyer’s market tomorrow. If you decide to wait, you could end up losing your upper hand as a seller. There are millions of business owners that are approaching retirement age and if there is an influx of these sellers onto the market, it can result in increased competition and buyers will enjoy having their pick of the litter. That also means lower valuations for your company. You can easily get out in front of this scenario by not hesitating to start the process.

According to the Pew Research Center, 10,000 Baby Boomers will celebrate their 65th birthday every day through the year 2030.

Act Early for a Patient Process

Patience is a virtue, especially when it comes to selling a company. Ironically, getting into the sale process sooner rather than later will afford you the ability to be patient through the process. If you wait too long and end up in a situation where you are panicking to sell your company, buyers will sense your desperation and will try to low-ball you on a deal. By demonstrating to buyers that you have been carefully considering and planning for this, rather than appearing to just “want out” without an exit or succession plan, it will likely increase your sale price. 

 

Feel like it's a good time to sell?

 

Test the Market

Maybe you are feeling too uncertain about selling now. Keep in mind that you can always test the market. Prepare your company for sale, put it out there, and see what kind of offers you get. You might find that there is interest in your company that you were not aware of, and eager buyers might come to the surface, surprising you with offers that are hard to turn down. In the case that the offers are lower than what you were hoping for, you can simply take the company of the market for the time being and wait for a better time.

Ready to Talk?

The process of selling a business can take several months. Even if you are simply considering a sale, reach out to one of our M&A advisors at Benchmark International to start the conversation. We can help you get a better understanding of the market timing, if you feel that you are ready to sell, and what exit strategy is right for you. We also understand that you have worked hard to build your business, and parting with it is going to be an emotional process. That is why we always work in the seller’s best interest, working relentlessly to arrange a deal that is the absolute very best for you and your family and with which you feel truly comfortable.

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Benchmark International (South Africa) is proud to be shortlisted for the annual Africa Global Funds Awards

Benchmark International (South Africa) is proud to be recognised and shortlisted in the category of Best Independent Advisory Firm alongside some of South Africa’s most recognised corporate finance brands.

The Awards were created to honour and generate both industry and public recognition of the outstanding efforts and accomplishments of Service Providers covering Africa.

The 2019 awards shortlist was announced in mid-September and the black-tie event and ceremony will be hosted on October 24th at the Radisson Blu Sandton, Johannesburg, South Africa. 

Benchmark International’s nomination was motivated by the consistent year on year growth in transaction activity and success achieved in transactions across the spectrum of M&A and corporate finance disciplines.

About Benchmark International:

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximising solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 12 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

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The Aviation Industry and M&A

The transportation industry on a whole has seen major opportunities for investment thanks to a myriad of technological advancements such as self-driving cars, ride sharing and alternative fuels. As technology permeates all global industries, the aviation industry has its own unique circumstances, and must turn to acquisitions and market share to create competitive advantages in the 21st century.

Major areas of focus include aerospace, defense, supersonic travel, artificial intelligence, robotics, cybersecurity, surveillance, and communications. The idea of space exploration has become more privatized. It is not just about commercial astronauts anymore, but about making it possible for everyday people to engage in space travel. Also, urban on-demand air transportation is redefining the possibilities for how people commute to work. This technological advancement is proposed to use three-dimensional airspace to ease traffic on the ground, save commuters time and money, and provide a safer yet still relatively quiet travel option.

Aerospace and Defense (A&D)

As global A&D spending increases, so does the opportunity for M&A activity. In our digitized world, threat and risk mitigation continue to take on more importance, resulting in more mergers and acquisitions within IT, cybersecurity, and space companies.

Commercial aerospace firms are stretching their aftermarket capabilities to gain repair revenue over the lifespan of an aircraft fleet and benefit from improvements within the areas of electronics and avionics.

Private equity investors are also becoming more attracted to this sector, looking to sink capital into targets that have high growth prospects and high margins.   

 

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Aircraft Backlogs and the Maintenance, Repair and Overhaul (MRO) Market

Commercial aircraft order backlogs also drive M&A activity in the middle market, as equipment manufacturers within the supply chain must respond to the demand, and are sitting on a tall stack of orders. Over the next 20 years, around 40,000 new aircrafts are slotted for production. Major airlines have a tendency to prefer larger suppliers, so consolidation to create more efficient and reliable MROs is a tactic that ensures the orders can stay on pace without major delays. As this consolidation occurs, it becomes more difficult for smaller, independent MROs to compete, causing them to team up with larger original equipment manufacturers (OEMs) in order to meet demand and avert delays.  

Pilot Training

There is an existing and growing pilot shortage that presents a major challenge for all airlines around the world. According to Boeing, it is estimated that 800,000 new pilots will be needed over the next 20 years. More pilots are reaching the mandatory retirement age at the same time that an increasing number of people around the world are booking flights. Plus, military expansion means a reduction in the pool of military pilots that are typically sourced by commercial aviation. These factors all combine to create new opportunities in M&A in the global aviation industry through the need for pilot training and the creation of new, more efficient flight simulators, as well as the development of autonomous piloting technologies.

 

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A New Era of M&A

M&A activity is crucial to the many new types of developments in the global aviation industry. Private equity and venture capital are needed to keep the innovations coming, alongside the pursuance of new growth strategies and market retention by existing industry players. M&A in the aviation industry has become very much about bringing new services to new markets. This changes the way competitive companies must view each other, calling for more collaboration in order to drive innovation and create value.

It is strongly advised that anyone entering into the complex world of aviation M&A obtains an advisor that has the appropriate experience to conduct proper due diligence, navigate the intricacies of the industry, create the right connections, and be familiar with the industry-specific regulatory environments. 

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M&A In The Global Insurance Industry

Mergers and acquisitions in the global insurance industry carry their share of unique challenges. There is always the potential for increased regulation, and ever-changing technologies and infrastructures can make it expensive and difficult for companies to keep pace. When it comes to cross-border M&A, cultural integration is often overlooked. These factors make the world of M&A in the insurance sector complicated to navigate.

Key Drivers of M&A in the Insurance Industry

M&A activity in the global insurance sector becomes more dynamic as a result of several contributing factors and strategic objectives.

  • Companies acknowledge the need for economies of scale and seek to expand by moving into global markets.
  • Lower policy rates push industry players to consolidate to maintain profitability and find ways to remain competitive by uniting two synergistic companies and gain more value through scale efficiencies.
  • Stagnant domestic markets result in cross-border targets.
  • Organic growth cannot be relied upon to meet company goals.
  • Heightened interest comes from a broad range of backers, from hedge funds to international investors.
  • Low profitability results in low investment yields.
  • Insurers need ways to spend large cash reserves.
  • They need to integrate new technologies (such as mobile apps and big data) to revitalize flat business models, improve internal capabilities, reach customers, or gain market insights.

Due Diligence

As with all M&A transactions, meticulous due diligence in the insurance industry is critical to a successful deal. While many due diligence topics for an insurance company overlap with that of all types of M&A transactions (property, tax records, employee issues, etc.), the insurance industry is subject to some unique scrutiny, such as:

  • Regulatory issues (licensing, permitted practices, regulatory filings, and interactions with government agencies)
  • Assessment and adequacy of reserves
  • Structure of investment portfolio
  • Underwriting and claims administration
  • Market conduct and producers
  • Reinsurance collectability
  • Intercompany agreements
  • Data security
  • Compliance with privacy laws

Crafting of the purchase agreement in insurance M&A transactions is also an important part of the process. If done correctly, it will address both the unique nature of insurance companies and the regulatory environment in which they operate.

Insurance-Specific Indemnities

Indemnification provisions within insurance M&A agreements are similar to that of other industries, with exception of a few differences. An M&A transaction can call for unlimited indemnity protection for specific circumstances in which the buyer asks the seller to assume the risk. Common areas for specific indemnities include:

  • Policyholder claims for extra-contractual obligations or claims that exceed policy limits
  • Litigation specific to the insurance industry (i.e., class action policyholder lawsuits or regulatory actions for improper business conduct)

Cultural Integration in M&A

Global insurance executives have reported that overcoming cultural and organizational differences following a deal has been a significant challenge.

In order for cross-border M&A to be successful, leaders must look beyond financial motivations and consider how cultural integration can result in improved synergy and innovation. This can happen in several ways:

  • The acquirer can completely assimilate the culture of the target company.
  • The acquired company can maintain its own identity and independence.
  • The two can meld, creating an entirely new culture.

The route a company chooses to take depends on the size of the two companies, the post-deal organizational structure, and the advantages generated by different cultural traits.

When companies carefully take culture into account, they can greatly benefit from the positive outcomes and lower the risk of failure in M&A. A cultural assessment should be conducted alongside due diligence far before the deal nears completion. This assessment should study the geographic locations, management styles, work habits, and attitudes of both companies. Successfully uniting employees from diverse backgrounds calls for a customized process that should not be rushed and includes clear and honest communication.

Steps for Success

When insurance companies are considering M&A for financial growth, geographic expansion, and bolstered competitiveness, there are certain steps that leadership should take to find the right type of deal and ensure a positive outcome.

  • Assess the future of the industry, the trajectory of the business, and where the two align.
  • Plan for different scenarios that could trigger economic changes in the next one to two years.
  • Craft an M&A strategy that aligns with ownership’s goals.
  • Choose target companies consistent with leadership’s overall strategy and long-term goals. What seems like a good idea today may not make sense for five to ten years down the road.
  • Remain cognizant of the changing tax and regulatory environments.
  • Evaluate in-house corporate development and overall integration abilities.

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The IT Services Industry and M&A

Information Technology (IT) services encapsulate maintenance and security with regard toonsite and remote tech support,infrastructure, computers, servers, networks, workstations,firewalls, cloud services, web development, systems integration, telecom, patch management, software updates, big data, and virus and malware prevention.

