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Top 10 Mistakes in Mergers and Acquisitions

The merger and acquisition process can seem daunting to someone who has no experience and isn’t working with a broker. Over the years we have heard a number of horror stories and have compiled the following list of the top 10 mistakes in mergers and acquisitions:

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podcast

Fueling Deals Podcast: Acquisitions

John Bly, CEO of LBA Haynes Strand, is on Corey Kupfer’s Fueling Deals Podcast today sharing his deal-making strategy. “It wasn’t until my fifth acquisition that I ran into trouble. I enjoyed sharing my story and the importance of research with Corey,” describes John. Listen to the full podcast episode by clicking this link!

The Fueling Deals podcast showcases interviews of entrepreneurs and experts who have great stories about deals they have done or failed to do. Corey strives to have guests who are open, honest and authentic. Topics include negotiating, structuring, finding, valuing, closing and integrating deals. In addition, they discuss all the related issues, opportunities, benefits, pitfalls and lessons learned during the process.

John is a dynamic international business consulting speaker. In addition, he is the author of Cracking the Code: An Entrepreneur’s Guide to Growing Your Business Through Mergers and Acquisitions for Pennies on the Dollar. When you’re facing a complex business decision, John helps you determine the best possible outcome. He focuses on developing a strategic plan and works with you to take advantage of opportunities, overcome obstacles, and deliver the best results possible. John’s emphasis on being a proactive business partner empowers him to deliver insightful information and practical advice to circumvent challenges before they arise.

If you want more information on how John can support and guide you through a merger or acquisition, contact us today!

Free Webinar: “Cracking The Code To M&A Growth”

Join us on July 12th at 1pm for a free webinar. John Bly, Principal and CEO of LBA Haynes Strand, will deliver his signature presentation: “Cracking The Code To M&A Growth.” John has delivered this speech across the globe to rave reviews and even wrote a book on the topic. He is excited to bring it to a webinar platform.

“Cracking The Code To M&A Growth” serves as a guide to effectively find good deals for entrepreneurial businesses in the $1 to $30 million range.  John provides a blueprint for how to tackle such issues as: determining whether the deal is a good fit, due diligence, structuring the deal, tax issues, and how to land the perfect catch.

John will show you ways to find potential spots for rapid growth and accomplish, on a smaller level, what the larger companies do. By breaking down the M&A process into approachable elements, you will find that your entire outlook on the topic will be transformed!

If you would like to meet with John, contact us to schedule a no-cost consultation.

Are We Living In “The Merger and Acquisition Age”?

Could this be a term of our times? Are we really living in The Merger and Acquisition Age? According to recent business trends posted in the Kiplinger Letter, merger activity is on a roll.  Not just in the U.S. but across the globe. Merger activity in the U.S. has hit a 15 year high in the first quarter of this year with consumer-oriented firms leading the action. But that’s not the only industry finding success in mergers and acquisitions. Pharmaceutical, technology, energy, mining, and electric utility companies are also finding success.

What’s So Appealing About Growing Through M&A?

Easy. It is a way to effectively grow or even double your business overnight and the timing could not be better!

The baby boomers have been a driving force in Middle Market M&A in the late 20th and early 21st centuries. The eldest members of the 78 million-strong baby boomer generation turned 68 in 2014. The youngest boomers will turn 66 in 2030. Many baby boomer entrepreneurs will sell the Middle Market businesses they founded, and this factor will remain the driving force in M&A for at least two more decades! To put this into perspective, consider this: Based on recent data supplied by the US Census Bureau, there are just about 1.2 million Middle Market firms with sales of $1 million to $1 billion annually. Collectively these 1.2 million firms had sales totaling $9.8 trillion and carry a conservative market value of $4.9. About 800,000 of these businesses are owned by baby boomers. Between 2014 and 2029 (15 years) an average of 43,000 of these businesses per year will be disposed of… about two-thirds of these by sale. These numbers are huge and unprecedented.

