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Archive for the ‘A journey to acquire’ Category

In this installment of the series, A Journey To Acquire, we will explore the first meeting with the target company that we are attempting to acquire in conjunction with a private equity firm partner. Previously we have written about initial elements of the process including, partner selection, composing a target list and making initial contact with a target company.

Our initial meeting with the target company, will be to gain a perspective on the Chief Executive Officer and his sense for the potential viability for a transaction based on his knowledge of and experience with the Board of Directors that would have to approve any transaction. After several calls and e-mails we were able to confirm our initial meeting.

I spent a restless evening, the night prior to the meeting, pondering the possibilities should we have a receptive meeting with the prospective acquisition’s CEO. In the morning I awoke early and prepared for the meeting. I had to pick up an associate from the private equity partner that I have elected to work with, that was flying in to join me for our meeting. His flight arrived on time and we proceeded to the industrial community where the company is headquartered.

The company is a manufacturing company with 2 facilities located within a mile of each other. We arrived at the company headquarters and drove around the primary manufacturing facility which comprises a city block before parking and entering the offices for our meeting.

 The target company meets our criteria for having a revenue base of $200 to $500 million. The company also has an acceptable Ebitda and is in a category that provides additional roll up opportunities with other complimentary companies in the category. We will spend the next few hours meeting with CEO and touring the manufacturing facilities. Following that we will make an assessment based on what we have seen and heard as to whether it makes sense for us to continue to pursue the target company.

In our next installment we will share what we gained from this initial meeting and what our next steps in the process will be.

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Ceo4aday the blog which offers ” perspective from a corner office” and commentary on politics, the economy, business and entrepreneurship, experienced its’ first single day yesterday of 1,ooo+ views. The blog which was launched in December, 2008 thanks all its’ readers for your interest and support.

We continue to support the initiative to create the United States Office of Entrepreneurship.Please check our archives for additional information regarding the USOE. Our series “A Journey To Acquire” resumes with the next installment this week.

You can also view our commentary on the American Recovery and Reinvestment Plan at www.Americanrecoveryact.blogspot.com.

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Previously, we have written about the journey I am on to acquire a platform business. We have presented the importance of identifying an industry and a category within the industry to focus against, as well as selecting the right private equity partner and the importance of identifying appropriate opportunities and creating a target list.

As I previously wrote, I am attempting to secure a platform company with a target revenue base of $100 to $500 million. Now that we have created our target list it is time to begin the process of making contact with the respective leadership or ownership of the target companies.

I have chosen to focus on an industry and a category that I have spent my career in and as such I am  familiar with the companies and in some cases the shareholders, executives and ownership structures of the companies that are on the target list.

I have elected to start with the proverbial low hanging fruit and have reached out to a CEO  of a company that I am familiar with  and has revenues in the $200 to $300 million range.  After several attempts to contact this particular CEO, I was able to make contact and secure an initial meeting to discuss his business. I also followed up with the private equity partner firm to confirm the availability of a senior representative from their firm to attend this initial meeting to lend credence to the discussion.

Since the Private Equity Partner will be making the principal capital investment,  it is critical to get them active in the process as quickly as possible. It is my responsibility to bring the respective parties together so that the target company is secure, that should we begin a process that we  posses an adequate amount of capital to close the acquisition on a timely basis.

The private equity partner agreed to attend the meeting , the CEO of the target was interested and as such we agreed to meet during the first week of January. In this particular case, we were able to move with reasonable haste to secure a meeting. If you are attempting to contact companies with whom you do not have an existing relationship the process can take much longer to gain an initial meeting.

Companies receive frequent inquiries from prospective acquiring parties. As such it can be difficult to be received as a serious acquirer without an introduction from a third party, that has a working relationship with the potential target. Networking through other business leaders that you work with, including bankers, is often the best method for gaining an introduction.

In our next article in this series, I will write about the results from our initial meeting with the target company as I continue a journey to acquire.

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In a prior article, I introduced A Journey To Acquire, which is a series of  articles related to my quest to acquire a new business platform in conjunction with a private equity firm partner. As I wrote previously, we are targeting middle market firms with from $100 to $500 million in revenue within an industry that I have extensive operating experience in as a CEO.