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M&A And The Chemical And Plastics Manufacturing Industry

The chemical manufacturing industry converts raw materials such as gasses and oils into chemicals such as ethylene, propylene, methanol, benzene, chlorine, and paraxylene. These chemicals are feedstocks for value chains that produce a wide array of intermediates, plastics, and performance materials that are used to create more than 70,000 registered productsaround the world. It is an extremely diverse and complicated industry. Because many of the industry’s products are intermediates, the customers of chemical companies are often other chemical companies.

M&A Strategies

Among the many factors that influence multi-billion dollar investment decisions include energy market trends, global economic growth, and regional trade dynamics. Investors seek sustainable competitive advantages regarding the costs of energy and feedstock, technology and scale, proximity to markets, and degree of integration.

Mergers and acquisitions have been a long-time tactic used among chemical companiesto create growth, change strategic course, and consolidate segments. In an industry that has seen major expansion, certain factors can complicate M&A. This includes the substantial size of some transactions and merger-of-equals deals that are more complex to carry out.

Key drivers of M&A in the chemical manufacturing industry include:

  • The pace of organic sales growthin sub-segments
  • Consolidation driven by a need for innovation and fewer opportunities to differentiate from competitors in high-value and specialty-chemical areas
  • The state of capital-markets returns and a campaign for higher valuations
  • An abundance of capital and private equity interest and access to low-cost finance

Digitization & Optimization

Technology continues to transform all industries in the modern world, and the chemical manufacturing industry is no different. Data management through advanced analytics is enabling plant optimization across sites, improved supply chains, and infrastructure synergies. Digital solutions reduce downtime and costs as a result of maintenance and repairs. Sensors monitor plant and warehousing conditions, improving logistics. Also, a vast amount of field operator workload can be transferred to automation and robotics, allocating people resources elsewhere in the business and creating more opportunities for up-skilling. Implementation of these technologies results in revenue improvements.

The Circular Economy of Plastic Waste Recycling

Plastics production accounts for more than one third of the chemical industry’s manufacturing activities. But only a small percentage of these plastics are being recycled, resulting in resources that are lost forever into landfills. Global plastics waste volumes are expected to reach 460 million tons per year by 2030. Public outcry for sustainability is rising and raw material supplies are growing tighter, forcing the chemical industry to adapt on this issue. New plastic recycling methods offer new opportunities for value-creating growth for petrochemicals companies. Instead of focusing on the problem that plastic waste creates, companies are starting to recognize the billion-dollar profit pool it represents through new types of businesses, resulting in an entirely new landscape for M&A activity.

Activist Investors

Additionally, activist investors are playing a larger part in the chemicals sector. Activist investors attempt to create change within a company by purchasing a large number of shares or board seats. These players are emerging influencers of M&A activity and they have an ever-increasing role in the chemical industry through restructuring initiatives. This creates new challenges for industry executives because long-term strategic planning is not a typical priority of activist investors. Although activist investors are capable of delivering solutions that add value, they usually are more interested in shorter-term, higher valuations and results. This often results in cost-cutting measures, shareholder buybacks, and the splitting off of company divisions. 

Successful Chemical Industry M&A

Deals that employ proven M&A best practices will yield higher total returns to shareholders. Capturing the full value potential of a deal requires specific industry knowledge and expertise. To craft a successful deal in the chemical sector, sellers should enlist the advice and methodologies of dedicated M&A experts such as those at Benchmark International. They should also:

  • Monitor the field to identify potential opportunities
  • Review their portfolios to ensure current assets fit their core business
  • Look for gaps that may need to be filled for fast action when opportunities arise
  • Prepare non-core businesses in order to maximize value from a deal

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M&A In The Global Education Industry

Around the world, the global education industry remains shaped by population growth and access to education, and driven by new technologies and service offerings.

  • Solutions for professional education, teacher development, improved online and adaptive learning, and language training (especially English) are always in demand.
  • Online learning technology and the need for corporate workforce training drives increases in corporate spending on outsourced training programs.
  • Smartphone-only Internet users are reshaping learning models.
  • Enrollment in pre-primary education continues to rise as it has proven to show positive long-term results.
  • In primary and secondary education, technology investments directly impact school expenditures.
  • Higher education is being forced to adapt in the wake of changes to jobs, skills and increasing student debt.
  • Learning Management Systems are shifting the teaching focus away from content and onto learners.
  • Newer offerings include cloud-based student information systems, digital tools and learning platforms, and data reporting and analytics.

The global education market is expected to be valued at $10 trillion USD by the
year 2030.

 

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M&A Activity

In today’s digitized society, as education becomes more globalized, it presents newforms of private, for-profit involvement. In the global education industry, less than three percent of overall education expenditure is spent on technology. This is expected to increase in the future, yet at an alarmingly slow rate, giving investors a favorable position to get in on
the market.

Mergers and acquisitions opportunities are heavily influenced by the possibilities created by new innovations in digital education, instruction, and credentialing. The global education sector’s biggest strategic performers are diverse companies that continue a shift towards digital services and away from print. Target companies within the education landscape that are in drawing investment include those that provide adaptive learning solutions and assessment products, such as software that facilitates testing and scoring. Other areas that appeal to buyers include education-market-focused infrastructure software and English language learning solutions.

Education Infrastructure Software

Modern education-focused infrastructure software has the power to transform learning environments for students and teachers both inside and outside the classroom by balancing technology across all locations. The approach is comprised of cloud computing, enhanced privacy and security, connectivity, storage, and manageability. Additionally, virtual infrastructure not only simplifies troubleshooting, but it can reduce costs for institutions by reducing overhead through the reduced impacts of having to frequently replace hardware. With support of more devices, teachers can better tailor learning experiences to students learning needs, and a more collaborative learning environment can be created.    

Global English Language Learning Market

The global English language learning market is expected to exceed $22 billion USD by the end of 2025. These programs are in growing demand due to globalization, urbanization, and an appetite for improved education and job opportunities. The escalating numbers for student enrollment in graduate schools in English-speaking countries is deemed to be a primary contributing factor to growth in this market. In higher education, universities in the United States, the United Kingdom,  Australia, and Canada require applicants to pass language tests such as the Test of English as a Foreign Language (TOEFL), Graduate Record Examination (GRE), and International English Language Testing System (IELTS). This drives students to enroll in English language training programs, leading to notable demand for them in countries (such as an India and China) where the number of graduates relocating to English-speaking countries for advanced studies continues to grow at a significant rate.

The global market for digital English language learning is comprised of both regional and international manufacturers. As the international companies expand their reach, improve quality, and lower prices, the regional firms struggle to compete. Such an intensely competitive market for innovation and service extensions increases the number of M&A transactions.

 

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An Industry Continuing to Evolve

Innovation in education requires capital and government funding is limited even in the wealthiest, most developed countries. Private equity and M&A can strategically create and grow companies of scale in the education sector. Larger size means more attractive acquisition opportunities, more prevalence, and more potential for transformation in the industry and its subsectors.

Advancements that are impacting and will continue to impact this industry include:

  • Artificial Intelligence, virtual reality, and unified data solutions
  • Online education
  • Robotics
  • Specialized curriculum start-up companies
  • Improved curriculum storage and peer-to-peer sharing platforms
  • International schools
  • Digital classrooms
  • Chat bots and voice enabled hardware
  • English language training
  • Enhanced admissions management and student retention
  • Global school networks
  • Improved vocational training
  • Alternate university models
  • Online program managers
  • Job training boot camps
  • Primary education mobile apps
  • Increasing availability and free access to academic publishing resources
  • STEM and coding
  • Gaming and simulation

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The Engineering Services Industry and M&A

The engineering services sector is made up of Engineering Services Outsourcing (ESO) firms or Engineering Service Providers (ESPs) that specialize in planning, design, and technical work at each stage of a product lifecycle. ESO is commonly used by industries such as construction, automotive, telecom, energy, transportation, pharmaceuticals, and manufacturing. Among the services offered by ESO that are consistently in high demand are structural, architectural, civil, and electrical engineering.

Industry Growth Drivers

Growth in the engineering services industry is stimulated by circumstances that include:

  • Increasing technical complexities regarding product development and manufacturing
  • A need to reduce costs
  • Shorter product lifecycles
  • Demand for innovation
  • Increasing tie-ups between ESPs and Original Equipment Manufacturers (OEMs)

The Demand for ESO

As clients demand more complex solutions and shorter product lifecycles, there is a growing need for the use of subcontractors through ESO. Shorter duration solutions result in renewed managed service contracts, helping ESO businesses to do well. Additionally, some engineering companies opt to use ESO as an extension of their own capabilities.

Other reasons that companies choose to use ESO include:

  • Access to more cutting-edge technologies and more complex engineering services
  • The ability to focus time and resources on other critical tasks such as marketing
  • Need for less office space and lower office equipment costs
  • Faster project turnaround that can result in improved client satisfaction
  • Access to services on an as-needed basis
  • Around the clock support services

ESO demand is also affected by the specific needs of individual industry sectors.

  • ESO in consumer electronics is driven by consumer demand for enhanced mobility and entertainment, and the better exchange of information between devices for data and media.
  • Both onshore and offshore ESO is used in the automotive segment in developing countries due to their high demand for passenger vehicles and economical cars. Demands in developed countries include car connectivity, advanced driver assistance, Vehicle-to-Vehicle (V2V) and Vehicle-to-Infrastructure (V2I) communication.
  • Tech companies, OEMs and semiconductor companies look to ESO for assistance in developing next-generation smart devices. These businesses also employ ESO to stay competitive by focusing on product localization needs, new features, and industry best practices.
  • The telecom industry accounts for a major share of ESO revenue as global telecom companies continue to expand their market presence around the world.

Adapting to the Tech Era

In today’s digital world, engineering services companies must adapt their business models to focus on emerging technologies and their integration with manufacturing and engineering services. This adaptation is crucial to realize the full potential of these growth opportunities. These technologies include data, sensors, the Internet of Things, embedded electronics, Machine-to-Machine adoption, and other digital transformative solutions.

