Exit Options for your Closely Held Business Panel Discussion
Exit Options for your Closely Held Business Panel Discussion

Breakfast Panel Discussion Recap

We recently teamed up with the Cincinnati and Dayton Commercial Teams to host an event in Cincinnati to discuss exit options for a closely held business including a sale to private equity, strategic buyer and ESOP transaction. The panelists included:

John Jacinto, President and CEO of Vistech Manufacturing Solutions
Augie Pence, Leader of Centerfield Equity's control equity strategy
Mike Mendenhall, Managing Director of First Financial's National Corporate Relationship Management

It was an interactive discussion including the panelists, the moderators (Roger Furrer and Carlton Zesch of our team) and members of the audience. Here are some of the key takeaways:

Market Conditions

  • Overall deal flow is down approximately 25%, but it is beginning to pick up as the market is adjusting to the new interest rate environment……however, activity in the Lower Middle Market sector continues to be strong
  • High quality companies remain in high demand, especially in business, commercial and home service industries.
  • Private equity groups still have significant capital to deploy.
  • The due diligence process continues to be rigorous.
  • Leverage available to fund acquisitions has decreased slightly due to higher interest rates, so many buyers are deploying more of their own capital to fill this gap.

Preparing for a Potential Sale

  • Whether a business owner is contemplating a Strategic, Private Equity or ESOP transaction, the key theme is to start planning for your exit sooner rather than later.
  • Build a strong advisory team including an experienced M&A attorney, sophisticated CPA, and knowledgeable Investment Banker.
  • Build a management team around the current owner for a quicker transition post-acquisition.
  • The owner may need to stay on longer in a Private Equity or ESOP transaction. As a result, the timing of a transaction may need to begin sooner to allow additional time to work with a new partner.

Key Drivers of Value

  • From a Private Equity ESOP perspective…Investing in “Great Management Teams” can outweigh other business attributes
  • Recurring revenue drives value up
  • Overall financial profile and recession resilience
  • Customer / Vendor concentrations
  • Future growth profile through organic and/or acquisition
  • From a strategic buyer perspective…ability to drive synergies and efficiencies from revenue, supplier, similar plant locations and working capital.
  • Culture alignment between the two groups

Watch the discussion

Listen to our panelists discuss exit options, market conditions, preparing for a potential sale, and key value drivers in closely held businesses.