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You Haven’t Missed Out On The Ideal Seller’s Market

2021 was a strong market for business owners looking to sell their companies. The market remains ideal and will do so as we move into the first quarter of 2022. As we are in the middle of this year, there is no better time to consider putting your business on the market.

2021 Recap
M&A activity was moving at a record pace in 2021, thanks to economic recovery, a strong stock market, low-interest rates, rapid digitalization, more SPACs, confident boardrooms, and available debt. The U.S. had reported more than $2 trillion in M&A activity in 2021, with the year on pace to be the most active in history. Not to mention that the second quarter of 2021 was the third straight, with total global M&A value surpassing $1 trillion. That is the first time this has ever happened in three consecutive quarters. So even in the middle of the year, when things typically slow down, we are still seeing a great deal of investment, and the market is still flooded with capital.

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Benchmark International Successfully Facilitated the Strategic Partnership Between HSQ Group, Inc. and The HFW Companies

The HFW Companies, a leading professional services and growth partner to architecture and engineering firms throughout the country, is pleased to announce its strategic partnership with HSQ Group, LLC, one of the most prominent civil engineering companies in South Florida.

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I missed the market!

We have been in an unprecedented bull market. I use the phrase here broadly as the public markets have been flying for over a decade, and the M&A market has seen similar levels of growth. Spurred on by aggressive monetary and fiscal policies and a relaxed regulatory environment, the S&P 500 has grown 15.47% as of the time of this writing from the bottom on March 9, 2009. Similarly, the DJIA (The Dow 30) has grown at an annual clip of 13.64% over the course of this thirteen-year bull market. Remember what the rule of 72 demonstrates- that money doubles every 6 years at 12% and in less than five years at 15%. This is a remarkable rate of growth when you consider this market has spanned nearly 1/7th of a century.

Ready to explore your exit and growth options?

But bull markets must end. Markets do work in cycles. Much like our natural habitats require destructive fires to seed future growth and a healthy ecosystem, so too does the market. I’m not referencing the concrete jungles we find ourselves in today, but rather our natural environments. Bear markets reintroduce a rational approach to investing that had long been sidelined in favor of momentum and emotion-based investment “theses."

 

Further, bear markets tend to focus investments toward the highest quality of companies, known as a flight to quality. This clearing of the playing field, separating the wheat from the chaff, will often spur innovation and future growth. So a bear market is as natural to the market dynamic as is a bull market. These countervailing forces are required for regeneration.

 

The bull market created trillions of dollars of dry powder for buyers to deploy in the coming years. The balance sheets of corporations, large and small, are replete with cash there to deploy in pursuit of their stated strategic goals. The best of markets tends to flood the M&A market with excess buyers, many of which lack the track record, experience, credibility, and true access to funding required to transact successfully. Bear markets tend to weed away many of these less credible buyers creating a similar flight to quality detailed in the above discussion about the public markets. And while the cost of debt will tick up and valuations may similarly tick down, the likelihood of actually consummating a transaction increase as there is a much better chance that the buyer selected can get a deal done.

 

I tend to view my decisions in life through a very specific lens- my expected value lens. If one were to look at an M&A transaction through that lens, we would likely find the expected value of the proceeds from a transaction as being higher, even if valuations tick down, because the likelihood of closing is greatly increased.   And frankly, while the cost of capital on senior debt will rise over the course of the year, given the aforementioned stores of cash in their coffers, buyers will have the ability to utilize more equity to bridge any gaps in the capital stack. Private Equity funds have more than $2 Trillion of dry power. They also have a mandate to put capital to work regardless of the cost of debt lest they face aggressive headwinds during their next fund raise. Their Limited Partners, known as LPs, require that they put the money to work. Deals will continue to happen and we may in fact see more deals in the next eighteen months or more as buyers finally draw down on the excess stores of cash build-up that resulted from inflated valuations and bidding wars with less credible buyers.

 

Sellers must consider several factors when considering a sale. Of course, valuation and a healthy economic environment are among those factors but they don't have to be the determining one. We are often faced with life changes of which we have no control. Some of us simply reach a stage where we no longer wish to carry the burden that invariably comes with owning and running a business. Or, God forbid, we encounter health challenges personally or in our family that requires that we focus our attention elsewhere. Perhaps we come to the realization that we are no longer the right caretaker for the business? That the business has reached a level where our skills no longer map to what is required to successfully steer. Whatever the reason to sell your company, we can only control the controllables.

 

Just like in the public markets, if we try to time it perfectly, we will invariably fail because the objective was unattainable. Selling one's business is a life-altering decision. Selling a business can be both liberating and gutting. Sellers are at once monetizing their life's work and entrusting someone else with its care. The stakes are high. When making that determination, it is critical that sellers consider all of the critical variables. While valuation, market conditions and timing are among the variables worthy of consideration, they are merely inputs to a multivariate equation. Often, upon careful consideration, sellers determine that the qualitative elements are more important than are the quantitative ones.

 

  Author
  Dara Shareef
  Managing Partner
  Benchmark International

  T: 813 898 2350
  E: Shareef@benchmarkintl.com 

 

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Benchmark International Successfully Facilitated the Transaction Between VAI Architects Incorporated and HED

Benchmark International successfully facilitated the transaction of an award-winning, Dallas-based architectural firm offering a wide range of planning and design services.

Ready to explore your exit and growth options?

'VAI Architects Incorporated (VAI) primarily works on public infrastructure projects for the transportation, government, education, healthcare, and religious sectors. With over 35 years of experience in the greater Dallas-Ft. Worth area, the VAI team has established trust among clients by consistently delivering excellence through collaborative design innovation and dedication to client service.

