Mid 30's Search

July 24, 2017

by a professional from Marquette University in 21370 SW Langer Farms Pkwy #196, Sherwood, OR 97140, USA

In the last week, I've had a chance to talk with two individuals in their mid-30's making career transitions. The first began his career as a financial planner. After a couple of years, his uncle pulled him back into the family business as CEO and had him get his MBA while working. The next step, to satisfy the multi-genrational family members, was to sell the company. After interviewing six companies for helping with the sale, they selected an investment banker. After the sale, the individual went to work for the investment banker doing business development in a new geographic area. Business has not developed well enough after two years (that may be a statement about the industry of search funders at this time) and he is now looking for the next step in his career. Options include getting a job and finding a company that he can run with the help of someone funding the acquisition. Jury is still out on the path he will take.

The second is a situation where the CEO had some incentive compensation over the last 3 years and has strategically turned the emphasis of the business from a few large customers to many more, but smaller customers. While revenue has decreased on an annual basis, the company has significantly returned money to the private equity investors. Upon the CEO's recommendation, the company is being merged with a competitor, but the process seems unique to me. Instead of the current private equity company buying the competitor, another private equity company bought both companies. Also, unusual to me, the buyer private equity and the selling private equity have a common managing partner who had to recluse himself on the buy side. Again, the jury is still out. The CEO expects to meet with the new private equity owners this week.

My son and I are continuing to search for a company to buy, but it's taken a back seat for a while. He had a son in the last 12 weeks and had to deal with running/selling his company. However, we have seen some interesting opportunities through DealForce (www.DealForce.com), a part of Generational Equity. I'm not sure how many people are using investment bankers and others as part of their resources for searches. There are some that specialize in the $3 Million to $15 million dollar companies that might be a good first step for a searcher.

Reply by a searcher
from Harvard University in Chicago, IL, USA

Gregory - Interesting comment on divestiture. This is something I have been considering, and wonder if any searchers have experience purchasing this type of businesses. Through my conversations the typical divestiture (that can function as a stand alone entity) is either much larger than a typical searcher size, or the business unit requires a turn around. The other part I have struggled with on divestitures is the sourcing of those deals. Any searchers or past with experience looking at corporate carve-outs, I would love to hear your thoughts.

Reply by a searcher
from Babson College in Washington, DC, USA

Interesting post. The search process depends on how flexible the searcher is. It took me six months to identify and acquire my first company. My current search has taken north of 18 months, primarily due to an over-representation of marketed deals. Proprietary deals are easier, in my opinion. I would work with a handful of bankers or brokers that you have a relationship with, and communicate your search with executives or managers at company's - there's always a carve-out or latent divestiture that you can navigate your way into. Good luck!

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