The Need for M&A

As delivery methods for engineering services continue to change, engineering firms must either look to acquire new technologies, or diversify into higher value advisory services and focus on forming strong client relationships. Mergers and acquisitions are a resourceful path to establishing these services in a highly competitive market.

M&A strategies are also vital to creating growth and uncovering new strategic pathways. Larger companies look to acquire smaller companies in order to remain relevant, close talent gaps, expand to new regions, and strengthen their portfolio of offerings. This increased consolidation results in the prevalence of more one-stop service providers.

Because larger engineering services firms have more developed infrastructure and economies of scale, they are able to easily outbid smaller firms. This makes it problematic for the smaller firms that are trying to keep up and stay profitable. As a result of such challenges, many small engineering services companies are forced to rethink their options and consider partnership with larger firms through acquisitions.

M&A as a Succession Solution

Additionally, private engineering services companies may face succession issues because they typically have one or two founders who eventually plan to retire. When these particular business owners choose to exit the company, in many cases the next generation either cannot afford to buy out its departing leaders or is unwilling to do so. In these situations, M&A transactions are an ideal way for middle-market leadership to solve succession-planning issues, form a strong exit strategy, and set up the future trajectory for the company.  

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M&A And The Machinery And Equipment Manufacturing Industry

The modern manufacturing industry on a whole is continually undergoing somewhat of a seismic shift in operations thanks to rapidly changing technologies, globalization, rising wages, and demands for higher quality standards, shorter timelines, and more customization. These factors reshape strategic imperatives and decision making, largely in part to emerging disruptive technologies in the machinery and equipment manufacturing industries.

Technology Driving M&A

As is the case with most industries in the 21stcentury, the availability of new technologies is driving major opportunities for mergers and acquisitions in the industrial-equipment manufacturing sector. Some of these game-changing technologies include:

  • Data CentersAs the use of data centers becomes more and more prevalent in the machinery and equipment manufacturing industry, there is an increasing demand for mass power generation and back-up power generating systems. Because data centers consume a tremendous amount of energy, there is also a need for growth within the market of energy-efficient industrial solutions that have the capability to reduce operational costs. The data center construction market is forecasted to reach $45 billion by 2023.
  • Sensors and Control Systems: Wireless sensor networks offer a cost-effective way for data center operators to implement system changes that reduce energy consumption. Sensors detect and log specific operating conditions such as temperature, pressure, torque, load, and lighting. Control systems ensure proper workflow and identify potential problems and hazards. The addition of these technologies expedites digital strategies and creates a solid platform for connected solutions in safety and maintenance. By the year 2022, the sensor market is expected reach $27.4 billion and the control systems market is projected to reach $50 billion.
  • High-performance Computing (HPC): HPC is the practice of aggregating computing power in a manner that enables performance that is far beyond what is capable of typical desktop computers. It uses parallel processing to run advanced applications quickly and efficiently. Companies in the equipment-manufacturing sector are using HPC throughout the entire product lifecycle.
  • Automation: Industrial companies are increasingly using automation and predictive analytics to overhaul processes, improve capabilities and rectify previous operational inefficiencies. Specifically, automation is playing a major role in the use of industrial machinery in the food and beverage sector, driving M&A transactions. The global factory automation market is expected to reach $368.4 million by 2025.
  • The Internet of Things (IoT): The implementation of all of these technological advancements has led to a need for IoT networks that connect them across operational platforms. These networks enable machinery and equipment to communicate for the purpose of recording data, merging systems, and rooting out costly disruptions. The access to such knowledge gives companies the power to improve their manufacturing processes and the entire supply chain. The global industrial IoT market is expected to reach $933.6 billion by 2025.

Driving Acquisitions and Competition

Because it is simply easier for large industrial companies to buy smaller niche companies that offer specialized technological capabilities rather than attempting to develop them in-house, acquisitions in this sector are a favorable tactic. Additionally, the ability of a buyer to leverage new technology within its own operations and distribution channels gives strategic acquirers far better synergistic potential. Even in light of this fact, there remains growing interest on behalf on private equity investors, creating a competitive M&A environment in the machinery and equipment industry.

Target Company Attributes

Regarding M&A activity in the global machinery and equipment manufacturing industry, target companies that possess the following characteristics typically garner higher multiples:

  • Predictable revenue stream
    • Stable contracts with well-capitalized customers
    • Long-term customer relationships
    • Demonstrated sales diversification strategies
    • Business lines that can withstand cycles and recessions
  • Opportunities for growth
    • New end-markets and geographical locations
    • Cross-selling to existing customers
    • Bolt-on acquisitions
  • Growth-supporting infrastructure
    • Ability to maintain projected revenues
    • Long-term control over facilities
    • Proper maintenance of equipment
  • Technical product differentiation
  • Strong and stable management
    • Depth and continuity
    • Cohesive culture
  • Technology investments
    • Strong finance management
    • Post-enterprise resource implementation
    • Dependable, quality data

It is strongly advised that business owners who are seeking M&A strategies partner with an experienced M&A advisory firm that understands the intricacies of the industry and has the kind of global connections and prowess that maximizes value.    

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Break Beyond Limitations – Become a Generalist

Although prior knowledge of how to approach a particular problem helps us to some extent, it can largely hinder our decision making process. Instinctively, the human mind causes us to succumb to second guessing ourselves and making a decision out of fear, rather than from intuitive knowledge. Additionally, the human mind also has a predisposition towards cultivating an inside-view during decision making. An inside view considers a problem based upon the surface level information of the specific task at hand, and makes predictions based upon the narrow set data points relative to the problem. Comparatively, an outside-view draws upon similar or even distant analogies to the problem at hand, by purposely setting aside information relative to the problem, in a conscious effort to minimize biases. 

We allow fear to control our actions and decision making. Sometimes, we may not even know it because we have done such a good job at convincing ourselves otherwise. We think of the future and obsess over adverse outcomes that can happen as a direct result of our actions. We are cautious and methodical, intentionally as to not make the “wrong decision.” This is how we involuntarily hedge our own personal risk. Often, this fear serves a constructive purpose, enabling us to safeguard our assets. But sometimes, this developed habit can act as a mental barrier to sound decision making when fear inhibits our ability to approach problems differently. Research suggests that approaching a problem with the same mindset developed from previous problems that are similar, may actuallyinhibit our ability to make the best decision or the correct valuation. Sounds counterintuitive doesn’t it? That’s because our brains are hardwired to draw upon our learned experiences when problems and solutions repeat. To approach a problem differently poses a risk, so naturally we develop a habit to approach the same problem in the same way despite how greatly the variables of each situation change. By critically evaluating past events, and applying previously learned knowledge gained from similar experiences, we are limiting our problem-solving abilities.

 

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The trouble in using no more than one analogy, particularly if it is a similar situation to the problem at hand, is that it does not help battle the inside view since we make judgement on the narrowed details that are the most apparent to us. The outside view is deeply counterintuitive because it causes the decision maker to ignore unique surface features of the current project, of which they are the expert.

In 2012, University of Sydney business strategy professor Dan Lovallo conducted an inside-view research study, to test the idea that drawing upon a diverse range of analogies would naturally lead to an outside view perspective and improve decisions. They recruited investors from large private equity firms who regularly consider potential projects in a variety of domains. The researchers believed that the investors’ expansive experience might have naturally lent itself to the outside view. The private equity investors were instructed to assess a real project they were currently working on and write down a batch of other investment projects they knew of with broad conceptual similarity. The results showed that the investors estimated a 50% higher return on their own project than the outside projects they had identified as conceptually similar. The investors initially judged their own projects, where they knew all the details, completely differently from similar projects to which they were outsiders. This is a widespread phenomenon – the more internal details you learn about any particular scenario, the more likely you are to say that the scenario you are investigating will occur. Therefore, the more internal details an individual can be made to consider, the more extreme their judgment becomes. The results of the study suggest that broad conceptual similarities should be considered when making a decision. In Range, author David Epstein argues that referencing distant analogies relative to the problem at hand, enables the highest rate of successful decision making. The outside view probes for deep structural similarities to the current problem relative to different problems. One way to achieve sound decision making is to develop self-awareness of the natural inclination to make self-proclaiming assumptions, and the limitations of becoming buried in details that may inhibit optimum decision making.

Additionally, possessing a diverse range of experiences enables the decision maker to be better prepared to approach any given problem with a broader mindset. With the work world changing faster than it did in the past, it is essential to broaden your specialty in order to optimize your decision making ability and expand your knowledge across a variety of domains. The people who make the biggest impact have a diverse background of prior experiences within their intellectual toolbox to draw upon when determining the best solution for a problem at hand. In 2016, LinkedIn conducted a study to analyze the career paths of 459,000 members to determine who would become an executive. One of the best predictors is the number of different job functions an individual had worked within a given industry. The study concluded that each additional job function provides a boost that, on average, is equal to three years of work experience. Therefore, to optimize your decision-making ability and create competitive advantage in the ever-changing workforce, take on new challenges and roles to strengthen your weakest abilities and become as well-rounded as possible. For us to be the best for our clients, we must approach each problem with a broad and open mind, while being cognizant of the transferability of our past experiences. Each experience has added value to who we are and has shaped our unique insight. The reward of learning a new skill develops new habits, strengthens the mind to overcome the fear of doing something new, and enables us to become the best version of ourselves for our clients.

 

Author
Jordan Stenholm 
Transaction Support Associate
Benchmark International

T: +1 813 898 2350
E: stenholm@benchmarkcorporate.com

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Provision of Healthcare To Patients, and M&A

The provision of healthcare to patients is the delivery of interventions within an organizational or home setting, including medical services, devices, health insurance, pharmaceuticals, and facilities.

Healthcare Around the World

The provision of public healthcare was not a priority until the last 100 years. Prior to World War I, public healthcare expenditure on healthcare was less than 1% of all national incomes worldwide. Today, the countries with the highest levels of public healthcare spending commit nearly 10% of their national revenue to it.

Wealthier nations spend more per person on healthcare and, not surprisingly, they have longer rates of life expectancy.

