Business Acquisition Experts closes another record M&A deal in the manufacturing sector at 8.6X EBITDA
Sep 28, 2016, 11:12 ET
EAST HANOVER, N.J., Sept. 28, 2016 /PRNewswire/ -- Business Acquisition Experts has just announced the sale of an aerospace and aviation precision sheet metal manufacturer located in New Jersey. BAE executed a competitive auction strategy to garner the outrageous price for its clients. The buyer- A major multinational firm made this strategic acquisition at almost twice the industry standard valuation multiple. An exorbitant 8.6X Adjusted EBITDA. Total acquisition price: $14,200,000
WHY such a high price tag?
The seller although much smaller than its acquirer, developed a "competitive advantage" that consistently allowed them to take market share from its dominant competitor (buyer before the acquisition owned about 85% of the market) while simultaneously pulverizing their margins.
Once BAE clearly conveyed to the buyer a compelling story of "Pain or Gain", it was a done deal. The acquirer will immediately realize phenomenal synergies like management integration, facility consolidation, new product lines, supply chain distribution, and increased profitability. Due to the synergies and the nuisance the seller was becoming it was a no-brainer to make this acquisition.
HOW is an outrageous sale price achieved?
Not all companies are candidates for a strategic acquisition. But they are more common than one may think. Business Acquisition Experts has identified three key elements in obtaining a sale premium.
1.) The selling company absolutely has to have a competitive advantage or proprietary methods that have a huge runway for growth. Or as mentioned above, the company is becoming a major pain point to the larger competitors in their respective industries.
2.) The acquirer has to be a very large buyer (public or private) with lots of cash. Senior or subordinated debt does not exist for outrageous prices. An 8-10X multiple is an extremely tough pill to swallow for lenders. They are rarely willing to finance these deals especially when the industry standard business valuation is approximately half of that. Cash is King!
3.) The sale process must be run by experienced advisers who can speak the language and prove it. It is critical to have a Top-Producing Investment Banker or Business Broker like BAE working on your side in cooperation with a great M&A Attorney.
Securing a record deal is much like playing high stakes poker. You have to be willing to bet big and not be bluffed at your own game. Cody Weaver President of Business Acquisition Experts said, "There will always be a market for excessive prices as long as companies are looking to grow. Growth through M&A is essential for larger companies. Our job is to get them in the heat of a strategic auction and make them pay."
Are you a candidate to achieve an outrageous price? Call us to learn more.
Business Acquisition Experts is a lower middle market M&A boutique that specializes in companies with revenues from $1,000,000 to $50,000,000. BAE represents companies in New Jersey, New York, and Florida.
-Cody Weaver
President/ Senior Broker
Business Acquisition Experts
(646)737-5273
SOURCE Business Acquisition Experts