Having selected a partner to work with and an industry to focus my efforts against,  the next step in the Journey,  is to develop a target acquisition wish list from which a platform company,  can be identified and subsequently acquired. Target opportunities can evolve from a number of sources.

 I have had broad experience in the industry that I am targeting and as such have a familiarity with a number of potential targets that may meet the parameters that I have identified with respect to revenue, income, ebitda (earnings before income taxes depreciation and amortization),  potential for growth , branding opportunities, strength of management team and capex (capital expansion) requirements.  

I rely extensively on the Internet as a resource to provide data to support assumptions that I make in determining whether a company can meet or exceed hurdles that I have established to qualify for my target list,  for example YOY (year over year) financial performance, company news briefs, brand extensions, product introductions or innovations and executive bios can be readily sourced on the Internet.
Within every industry their are sectors and sub sectors that provide specific niche opportunities within the broader industry profile. As I review targets , I arrange them within the target list by sector or category and further prioritize them based on an opportunity index which addresses among a number of factors the likelihood of completing a transaction with the target company.
The target list is a starting point as we focus on a specific industry and  move through the Journey To Acquire.The Target List can be a very fluid as we delve further into a particular sector or category and as other opportunities evolve however, it remains our compass on the journey.
 In our next article CEO4ADAY will  address target contact and initial meetings.

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I am going to begin writing about a journey, that I am beginning, as I attempt  to acquire a platform company in partnership with a private equity firm.  A  journey that is likely to be more difficult given the current performance of the global economy. However, economic trials can provide numerous opportunities if you are prepared to put the effort forth to identify and execute. In the Age of Austerity we have to create opportunities.

I will be targeting middle market companies with revenues from $100 to $500 million and will not expect any TARP funds or bail outs from Congress or the White House to finance the acquisition. The intent will be to identify a platform that will provide organic growth as well as serve as a vehicle for a potential roll up within a category.

 I  will provide some background on my experience to establish my credentials for this particular pursuit. I will not use actual names as the confidentiality of the process is critical and I will at times in this journey be targeting a company or companies that may be publicly traded.

I have enjoyed a  successful career in an industry that continues to provide challenges,  opportunities for innovation and provides essential products to the public. I have worked with fortune 50 corporations as well as a smaller family business. I have experience in both domestic and international markets  and I was a CEO of a middle market company for nearly 10 years. During my stint as the CEO,  the company was divested by its’ parent company and I was able to partner with a private equity firm to acquire the company and remain as CEO until the company was divested from their portfolio in 2004. 

 In 2005,  I joined another private equity firm to become CEO for a group of five companies that the firm had acquired over a period of about three years,  prior to my joining the firm.  After nearly three years at the helm of this group of companies I am now in a position to seek new opportunities and have selected another private equity firm to partner with.

What I will be writing about in the coming weeks is the process from creating a  target wish list, to acquisition should we be fortunate enough to complete a transaction. The journey ahead will be  filled with numerous roadblocks as we identify a target, create true believers in our partners, secure meetings with target management, engage in due diligence, arrive at an acceptable valuation, present an offer to shareholders and secure financing to close the transaction in a timely manner.

The first step for me in this process was identifying a firm that I could partner with. As an operating executive I bring a set of skills and experience that private equity firms are in need of.  That experience includes knowledge of an industry or  a category that the firm may desire to invest in, along with the ” in the trenches ” experience garnered from years as a CEO charged with enhancing stakeholder value.

In this particular instance,  I am working with a firm in which there are two team members at the firm  that I have partnered with in a past transaction within the same industry and category. Since we  had a successful experience in our prior business relationship it shortened the courting process and we were able to agree to work together after a phone call and a meeting. Selecting the right partners or firm to work with may be the most critical decision that I make in the entire process.

The benefits to be gained from this relationship are numerous.  For me,  they include working with a well respected and well funded firm that understands the category that I want them to invest in and they are familiar with me and respect my counsel and experience.

 For the firm,  I provide insight into a category they are interested in participating in and at no cost to them,  they now have access to a knowledgeable participant in the industry that can potentially generate new opportunities for the firm.

In my next Blog I will write about creating the target acquisition wish list.

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