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April 20, 2023
Over more than 35 years, CMG has represented hundreds of family-held and founder-led manufacturing businesses as they explore their ‘once in a lifetime’ capital merger & acquisition transactions. As you may know, our team at CMG recently represented Gem Manufacturing and the multiple family shareholders in their recent transaction with the private equity firm Core Industrial Partners, whereby Gem became a platform for multiple acquisitions to build a powerful force in the precision, high volume deep draw metal stamping business.
I wanted to take this opportunity to share some key insights that were reinforced during that process.
We hope that by sharing this information with you, we can help you be better prepared if you ever consider selling your business in the future. Whether you are considering a transaction now or ten years from now, our goal is to provide you with valuable sell-side advisor insights that will help you navigate the process as successfully as possible.
Overall, the M&A market for metal stamping businesses has shifted from a ‘sellers market’ to a ‘buyers market’, but there is still ample opportunities for sellers to maximize value. While peak valuations were seen in late 2021 and early 2022, valuations generally are higher than the longer term averages, but as in all industries, valuations for metal manufacturing businesses depend on the quality of the target. Are you an “A” “B” or “C” company?
Current market conditions are requiring buyers, investors and lenders to dive even deeper in due diligence. The credit markets have certainly tightened since last fall (causing more scrutiny of risks), but strategic buyers and private equity investors are still eager to deploy record amounts of ‘dry powder’ capital, albeit more cautiously. Beyond the standard legal and accounting diligence, other key areas of due diligence that have become even more important include:
In addition to operational excellence, data has become more important than ever. Enhanced reporting capabilities are now the ‘norm’ and future partners now require the ability to “go granular”. Buyers pay more when they have confidence in the financial results, so a robust analysis of revenue is only the beginning.
Deciding to pursue a capital transaction should not be taken lightly. It should be considered only after a robust consideration of the company’s readiness. The value of proper preparation and planning far outweighs trying to ‘time the market.’ Even in today’s dynamic market, prepared sellers can still maximize value.
Our CMG team is ready to help you in the process of selling your business. If you would like to have a conversation about our recent experiences with other manufacturing companies, our insights of the current M&A markets or a confidential review of your business, please do not hesitate to reach out. We would love to meet with you and start to develop a relationship so you can maximize the value of your business whenever you are ready.
About Carter Morse & Goodrich
Located in Southport, Connecticut, Carter Morse & Goodrich is a boutique M&A advisory firm that specializes in representing founder-led and family-held businesses valued between $25 million and $250 million. While CMG provides a full range of investment banking services, our primary focus is representing owners who are pursuing their once-in-a-lifetime M&A transactions. CMG specializes in advising leading companies in niche markets to plan, prepare, execute, and close successful transactions that maximize shareholder value. CMG fully understands and appreciates the unique dynamics of closely-held businesses and the importance of owner legacies. For 35 years, the combination of our hands-on approach, senior banker attention, strategic guidance, seamless transaction execution and extensive network of domestic and international resources has enabled us to become a trusted advisor to hundreds of business owners.
CMG's Broker/Dealer affiliate, Carter Capital Corporation, is a FINRA member firm registered with the SEC and SIPC.
For more than three decades, Carter Morse & Goodrich has excelled at maximizing shareholder value for our clients and leading transactions through to successful completion.
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