In most countries, government is heavily involved in healthcare markets. And in most wealthy countries, such as in Europe and Canada, the government runs the healthcare system. Universal healthcare is achieved in these nations through:

  • Government tax-funded systems
  • Privately run but government funded systems
  • Private insurance but with regulation and subsidies to ensure universal coverage and non-discrimination based on pre-existing conditions

The United States is the only industrialized nation with no universal healthcare option, where big pharmaceutical companies and insurance giants wield heavy influence on the industry.

Many developing countries make an effort to provide universal healthcare but face challenges associate with poverty, corruption, and inequality. There is also reliance on foreign aid.

A major difference between government-funded and market-based healthcare lies in the realm of medical innovation and advancement in new, effective treatments. Under government-financed systems, price and budgetary limits and other restrictions reduce investment in medical research.

Healthcare provision is extremely complex and is also subject to cultural, political, social, and economic conditions. This makes the sector very different from other business markets that operate based on supply and demand, especially when governments ensure that healthcare provisions are distributed in adherence with certain policies.

 

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A New Era in Healthcare Provision

Healthcare spending makes up a growing share of the world economy. As the 21stcentury progresses, the provision of healthcare to patients is undergoing changes to the overall landscape. People are living longer and spending more on healthcare. Evolving technologies are changing every aspect of healthcare. Chronic diseases remain a burden on healthcare systems. And more integration is needed for the continued improvement of the provision of healthcare to patients.

New technologies, such as fitness monitors for example, are empowering people to take more control over their own health. There is an opportunity to further help patients play a larger role in symptom disease management and their overall health through continued innovation in the healthcare sector.

There is a massive opportunity to improve patient outcomes through the engagement between clinicians and patients. Healthcare facilities are being reimagined so that they are designed around patient experiences rather than the need of the providers. They are also being digitally equipped with interfaces that streamline admission processes and recordkeeping, improve the continuity of care, and ultimately provide better patient care. New digital frameworks are allowing facilities to be updated rather than entirely rebuilt when technology undergoes drastic changes.

Integrated care is a growing focus in the healthcare provisions sector. How communities work with facilities is being reexamined to formulate the right platforms for patients and alleviate the demand for inpatient beds.

Healthcare Provision and M&A

Mergers and acquisitions in healthcare tend to always be a topic of debate, as they can have a serious impact on the patient experience. And as M&A healthcare deals become more frequent, concerns over monopolies arise. However, structure changes can be quite vital for some companies to survive in an ever-evolving industry. Additionally, M&A can actually help patients have better access to quality care and improve costs.

  • According to the American Hospital Association, certain mergers can boost access to capital and other resources, lowering costs for patients.
  • When small independent facilities are acquired by larger organizations, they can remain open and patients do not lose access to care.
  • Under a merger, it is common to streamline protocols, which can lead to enhancements and new standards in quality care. This can also reduce the instances of patients undergoing surgical procedures at a facility with limited experience in that area.

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How A Sovereign Credit Downgrade Might Impact M&A Activity

While still managing to avoid a downgrade in April, South Africa has found itself at a crossroads of uncertainty since Moody’s Investors Service’s bleak budget reaction that sparked junk status fears for the country.

The speculation about the credit downgrade has been amplified by the fact that South Africa is in the middle of an election year – a factor that has also been blamed for a decrease in foreign investors’ confidence in the South African market.

An analysis of mergers and acquisitions (M&A) activity pre-and-post downgrades in Brazil and Greece suggest that although foreign investment will not end, investors do adapt their investment portfolios to align to the parameters of their investment mandates. 

Government bonds and treasury securities become largely un-investable instruments post a sovereign downgrade. However, statistics suggest that while capital outflows are a reality, some funds do remain behind in these countries, and new funds do flow in. These investments will naturally seek viable and alternative high-return investment opportunities – options often presented by M&A. One theory that emerges from this analysis is that mature economies have more stable but lower growth rates. While developed economies also represent a seemingly lower risk, they do not offer sufficiently high returns.

In order to achieve the required overall return on investment in a risk-on environment following a credit downgrade, fund managers will inevitably still require some form of investment in emerging markets.

 

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In order to understand the impact a credit downgrade has on M&A activity in a country, we compared M&A activity as reported by Zephyr, a Bureau van Dyk company that offers a database of deal information.  

We compared M&A activity before and after a credit downgrade in Brazil, which has a similar economy to South Africa due to slow growth and political instability in both countries, as well as in Greece. The raw data suggests that a catastrophic capital flight is unlikely because the sums invested may be lower and the investment profiles between the countries are different. But opportunity abounds and returns remain strong as there exists a direct correlation between risk and reward.

According to Trading Economics, Moody’s was the first to downgrade Brazil in September of 2014 for political and economic reasons. Fitch Ratings followed suit with a downgrade in April 2015. In July 2015, S&P downgraded the country too.

The Bureau van Dyk / Zephyr data looked only at transactions where the targets were Brazilian companies and considered deals that were both completed and announced each year. The transactions analysed include mergers, acquisitions, institutional buy-outs as well as venture capital and private equity.

It is evident from the data that the volume of transactions was relatively flat after the first downgrade by Moody’s in 2014. The volume of transactions decreased by approximately one-third after the remaining agencies downgraded the country in 2015.

While the total value of transactions reported also decreased, it is evident that the average transaction value in 2017 was similar to 2015.  For example, the average value per transaction in 2015 was R973 million and R929 million in 2017. On a cursory view, transaction values held up well after the Moody’s downgrade.

Analysing the data for Greece, which was downgraded in 2010, the following graph illustrates the effect on both volume and values reported by Bureau van Dyk over a similar period to Brazil.

The data illustrates a clear downward trend in M&A deal values over the period of the financial crisis in 2008, 2009 and well into 2010. While there was an initial slump in volumes and a slight decrease in value immediately after the downgrade in 2010, it is only 2017 that has subsequently underperformed the deal values as they were similar to levels seen in 2010. Again, the average deal size in the period following a downgrade is shown to have increased.

In conclusion

The data analysed makes no currency or inflation-related adjustments. And the data, being Euro-denominated, indicates that the M&A sector remained resilient even after credit downgrade events.

Although Moody’s did not downgrade South Africa to junk, the data from Greece and Brazil does indicate that deal flow will not evaporate should this happen. Volumes may initially drop but average deal values can be expected to increase.

While we continue to work to avoid it and acknowledge the punitive impact thereof, the statistical reality is that a downgrade is not likely to be as detrimental for the M&A sector as otherwise perceived.

 

Author
Andre Bresler
Managing Partner
Benchmark International

T: +27 (0) 21 300 2055
E: bresler@benchmarkintl.com

 

 

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Benchmark International (South Africa) Closes 9 Deals in 9 Weeks

Benchmark International’s South African office has experienced a sharp increase in deal flow and activity. The company reports having received 51% more non-disclosure agreements from interested parties and a 71% increase in the number of offers received for client businesses than in the corresponding period last year.

The volume of transactions concluded by Benchmark’s South African office confirms the positive trend identified in the recently published Intralinks Deal Flow Predictor, which relies on early-stage transaction forecasts compiled from data on M&A due diligence activity in virtual data rooms. The predictive models for the second half of 2019 suggested an increase in the number of deals to be announced in the order of 5% for the EMEA region.

Benchmark International—demonstrating this trend—is pleased to have facilitated the following transactions in recent weeks:

  1. The investment by way of share subscription in Shift South (Pty) Ltd, trading as SweepSouth, by MIH Holdings, trading as Naspers Foundry

  2. The sale of a majority interest in Counterpoint Trading 439 (Pty) Ltd to Shave and Gibson Packaging (Pty) Ltd

  3. The merger of two undisclosed prominent e-commerce companies

  4. The disposal of Groupline Projects (Pty) Ltd by Wonderstone Ltd who are in turn owned by the JSE listed group Assore Ltd to Mokoena Holdings (Pty) Ltd

  5. The sale of Muffin Mate Coastal (Pty) Ltd to Ekuzeni Supplies (Pty) Ltd

  6. The sale of Jordan Human Resources to Vinton Holdings (Pty) Ltd

  7. The sale of an undisclosed mining equipment manufacturer to an undisclosed Canadian equipment supplier

  8. The acquisition of Ciba Packaging (Pty) Ltd’s non-core flexible food assets by Lampac CC, trading as Packaging World

  9. The sale of Nology (Pty) Ltd and Nology Distribution (Pty) Ltd to a multinational technology holding company

Commenting on the transactions, Andre Bresler, Managing Partner at Benchmark International’s South African office, remarked, “The range of transactions is a testament to the maturing M&A landscape in South Africa as well as the depth of the Benchmark team as these nine deals represent a very broad spectrum of M&A activity—from a capital raise to a merger and both partial and full disposals. There are private equity and trade-buyer deals, cross-border and domestic transactions, an acquisition, and even the disposal of a non-core asset of a listed entity. It’s certainly an exciting time for M&A in South Africa with no significant slow-down expected; we anticipate a number of additional transactions to finalize in the last quarter too.”

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M&A In The Global Mining Sector

The Role of Mining in the World

The global mining sector employs millions of people worldwide and its role in the global economy continues to significantly evolve. Standard functions in the mining industry include production of metals, and metals investing and trading. Additionally, there is a strong correlation between the global mining industry and other industries. For example, elements such as copper, nickel, and aluminum are core components used in the construction, aviation, automobile and other industries. In areas where mining is more concentrated, the industry plays a more important role in local economies.

According to the International Council on Mining and Metals, at least 70 countries are extremely dependent on the mining industry, and most low-income countries rely on it to survive. The same study shows that in many low-middle income countries, mining accounts for as much as 60-90% of total foreign direct investment.

Increased populations and urbanization drive the demand for growth in mining activities, as there is more demand for cars, buildings, and consumer products.