"VAI has always been dedicated to client service and committed to the Dallas community, and since our founding, we’ve emphasized learning and collaboration in our company culture — values we share with HED,” said VAI Co-Founder William Vidaud de la Vega. “Those shared values and commitments are strengthened by joining forces through the merger, and we look forward to working as part of the HED team to continue creating a positive impact for clients in Dallas and the surrounding area.”

Known nationally for the top-quality architecture and engineering services delivered by the firm’s expansive array of professionals, HED creates innovative and sustainable design solutions for clients in the healthcare, higher education, housing, manufacturing, and product development, mission-critical, mixed-use, preK-12, science, and workplace sectors.

“Our strategic merger with VAI is a great fit because of our shared commitment to creating a positive impact for clients and the greater community while providing growth opportunities for our talented staff,” said Peter Devereaux, FAIA, Chairman and CEO of HED. “We are pleased to welcome the VAI team into the HED family and look forward to using our combined strength to explore new opportunities and fulfill our common commitment to ensuring long-term success for our clients.”

“Benchmark was honored to work with VAI and HED through this strategic merger,” said Brenda Spencer, Transaction Director for Benchmark International. “Their shared commitment to their staff, projects, and communities were early indicators of a good fit. We wish them well in the transition and in their future endeavors.”

 

Schedule A Call

 

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $8.25B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 14 offices across the world, have assisted thousands of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkintl.com
Blog: http://blog.benchmarkcorporate.com

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Benchmark International Successfully Facilitated the Transaction Between Yakgear, Inc and T-H Marine Supplies, LLC, and Nautical Group International Holdings Limited

Benchmark International successfully facilitated the transaction of a distributor of paddle sports accessories and marine accessories. based in Houston, Texas, the company also has operating agreements to provide RAILBLAZA products throughout North America, as well as distribution agreements with several other third-party water sports brands.

Ready to explore your exit and growth options?

YakGear is an industry-leading supplier of kayak equipment, paddle sports accessories, and boat-mounting accessories to individual consumers, as well as distributors across the United States via e-commerce and retail sales. The company has several partnerships with big-box retailers, distribution outlets, and e-commerce channels such as Amazon to market and reach a wide audience.

“I wanted to take the time to thank [Benchmark International] for all the hard work y’all did to make selling the company an easy thing. From the early beginning of the adventure, I knew I had someone to rely on and count on for conversation and guidance. It was a long road, over two years, but you brought many competent buyers to the table, it was just me looking for the right one to continue the tradition my team, and I had built into YakGear for 17 years.” -Bill Bragman Founder of YakGear Inc.

Nautical Group Holdings (NGH) acquired all assets of YakGear that relate to RAILBLAZA distribution, including associated stock and direct-to-consumer (DTC) accounts. RAILBLAZA USA Inc. (RAILBLAZA USA) will operate as a 100% owned subsidiary of NGH from Houston, Texas, managing all RAILBLAZA operations and sales distribution to the North American market.

NGH aims to achieve a dominant market position for each of its niche portfolio brands while accelerating an innovation focus with speed to market while assisting portfolio companies to build out governance and corporate functions to a higher level of maturity to support growth. It will capitalize on a broad range of well-developed relationships with global distributors, partners, and customers, supplying best-in-class solutions.

Commenting on the transaction, CEO of NGH, Marc Michel, said, “Our thanks to the YakGear team who have done an amazing job of establishing and growing RAILBLAZA in the US market. This is a strategic acquisition to accelerate our momentum in the US market and put in place a focused RAILBLAZA team.”

The remaining assets of YakGear have been acquired by TH Marine, a division of OneWater (NASDAQ: ONEW). T-H Marine has grown to be one
of the largest suppliers of marine parts and accessories in the United States. T-H Marine is based in Huntsville, Alabama, where it provides various products, including jack plates, outboard tilt and trim controls, rigging components, boat plumbing, hatches, LED lights, live well aeration, and more.

“Since 2006, YakGear Founder and President Bill Bragman and his team have done a remarkable job providing accessories to kayak, canoe, and stand up paddleboard enthusiasts, earning YakGear’s reputation as a household name among their audience,” said Jeff Huntley Sr., Chief Executive Officer for T-H Marine. “We’re thrilled to add the YakGear team, including Jerron Wosel, YakGear’s Director of Procurement and now President of the YakGear division, to T-H Marine, along with their expansive portfolio of paddle sport products. YakGear’s strong multi-channel approach to the aftermarket complements our platform and provides exposure to an entirely new set of paddle sports retailers and consumers, giving T-H Marine a stronger foothold in the space.”

“Representing an industry leader like YakGear was an honor for our team and are confident the acquiring parties will continue to grow within their niche and benefit by this transaction.” Brenda Spencer, Transaction Director said, “we wish success to all in their future endeavors”.

 

Schedule A Call

 

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $8.25B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 14 offices across the world, have assisted thousands of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkintl.com
Blog: http://blog.benchmarkcorporate.com

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Benchmark International Successfully Facilitated the Transaction Between Action Computer Sales & Service Inc. And Alltech Computer Works

Posted on March 16, 2022 By in Deal completions + Sellersmarket

The seller, Action Computer, is a complete IT services provider that plans, designs, implements, and maintains a company’s IT system. Action has been servicing the Southeast region since 1981, keeping systems current and trouble-free. “Our interaction with Benchmark International was a pleasurable experience. They worked with us to develop a projected business valuation, helped us get our documentation in order, and created a sales sheet that they presented to prospective buyers, and they kept us informed of the progress of progress all the way through - from building the prospectus to the final closing. I will be looking forward to working with them again on some of my other business ventures,” said Lloyd Keel, Owner, Action Computer.

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