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Succeeding the Legacies of Lighting Manufacturing

By Jules Brenner, MSP

These days, mergers and acquisitions are commonplace, supported by strong industry interest and performance, availability of capital, and low interest rates. In this world, it is not uncommon for business owners to receive unsolicited offers to purchase their company. 

The common exit options for business owners are either selling to a Private Equity (PE) investment firm or to a strategic competitor. These buyers tend to be sophisticated deal makers and base their decisions on ease of integration into their current portfolio. Due to the complexities of these deals, it’s recommended that business owners seek perspective from professionals and start the planning process early. Here are the top seven things to think about when you discuss selling your business:

•    Is this the appropriate time for my family and me to move on to something new?
•    Does my business have a strong marketable future upside and management in place for a successful ownership transition?
•    What is the fair market appraised value of my business?
•    What type of buyer aligns with my values and who would I feel comfortable with handing over control of my employee’s livelihoods: strategic, private equity or individual?
•    Most buyers will ask you to stay for some form of transition. How long are you willing to stay to guide a successful transition of ownership?
•    Many offers will not satisfy your optimal mix of price, terms, and buyer type. What are you willing to compromise on in this mix and how quickly are you able to react to the right offer?
•    Keep the initial conversation at a high level and understand you will likely need to provide the last three years’ full financial statements to initiate a meaningful discussion. 

It is also essential to understand what to do if you receive an unsolicited offer. Losing focus on operating your business or trying to do it all yourself will both be detrimental to the process of selling your business. 
It is not as common for today’s young people to want to operate their family’s manufacturing operations. While networking with owners of manufacturing businesses, I have noticed that many of them are concerned with their company’s long-term future. This is especially true when their children lack interest in succeeding them. Due to this, many feel their only option for a fair sale price is to sell to a PE fund or competitor. 

Hearing that your family members do not want to take over the family business can be tough, but it does not have to put you in a rushed decision to sell. It is important to do your research, talk to industry peers, and make a plan that works for you and your current employees. Sometimes, just starting the conversation with a potential buyer might be all you need to focus on what is right for your business.

About the Author:
To support the continued legacy of manufacturing in America, Jules decided to form MSP. By combining his own money with investor and bank funds, he could offer owners a fair price for their businesses, while giving them the opportunity to sell to someone who will treat the operations like their family would. Without the constraints of PE, MSP is focused on building a long-term legacy that owners would be proud of.
 

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