 

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M&A Challenges and Considerations

Mergers and acquisitions can be intense in the global mining industry. They are heavily influenced by timing, fluctuating commodity prices, supply uncertainties, and come with many variables depending on transaction size, volatile markets, and the geo-location of the mine. There are certain considerations that are unique to the industry:

  • Mining projects can have limited lifecycles depending on the availability of deposits.
  • Mines cannot be relocated to areas that may be more beneficial economically or politically.
  • Because there are great technological and geological constraints, mining companies are not able to adjust production to increase revenue.
  • Funding is less readily available, access to bank financing is limited, and investors tend to be more cautious and selective.
  • Countries may have greater government regulations, and indigenous mining agreements designed to mitigate negative effects and to share the benefits from commercial mining activity.
  • In some parts of the world, there are human rights concerns, increased policing for corruption, and environmental impacts.
  • Once the ore is extracted, mine closure procedures can take several years, in turn, expending money and labor for activities that are not yielding any profits during that time frame.

Gold Mining Sector 

The gold mining industry is known for placing a high premium on growth. As of 2019, analysts reported that the leaders of gold mining companies say that they find mergers and acquisitions to be an easier path to growth than exploring for new untapped deposits underground. Modern M&A deals in the business of gold mining now focus more on capital efficiency and operational excellence, with heavy emphasis on evaluation of the management team.

Copper Mining Sector 

Copper is an essential metal needed by industrial economies. Globally, the copper mining industry is one of the leading metal mining markets. The continued innovations in battery technology continue to attract investment into metals such as copper, which plays a critical component in the function of batteries.

Coal Mining Sector

Coal has been widely used to provide power since the Industrial Revolution in the 1800s. In the 21stcentury, coal mining faces new challenges alongside the pursuit and popularity of renewable energy sources. At the same time, innovation in the coal mining industry remains alive. New, state-of-the-art technologies are being developed. Sophisticated robotic mining machinery and computerized systems are being used to streamline mining and boost production to unprecedented levels. And industry leaders are looking into new uses for coal beyond its long-standing role in the energy sector. An example is the development of carbon fiber, currently used in the aerospace field, and potentially used in prosthetics, electrodes, 3D printers, and more.

 

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Shared Buyer and Seller Risk

In the mining sector, both buyers and sellers alike face risks of deal failure, but are more likely to see success if a strategic plan is followed. Two of the most important factors are pricing efficiency and post-sale integration. Both buyers and sellers tend to be more cautious in this industry.

  • Sellers should expect buyers to be on the lookout for the risk overpaying for your company, not being able to integrate the company as efficiently as possible, and dealing with issues such as uninsured legacy liabilities. Buyers may become interested in underperforming assets because they have more experience and access to financing that the existing owner, as well as better government relationships, a different risk profile, and the option of consolidation with existing mines or facilities.
  • Sellers risk facing purchase price disputes and post-deal issues with warranty and indemnity claims. Plus, fluctuating markets, especially in mineral-rich regions such as Africa, can make valuation difficult.

If proper precautions are taken to understand and avoid these issues, overpayment or post-close surprises can be averted. Other benefits that come with proper preparation include improved sale and purchase agreements, smoother integration, and more efficient corporate governance. Enlisting experienced M&A advisors as early on in the process as possible can aid in significant mitigation of transactional risks.

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Please feel free to call us at Benchmark International to set up a conversation with one of our M&A specialists if you are thinking about selling a business. We look forward to discussing how we can help you with growth strategies, exit planning, or any type of transaction advice you may need.  

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The Information Services Industry and M&A

The global information services (IS) industry employs integrated methods to gather, process, communicate and store different types of information for the purpose of improving efficiencies for society and organizations. IS data—which typically covers people, software, hardware and procedures—is used for study, analysis and better decision-making processes. 

The IS landscape is comprised of companies that vary in size, including:

  • Global multi-billion-dollar firms that cover several sectors
  • Firms with hundreds of million of dollars in revenues and more concentrated areas of focus
  • Smaller firms that focus on niche markets and specific geographic regions

M&A in the IS Industry

Many large IS companies use regular acquisitions to execute business strategies such as product enhancement, geographic expansion, keeping pace with changing marketplaces, and expansion into adjacent markets. Acquisitions in this sector can also serve as an alternative path to product development, allowing companies to purchase capabilities and content rather than create it themselves. IS companies typically look to acquire content that fits well within their existing offerings.

Synergy and Value

Value through M&A in this industry comes in the form of clear synergies and improved distribution capabilities. This is partially due to the fact that IS content can be used several times at no added cost. After a one-time integration of content and capabilities between the two companies, there is much versatility in how the content can be used. Synergies are especially important to M&A deals when they are part of a business owner’s exit strategy in order to maximize the value of the transaction and fulfill the business owner’s personal objectives and vision for the company.

Consolidation planning is key to company valuations. IS companies do not typically view acquisition targets as stand-alone enterprises, but rather as opportunities to consolidate acquired content into existing platforms, therefore gaining positive revenue, improved cost synergy, and reduced technology costs.IS transactions can happen at a higher price if earnings and product synergies can be pinpointed and their profitability is clearly identified.  

Active IS Market Segments

In the IS industry, mergers and acquisitions activity tends to occur most in the following segments:

  • Business Intelligence
  • Financial Markets Information
  • Legal, Tax & Regulatory Information
  • Credit & Risk Management Information
  • Marketing Information

Business Intelligence IS

The Business Intelligence segment of IS—defined as information on industries, products and services that help companies identify market opportunities, respond to competition, and plan new products—is a highly active area for M&A. These companies use acquisitions to increase their existing coverage and expand into adjacent markets.

Financial Markets IS

In the segment of Financial Market Information, acquisitions frequently focus on adding content and capabilities to their distribution platforms to serve large portions of rapidly changing financial markets. New data is always in demand and new types of analyses are needed. Companies seek innovation, new customers, and stronger financial market data versus that of their competition.

Legal, Tax & Regulatory IS

The area of Legal, Tax & Regulatory Information is subject to ever-changing laws and regulations around the world. Also, IS companies face added regulations with the expansion of cross-border trade. To adapt to the need for product changes, these firms turn to acquisitions to expand content and capabilities.

Credit & Risk Management IS

In this particular IS segment, it is most common to see specialized firms being active in M&A transactions, with their primary strategy being to obtain more individual credit content. Also, as new entrants emerge in this space, the major credit ratings agencies see buying them as a way to strengthen their existing credit rating models.

Marketing IS

Marketing IS companies provide market research, audience management and other general marketing services. Companies in this diverse area use acquisitions for market consolidation, increased synergies, and the expanded mix of tools and information.

The Importance of Expert Guidance

As with any industry, it is recommended that business owners within the IS space engage the expertise of reputable M&A advisors to execute a deal in a sector that is subject to fast growth and high margins. These deals involve high levels of complexity and require the perspectives and resources of a partner that is committed to serving the best interests of the seller.

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Choosing to sell your company is a big step. At Benchmark International, we understand what a life-changing decision it is. Our M&A experts are here to walk you through the process and provide the utmost peace of mind every step of the way. Give us a call so that we can embark on this exciting journey together.

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M&A In The Ride Services And Autonomous Vehicle Industries

Two of the most transformative factors in the world of automotive and technological development have been the advent of ride-hailing platforms and autonomous vehicles. They each create various mergers and acquisitions opportunities both individually and in concert with each other in various capacities on a global scale.

Ride Service Companies

Ride services—also known as ride hailing and ride sharing—will continue to create opportunities for M&A in decades to come as their popularity around the world continues to increase. Uber, DiDi Chuxing, Gett, Grab, and Lyft are some of the leading firms in the market. As more companies emerge, the market becomes more and more fragmented. The right M&A transactions can help companies increase market share and improve service quality.

It can be relatively inexpensive to start up a ride-hailing company. After all, they depend on contract labor that does not rely on special skills or loyalty, and are powered by free mobile apps that easily bring their service to the public’s fingertips. While this makes it easy for more smaller firms to enter the space, it also creates ripe opportunity for M&A activity in an incredibly competitive industry that has been predicted to one day be dominated by only a couple of major players.

The ride hailing sector is not unlike other transportation industries, as it is subject to strict laws and regulations that can make M&A challenging, meaning that deals in this space require added due diligence.

 

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Autonomous Vehicles

A strong investment climate lies in the sector of autonomous or self-driving vehicles. Traditional auto manufacturers are investing billions of dollars and stepping up efforts to try to catch up with advancements already pioneered by the big tech companies. It is both faster and easier to acquire existing technologies than to try to reinvent the self-driving wheel. While they retain the advantage of being capable of the mass production of vehicles, it is expansion of their capabilities that is a major driver of M&A.

Companies at every level of involvement in the auto industry need to adapt their strategies, from manufacturers to suppliers to retailers. M&A is a necessary strategy for all existing industry players to maintain any foothold as newer digital companies transform the space. This includes rethinking business models and emphasizing innovation to establish themselves as a leader in the future.

Autonomous vehicles also present the possibility of major ramifications for other industries.

  • Law enforcement: With self-driving cars programmed to obey traffic laws, fewer police resources may be needed on roads and less local revenue could be earned from citations.
  • Insurance: With fewer accidents come fewer insurance claims, reducing the cost of insurance premiums.
  • Healthcare: Ideally, fewer traffic accidents can reduce reliance on emergency services.
  • Air & rail: Using autonomous vehicles for long-distance travel can mean fewer passengers on airplanes and trains.
  • Advertising: Withdrivers turned into passengers, their attention can be shifted from audio to visual, and advertising could be targeted by location.

Many companies around the world have demonstrated enthusiasm over the prospect of disrupting public transportation as we know it, and have been eager to invest in companies that are focused on bringing autonomous vehicles into this realm. This includes robotic taxis, driverless shuttles, electric car ride services, and taxis that are not equipped with steering wheels or pedals.

Countries leading the way in the development of autonomous driving technology include Norway, Singapore, the United States, Germany and Israel. 

Many challenges exist before the proliferation of autonomous vehicles on roads everywhere is a real possibility. While careful planning and programming goes into the technology that makes these vehicles both operational and safe, there are unexpected scenarios that are not easy to predict or take into account. These situations include other drivers’ errors such as going the wrong direction or making illegal maneuvers that can confuse the technology that a self-driving car relies upon. Essentially, the radar and high-resolution cameras in autonomous vehicles are able to detect and identify objects (such as a bicycle or pedestrian), but it cannot predict what those objects might do next.

These types of uncertainties, along with the strict regulatory environments surrounding self-driving vehicles, can also make the M&A market in this sector more complicated to navigate. It is prudent to consult with M&A experts regarding the opportunities in this area.

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How can Benchmark International help you realize your dreams for your business? Give us a call and set up a meeting with one of our M&A experts. Whether you are looking to sell, grow, or formulate an exit plan, we are committed to helping you achieve what is best for you and your company.   

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Benchmark International Facilitated the Transaction of Four Colour Imports, LTD to Vivos Corp

Four Colour Imports, LTD (“Four Colour”) of Louisville, KY has been acquired by Vivos Corp of Manassas, VA.  Four Colour is a non-traditional printing and sales service provider specializing in book and catalog print. The company uses advanced technology to supply its clients with the highest quality pre-press, printing and book binding services.

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Benchmark International has Successfully Advised the Shareholder of Group Management Electrical Surveys Ltd on the Sale to Phenna Group

Benchmark International is pleased to announce the transaction between Yorkshire-based Group Management Electrical Surveys (GMES) and Nottingham-based Phenna Group.

Established in 1990, GMES provides specialist electrical services to international blue-chip clients. It concentrates on delivering independent electrical inspection and testing services in line with BS7671 and IET Guidance Note 3 for all types of new build electrical installations, in addition to thermal imaging surveys and electrical installation condition reports.

Phenna is a group of specialist businesses focused on the testing, inspection, certification, and compliance (TICC) sector. Its aim is to build a global portfolio of independent TICC businesses, with GMES representing Phenna Group’s fifth acquisition since its formation less than 12 months ago.

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Steve Cressey, Managing Director of GMES will continue in his current role, alongside the company’s very experienced management team and highly skilled workforce.

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M&A In The Hotel, Lodging & Hospitality Industry

Hotel and hospitality brands have an insatiable appetite for rapid growth and there is an endless ongoing battle for global share. Because the industry is highly fragmented and brand driven (the top hotel brands only account for a third of rooms worldwide), mergers and acquisitions are always on the table as a key growth strategy. Since 1985, there have been more than 13,800 deals in the hotel and lodging industry, valued at $809 billion.

Studies have shown that, on average, lodging M&A is unique versus those in other industries because both the target and acquirer are better off following a merger.

Hotel M&A Value Drivers

There are several value drivers when it comes to hotel brand M&A.

  • Strategic value drivers include more customer offerings, the creation of new markets, and further reach into existing markets.
  • Operational value drivers include factors such as expanded loyalty programs, consolidated corporate teams, and improved technologies and reservation systems.
  • Additional key value drivers of a hotel brand include the integrity of its global trademark portfolio, and the value of both existing and potential management/franchise agreements and real estate portfolios.

 

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Clearing Hurdles in Hospitality M&A

It is not uncommon for various issues to arise during M&A transactions between hospitality companies. However, taking the proper steps can alleviate these concerns.

Clarify intellectual property.

Portfolio expansion through the acquisition of additional brands is a major reason for many M&A transactions within the hotel sector. In these cases, the target company's ownership of its intellectual property is very important to buyers, so it is just important to sellers. This is where third-party ownership claims can arise as an issue in a transaction. If a hotel brand shares valuable restaurants or other brands with a third party, and there is any chance that the third party could claim ownership of any interest in the brand, it can significantly devalue the brand and the target company. Ownership agreements must be adequately and clearly documented before entering into an M&A transaction. It is going to be crucial to the accurate valuation of the company.

Protect your data. 

Technology is integral to every step of the hotel booking process, which is why, as a seller, you can expect buyers in M&A transactions to heed the risks and liabilities surrounding the target company's data protection and cybersecurity practices, and its compliance with governmental regulations. There are web and mobile bookings, check-ins, complicated reservation systems, and even customer review websites to consider. Due diligence in regard to detailed data protection and cybersecurity at length is imperative. In order for a target company to maximize its value, management should thoroughly review its current compliance with existing regulations and take all precautions to ensure best practices are in place to minimize exposure to potential data breaches.

 

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Minimize withdrawal liability. 

Large hoteliers and hospitality companies typically have unionized employees covered by collective bargaining agreements that require contributions to one or more multi-employer plans. Withdrawal liability can occur when an employer has a significant reduction in union workforce, a complete union workforce reduction, or a withdrawal of all employees from a pension plan as a result ofthe event of a change in management or a sale of a hotel. Labor laws vary by country, but it should still be noted that there could be issues with determining whether the hotel owner or manager is the employer by legal definitions in that reason (for example, the Employee Retirement Income Security Act of 1974 [ERISA], in the United States). Multiemployer plans have the ability to disagree with who is considered the employer, and assess withdrawal liability on the party it determines is the employer. To mitigate the risk of withdrawal liability, all parties should consider who is the employer for labor law purposes, and who bears the liability under the management agreement.

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Working with an experienced M&A advisor is a game-changer in minimizing risk and closing a successful deal. We look forward to hearing from you about your interest in M&A as a seller of a company in any industry. Our global M&A experts are waiting for your call.

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M&A And The Construction Drilling Industry

The construction drilling industry is a very diverse market that handles various private and public contracts that include infrastructure expansion, excavation, road boring, poly piping, trench work, geotechnical drilling, and foundation drilling.

M&A Drivers

The key drivers for mergers and acquisitions in the construction drilling industry for most companies include:

  • The objective to grow and diversify the businesses
  • Expansion of services and capabilities
  • The need to address qualified labor shortages in an industry where talent is increasingly difficult to find

At the same time, labor shortages can also be a reason that some drilling businesses may hesitate to make a major acquisition, as they do not have enough young leader talent to make it work in their favor.

The sectors that continue to be ripe for acquisition activity are civil infrastructure and industrial. Organic growth and access to labor is challenging for both of these areas.

Consolidation is also driven by a customer demand for large companies that offer integrated, single-source solutions. This includes the collaboration by design and construction firms looking to vertically integrate and expand their delivery capabilities. Additionally, strategies are about more than the creation of better solutions for clients in the construction drilling industry. They are also motivated to create a better platform for employees. In what is a very competitive labor environment, offering a solid growth platform is just as crucial to employee retention as it is to customer satisfaction and shareholder value. Employees can benefit from the advantages and growth possibilities that come with being part of a larger infrastructure company.

 

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Buyer Interest

The interest of buyers in the drilling sector is partially driven by the need to remain competitive by adding capabilities and scale in a market where competitors are acquisitively expanding their own capabilities and scale. With a divide between large integrated firms and smaller niche providers, those that are not growing at the same rate as their competitors risk getting lost somewhere in the gap.

Horizontal Directional Drilling (HDD)

Horizontal Directional Drilling is a trenchless procedure that is utilized to install underground pipes, cables and conduits along a pre-determined route by using a surface-launched drilling rig. It has gained great popularity in the industry because it causes minor damage to the topography of the adjacent areas.

The opportunities for growth in the HDD market are strong because of the high demand that comes from the telecommunications sector. As telecom companies take action to expand broadband service availability, it increases the demand for the installation of cellular towers. As digitization is steadfast in both developed and developing countries worldwide, cable, broadband and fiber companies are expanding networks to serve the growing demand. The growth of the HDD market is also heavily supported by the steady demand from utilities such as electric, water and natural gas distribution. Utilities account for more than half of the overall revenue in this market.

Some of the unique challenges this industry faces are related to a lack of contractor review for construction assessment prior to starting projects, and the hiring of unqualified engineers and consultants with no prior experience.

The HDD market sees significant activity in North America, with telecommunication and energy amassing a major share of the revenue. Other major markets that have a high demand for utility installations and broadband access include China, India, Australia, and Japan.

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The world is full of opportunities and Benchmark International has the connections to help you effectively grow your business or sell your company whether it is domestically or across borders. Set up a call with one of our M&A experts and we can begin to delve into what how we can maximize your value and make the markets work for you.

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M&A And The Electronics Manufacturing Industry

The electronics industry manufactures electronic equipment used within industrial electronics such as semiconductors, as well as consumer electronics such as televisions and smartphones.Companies in this sector design, develop, manufacture, assemble, and service equipment and components.

By the year 2024, the global consumer electronics market is expected to reach
$1.78 trillion.

Growth within the electronics manufacturing industry is driven by the following factors:

  • The demand from emerging market economies
  • Investment in foreign production of electronics, which results in new factories and factory expansions
  • Increased consumer spending
  • Increased competition that drives down production costs and expands the availability of affordable electronics products
  • Development of new technologies

The Semiconductor Segment

The semiconductor industry creates products such as memory chips, microprocessors, integrated circuits, and specialized processorsfor a wide variety of uses in electronics and computers. Primarily, large companies dominate this particular industry segment, but smaller, niche players are carving their place in the market.

The semiconductor industry is highly influenced by new technologies and global economic cycles. When product prices are high, companies produce more of them. This saturates the market and prices drop. As a result, some companies choose to produce less, gradually driving prices back up. The industry also requires a great deal of capital, and research and development, and is subject to long lead times from concept to production.

Because there is much reliance on economic environments—plus there is the high degree of risk due to cost of R&D—smaller companies and startups tend to prefer to be acquired by a larger semiconductor company as a more realistic strategy to create steady future growth.

Next Wave Tech

Over the next couple of decades, printed, flexible and stretchable electronics will continue to represent a massive opportunity in the future of tech, as well as M&A activity. These electronic innovations include:

  • E-textiles, smart clothing, and wearable electronics
  • Flexible displays and screens
  • High-performance, low-power electronics
  • Wearable and mobile health monitoring tools
  • Flexible, foldable, roll-able batteries and photovoltaic technologies
  • Miniaturized components

Automotive Electronics Evolution

As software and electronics play an increasingly essential role in vehicles, the communication technology giants have been aggressively investing in the automotive industry. At the same time, traditional auto manufacturers are actively seeking to partner with technology companies in order to be more productive at digitizing and innovating their offerings. These market dynamics and adaptive strategies are key drivers of M&A in the automotive electronics sector.

The market for automotive electronics is expected to exceed $100 billion by 2025. 

Restructuring through M&A enables these companies to better integrate, reconfigure, and pool resources, gain new and specific knowledge, and enhance overall capabilities.

Integration of cultures can be an important challenge when a smaller tech firm converges with a giant conventional automaker. For M&A to be successful, both companies in the transaction must be mindful of how greatly differing cultures need to be integrated with care.

Achieving Successful M&A

Beyond cultural integration, other important considerations in an M&A transaction between organizations include:

  • Proper targeting and vetting of both companies
  • Identification and mapping of internal processes of both organizations
  • Evaluation of the structural fit for each organization
  • Locations of all global and regional offices and facilities
  • Synchronization of the data, applications, and types of technologies used by each organization
  • Assessment of how their legacy systems and languages might conflict or be enhanced

It is also critical to the deal that both parties are kept on track and expectations are properly managed. This is where the partnership with an M&A advisory firm can make all the difference in a smooth transition and the ultimate success of the deal. This valuable partnership can also save significant time and financial resources.

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If you wish to formulate a plan to sell, grow or exit your company, contact us at Benchmark International today. Our experts are uniquely qualified to coordinate deals that deliver on every single wish and stipulation expressed by the business owners with which we form long-lasting partnerships. 

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M&A In The Global Transportation and Logistics Industry

By investing in the transportation and logistics sector, global companies open up the opportunity to advance the flow of goods throughout the world. Businesses in this industry, both domestic and international, benefit from integrated supply chain networks that connect companies and consumers through multiple transportation modes within industry subsectors.

Industry Subsectors

  • Logistics services include the management of fleets, warehousing, order fulfillment, logistics networks, inventory, supply and demand, third-party logistics, and other support services.
  • Air and express delivery provide accelerated end-to-end package delivery services, as well as infrastructure for exporters. Growth in this subsector is greatly driven by the expansion of e-commerce.
  • Freight rail moves high volumes of heavy cargo and products long distances via rail network.  
  • Maritime includes carriers, ports, terminals, and labor involved in the transportation of cargo and passengers via water.  
  • Trucking  moves cargo over the road by motor vehicles over short and medium distances. 

The transportation and logistics industry is consistently a highly fragmented sector. This is largely due to the fact that most fleets are small and there are few barriers to entry when it comes to starting a small fleet. Another major factor is that larger carriers have difficulty retaining drivers and achieving organic growth. Owners are always looking to gain efficiencies, optimize routes and spread fixed costs across more operations. In order to do so, they must create greater scale. It is common in the transportation and logistics sector for acquisition strategies to revolve around broadening service offerings, branching out the customer base, and expanding geographical reach. 

 

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Economic and Industry Factors

Burgeoning economies drive demand in the transportation and logistics industry. More freight demand stems from strong consumer confidence and upward surges in manufacturing, resulting in more loads and vehicles on roads. When this climate is met with driver shortages, it increases transportation costs, which can reduce margins.  

The Impact of Amazon.com

Amazon has greatly raised global consumer expectations when it comes to rapid fulfillment. This demand has shifted distribution patterns, pushing companies to move warehouses closer to customers. Getting products to consumers faster increases the number of touch-points along the freight network.

Automation Technologies

The introduction and evolution of new technologies in the transportation and logistic industry are addressing over-the-road challenges such as driver shortages. Long-haul robotic trucks are being developed and tested. Driverless and remotely piloted deliveries are being incepted, such as aerial delivery drones. Experts expect it to be a very long period of time before these advancements face more mainstream use, but someday in the future, the possibilities they hold will be very real.

Data-Driven Tech

Artificial intelligence, the Internet of Things, data collection, machine learning, and blockchain are all being used within the transportation and logistics industry to gain major competitive insights and advantages, and therefore make better decisions that improve the performance of the company.

 

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Transportation and Logistics M&A

In the 21st century M&A market, transactions in the transportation and logistics industry are often driven by specific demographic, macroeconomic, and regulatory factors.

Sellers are motivated by:

  • The desire to take advantage of a strong overall M&A market
  • Volume limitations due to driver shortages, tight labor markets, aging drivers and increasing hiring costs
  • Aging ownership without a succession plan in place (usually companies with <$50 million in sales)
  • Unease about industry regulations around safety, driver hour limits and logging devices
  • The use of cross-border deals to counter negative impacts on operations, access new markets, and protect supply chains, as remaining agile in a globalized market is critical

Buyers are motivated by:

  • Leverage of economies of scale in order to maintain profitability
  • Capitalization on domestic economies with strong growth potential
  • The need to hire drivers while facing tight labor markets and rising hiring costs
  • Acquisition of smaller companies that expand service offerings
  • Use of various asset models to free up capital and invest in better equipment

A high level of activity in M&A in the transportation and logistics industry is contingent upon suitable timing in a growing economy, low interest rates, and widely available capital. It usually takes up to nine months to complete an M&A transaction, so timing and forward thinking should be considered when deciding to take your company to market.

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Are you considering selling your company? Even if you are merely exploring the idea, our M&A specialists at Benchmark International can help you decide if and when a merger or acquisition may be right for you. We’ll work closely with you to ensure that you never have to compromise value or timing, and that you are only matched with the most suitable opportunities.

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Benchmark International has Successfully Facilitated the Sale Between RG Distributors Limited and Headway Point Ltd

Benchmark International is pleased to announce the transaction between online supplier of catering equipment, RG Distributors (trading as eCatering), and private investor, Headway Point.

eCatering is an online supplier of commercial and domestic catering equipment such as refrigerators and cooking and food preparation equipment to restaurants, cafes and hospitals, as well as to end-users. It is also involved in the secondary supply of UV sterilisers directly to hairdressers, tattoo artists and dog groomers. Operations are conducted from offices in Cumbria with 40,000 sq ft of warehousing facilities in Kendal and Manchester.

Headway Point is led by Duncan Evershed, a private investor.

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On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.

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M&A In The Renewable Energy Industry

The renewable energy industry is one of considerable expansion. Global efforts to cut back on the use of non-renewable energy and to reduce carbon emissions are proven to stimulate investment and growth.As the world’s energy needs continue to change, the opportunities for mergers and acquisitions continue to evolve. And as the big technology companies get involved in renewable investments, major oil and gas companies follow their lead.

M&A activity in renewable energy is driven by traditional energy businesses striving to acquire new capabilities, institutional investors seeking stable returns, public demands to address climate change, and countries working to integrate cleaner energies into their existing energy mix. The European Union expects to achieve 32% of renewable energy consumption by 2030.

Established, traditional power companies must rely on M&A to fill gaps in capabilities because they do not possess needed skills that were never part of the mix in traditional grid-based power systems.

 

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Once viewed as a luxury form of energy only used in developed countries, renewable energy is now being adopted worldwide and in many developing countries, such as those in Africa and Latin America. Fossil fuel energy can be costly and difficult to transport and distribute in remote areas, making locally sourced renewable energy a practical option.

There are also other areas of continued development in the realm of renewable energy that offer M&A opportunities for investment and growth. These include the further development of electric vehicles, the electricity storage market—particularly battery technology—extending from technology manufacturers into the mineral supply chain and storage control systems. Digitization of the sector also presents the types of abundant opportunities that are inherent to technology and data in the 21stcentury.

Business Valuation As a Factor

Among the deal-specific factors that influence the valuation of individual renewable assets are:

  • Asset quality
  • Finance costs
  • Regulatory stability
  • The state of the wholesale energy market
  • The competitive environment
  • The lifecycle stage of the asset relative to the prevailing subsidy regime
  • Curtailment risks beyond the control of the asset owner

Many governments offer incentives and subsidies for renewable energy production and use, strengthening the value of companies of this sector. 

 

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Key Due Diligence Areas

In the acquisition of a renewable power project, the following due diligence topics must be considered:

  • The venture must have an energy generation license (or exemption from a license) and adhere to the terms of the license. It is also important to know if there has ever been a breach of the license.
  • There must be assessment ofthe project’s profitability and any credit support requirements.
  • It must be determined whether there will be any government subsidies for the project, which can affect its funding.
  • Property rights and planning permissions must be documented, ensuring that the correct leases, easements, planning permissions, and consents are in place and compliant.

The following key contracts are specific to the renewable energy sector and will be needed:

  • A shareholders’ agreement or joint venture agreement
  • Power purchase agreement
  • CFD or capacity agreement
  • Fuel supply agreement (in the case of biomass or biofuel generating plant technologies)
  • Engineering, procurement and construction contract
  • Operation and maintenance (O&M) agreement
  • Connection agreement
  • Financing documents

Because completing an M&A transaction in the renewable energy industry is extraordinarily nuanced and complicated, and embroiled in tedious due diligence processes and paperwork, it is highly advised that you seek the expertise of an M&A advisory firm before attempting to broker a deal.

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If you are considering selling your company, or even looking to plan an exit for your retirement, please call our M&A experts at Benchmark International to see how we can help you formulate a winning strategy. We are eager to get to work.

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The Ultimate Glossary of Terms for a Mergers & Acquisitions Transaction

If you are a seller or buyer that doesn’t have a lot of experience in the world of M&A, it can be frustrating and confusing trying to understand the terminology that is used. As much as we try not to confuse our clients, it is many times more efficient to use the specialized terms of the profession. To help, we have put together a list of common M&A terminology that we hope will assist you and make the process smoother if you are buying or selling a business.

Acquisition: One company takes over the controlling interest or controlling ownership in another company.

Add-On Acquisition: A strategic acquisition fit for an existing platform/portfolio company.

Asset Deal: The acquirer purchases only the assets (not its shares) of the target company.

Confidential Information Memorandum: Sometimes called “the book,” pitchbook or a deck, the Confidential Information Memorandum is a description of the business including products, history, management, facilities, markets, financial statements and growth potential. This is used to market the business to potential buyers.

 

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Data Room: Secure online website that contains information including contracts, documents, and financial statements of the business being sold. These online data rooms can track who views the information.

Deal Structure: May include seller debt, earn outs, stock, or other valuables besides cash.

Due Diligence: Part of the acquisition process when the acquirer reviews all areas of the target business to satisfy their interests. This includes viewing the internal books, operations, and internal procedures.

Earn-Out: A type of deal structure where the seller can earn future payments based on certain achievements or the performance of the business being sold after the closing. These are often based on revenue targets or earnings.

EBITDA: Earnings before interest, taxes, depreciation, and amortization.

Goodwill: An intangible asset that comes as a result of name, customer loyalty, location, products, reputation, and other factors.

Indication of Interest (IOI): A letter from the buyer to the seller that indicates the general value and terms a buyer is willing to pay for a company. The letter is non-binding to both parties.

Letter of Intent (LOI): A document that lays out the key terms of the deal. LOI’s are typically non-binding for both parties except for certain provisions such as confidentiality and exclusivity.

Multiple: Common measure of value to compare pricing trends on deals.

NDA: A confidentiality agreement that prohibits the buyer from sharing the confidential information of the seller. This is usually signed before the seller provides detailed, sensitive information to a buyer.

 

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Purchase Agreement: The contract that contains all the specifics of the transaction and the obligations and rights of the seller and buyer.

Representations and Warranties (reps & warranties): Past or present statements of fact to inform the buyer or seller about the status and condition of their business and its assets, employees, and operations.

Search Fund: This is an individual or a group that is seeking to identify a business that the individual or group can acquire and manage. Usually, search funds do not have dedicated capital but instead, have informal pledges from potential investors.

Teaser: An anonymous document shared with potential buyers for a specific business that is for sale.

Working Capital: A financial term used as a measurement of a business’s ability to meet its financial obligations over the coming business cycle (which is 12 months for most businesses). It is not defined under Generally Accepted Accounting Principles (GAAP). However, it is commonly calculated using this formula: Working Capital = Current Assets – Current Liabilities.

If you are thinking about buying or selling a business, Benchmark International has a team of specialists that can help answer your questions. A simple phone call or email to us can start the process today.

 

Author
Amy Alonso 
Associate
Benchmark International

T: +1 615 924 8522
E: alonso@benchmarkcorporate.com

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Environmental Services Industry M&A

Waste disposal and recycling companies provide essential services to global communities, giving this sector a relatively high level of resistance to changing economic cycles. Urbanization, increasing populations, and consumer spending drive the ever-growing demand for waste and recycling services.

By the year 2050, global waste generation is expected to rise from 2.01 billion metric tons to 3.40 metric tons - an increase of 70%.

Of the massive amounts of waste created globally, less than one third of it is recycled. Canada and the United States lead the world in waste production, followed by Europe.

The management of sustainable materials, including recycling, can help conserve resources, reduce waste, and minimize the environmental impacts of materials. An increasing number of regions of the world are using sustainable management practices for regulation. National governments are developing long-term strategies that assess their country’s current waste situation and are setting targets for recycling, sustainability, citizen awareness, and rehab of contaminated sites. There is also a movement in low-income countries toward better recycling, and waste disposal in controlled or sanitary landfills.

 

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Environmental Consulting

A sub-sector of the environmental services industry is environmental consulting. Environmental consultants ensure company compliance with environmental regulations.

With the world’s heightened focus on environmental issues, this global market continues to expand. A relatively small group of firms dominates this market. In order for other firms in this industry to remain competitive, they need to focus on specialized expertise, targeted M&A activity, and dependable client relationships.

Waste and Recycling M&A

In the waste and recycling sector, mergers and acquisitions activity is stimulated by quality and consolidation. Positive debt financing and public equity performance drive M&A valuation higher for waste and recycling companies. Investing in waste management and remediation is especially attractive to private equity for several reasons, including:

  • Lower risk through essential services
  • High barriers to entry
  • Demonstrated track records
  • Modest capital investments outside the recycling sector
  • Large number of industry players

From a seller perspective, you should be aware of the three most common considerations for M&A deals in this sector.

  • The buyer’s strategic rationale: Does the transaction tap new markets, complement existing markets, or deliver new service offerings?
  • The health and growth of the target company: Does it have favorable contracts and strong assets that will not require a significant infusion of capital?
  • The company’s management team: Can the buyer be confident in a smooth transition and a good post-acquisition relationship?It is not uncommon for waste management companies that have more impressive management teams in place to garner higher valuations.

Owners should focus on removing any uncertainty surrounding their company. In the months leading up to a possible sale, contract negotiations are key. Owners should also be aware of the possibility for anti-trust issues to arise, even when the geographic impact is limited to a single local area. These issues can impact the timing and outcome of a deal so an anti-trust risk assessment should be conducted prior to going to market.

When to Sell

As a seller of a waste management company, determining when to sell can be a difficult decision, but certain factors should be considered.

  • Are contracts secure with favorable terms?
  • Are revenue streams are diverse and trending positive?
  • Is the fleet is in good condition?
  • What are the conditions of the market?

 

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Procure M&A Experts

Company owners in this sector who enlist experienced M&A advisors are less likely to leave money on the table in a sale. It is important to choose the right buyer, get proper valuation of the business, and exit at the right time.

Industry lenders have reported that there are many more unannounced deals in the waste industry than those anyone hears about. For this reason, it makes perfect sense for a buyer to partner with an expert to seek viable acquisitions. The waste industry is highly fragmented and, other than the top three major players, most companies post less than $20 million in annual revenue. Typically, they do not have the knowledge or bandwidth to blindly jump into the M&A market. The right M&A advisor can identify quality companies not being offered on the market and negotiate a successful sale.

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If you are thinking that the time has come to sell your business or to formulate a growth strategy, contact us at Benchmark International today. Whether you are in the waste industry or any other industry, we can connect you with the right buyer. Our approach is proven to get results that exceed our clients’ expectations time and time again.

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M&A In The Nuclear Power Sector

Population and economic growth drive the global demand for energy. Nuclear energy is the world's second largest source of low-carbon power and it makes up 11% of the world’s electricity generation. Around 50 countries use nuclear energy, and there are hundreds of nuclear reactors in operation around the world.

There are also around 225 research reactors under operation, with more under construction. These reactors are used for research and training, and produce medical and industrial isotopes.

As the world increasingly focuses on ways to reduce carbon emissions, nuclear power has the potential to play a more pivotal role, yet the industry is seeing the state of things go both ways. Following the Fukushima nuclear disaster, Japan shut down 48 of its reactors, and Germany began phasing out its nuclear program. And in several countries, the creation of new reactors is facing delays and cost issues. However, there is a bit of a dichotomy, as France still obtains 75% of its electricity from nuclear power, and the United States generates about twice as much as France.

The United Nation's Intergovernmental Panel on Climate Change has warned that reducing emissions will be far more expensive without the availability of nuclear power.

 

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M&A Optimism

A single nuclear power plant is capable of generating a significant amount of electricity. It also requires very expensive components. For this reason, markets see drastic fluctuations from year to year. But there is still a great deal of optimism for the nuclear energy sector.

A strong appetite remains for companies that are of service to the nuclear industry. Acquirers and investors recognize the value that companies can gain from the multitude of services or products that are needed to keep the sector operational. This particular industry generates significant spending year after year in order to keep nuclear power plants compliant with the scores of federal, state and local regulations that exist. These companies must also keep up with increases in power production, which translates to regular spending on equipment and services. This type of reliability represents a quality investment opportunity. In general, the industry itself is always facing uncertainty, but the companies that have a history of serving this sector remain a solid investment.

As the energy industry transitions toward more sustainable cleaner energies, power companies are forced to alter their business models, and are faced with consolidations.  Mergers and acquisitions have the power to streamline this very fragmented sector. Some companies are simply incapable of organically achieving the level of change they need. Plus, the nuclear energy industry has to compete with the increasingly popular natural gas industry.

Also, a new class known as small modular reactors (SMRs) has been introduced to the world and is garnering a great deal of enthusiasm and support.SMRs are less expensive, more efficient, offer more flexibility for utilities, and are easier to finance. This represents a stellar opportunity for growth and investment in the nuclear power industry.

There is also another sector that wholeheartedly relies upon the operation of nuclear reactors, and that is nuclear medicine. While nuclear medicine has existed for some time (widespread clinical use began in the 1950s), later 20th-century developments increased its role in healthcare (diagnostic imaging), and it is seeing an entirely new renaissance in the 21st century. Conventional pharmaceutical companies are eagerly seeking to get in the game of radiopharmaceuticals, radiotherapeutics, and radiotheranostics. In fact, it is predicted that by the year 2030, radiotherapeutics will account for more than 60% of the market and nuclear medicine will be worth $26 billion. This represents a staggering opportunity for M&A activity.

 

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Nuclear Energy M&A Expertise

Any energy M&A transaction requires a specialized level of expertise in order to avoid pitfalls that can blow a deal. Finding the right company broker is advised.

  • Knowledge of the industry and the nature of the markets are key
  • The ability to identify areas of risk is imperative. The due diligence required for deals in this sector is exceptionally painstaking
  • Complex regulatory issues must be firmly understood. Laws and regulations in the energy industry go beyond the energy regulatory governance to include environmental, health, safety, tax, employee benefits and property issues
  • Cross-border transactions require global and local understanding of the market and the regulatory differences and how it plays into the company valuation

Contact Us

At Benchmark International, our global M&A experts are eager to help you make the next big move for your company and your future. Whether you wish to sell your business or plan your retirement, we have the strategies, connections, and technologies to make great things happen for you. 

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