Technology is also playing a large role in today’s Middle Market.  Because of the speed with which new information is being released, Middle Market firms have dramatically shortened business cycles.  New technologies and approaches launched by Middle Market firms routinely disrupt and eclipse other Middle Market firms, even Upper Market firms, and sometimes entire industries.  This has forced business owners to become increasingly proactive and infinitely more responsive to their clients and prospects, impacting not only Middle Market business operations, but also the timing, frequency, and execution of the sale of Middle Market companies.

Business can be described as an ecosystem.  As in all ecosystems the big fish eat the little fish in order to survive.  This is not a new phenomenon in M&A, but it is a more frequent one as the pace of business life continues to change.  Survival of the fittest is not just a Darwinian construct for living creatures.  It is equally applicable to business, especially the “Middle Market Sea”, which is the spawning ground for Upper Markets.

So are we living in The Merger and Acquisition Age? It certainly appears that way and it appears this trend will continue for the next few decades completely reshaping the way that Middle Market companies grow.  If you are not thinking about the M&A marketplace… it’s time to start and LBA Haynes Strand can help you.  Click the button below to download your free report and begin your M&A journey!

Property Management Companies Are Growing Through M&A

Mergers and Acquisitions have become an increasingly popular growth strategy among property management companies. In an earlier blog titled, “What Industries Are Growing Through M&A,” we mentioned property management companies as a top industry for mergers and acquisitions. So let’s dig a little deeper and learn what is being gained by M&A and what trends are driving M&A in the property management marketplace.

What Property Management Companies Are Trying To Gain Through M&A:
  • Size/Proximity to New Locations: In some cases, especially in the Charlotte area, management companies are looking to grow across State lines.  Rather than a Charlotte based management company opening a new location in South Carolina, they will often acquire other established management companies already based in South Carolina.  This is also true within the State as well (Charlotte -> Greensboro, Wilmington, Raleigh, etc.)
  • Economies of Scale: Management companies deal with many different service providers from landscapers and painters, to accountants and attorneys.  As management companies grow and manage additional communities through M&A, they are better able to pass cost savings (via economies of scale) onto their clients.  Doing so, theoretically, makes the management company more attractive in the market place as they are better able to offer attractive rates.
  • Additional Management Offerings: There are many local management companies who specialize in residential communities while others mainly do commercial associations.  Through M&A, management companies may be able to acquire residential work if they didn;t already have it, or vice versa.
What Trends Are Driving M&A In The Industry:
  • Real Estate Brokers Wanting Out: Community management is NOT a glamorous field. In lean times (2008 – 2012) many small/local real estate sales offices turned to property management when they were struggling to sell homes. With real estate “Hot” again, some real estate agents are looking to shed their portfolio of community associations to better focus their efforts on more lucrative selling activities.
  • Lack of Succession Planning: Similar to the CPA industry, some “mom and pop” community management companies simply have no succession plan, while other “younger” management companies are seeing this as a great opportunity for M&A.
  • National Players Coming To Charlotte: Up until 2008, community management in Charlotte was pretty much locally run (i.e. 20 or so management companies throughout the State and SC, perhaps). However, in the past 5 to 7 years, Charlotte has experienced an increase in nationally known management companies who often launch their local office by purchasing a locally-owned community management company.

This may be un-chartered territory for some management companies, and LBA Haynes Strand is here to help. We have a team that understands the needs and the financial issues associated with HOAs and property management companies. If your property management company is looking to grow through M&A, schedule a no-cost consultation with us and we will walk you through the steps for a successful merger or acquisition.

What Industries Are Growing Through M&A?

In recent years, mergers and acquisitions have seen a rise in popularity as a way to grow a business. Why is this? Much of this can be attributed to the aging of the Baby Boomer generation. Baby Boomer business owners are looking to retire or to cash in on the businesses that they have built. They are looking for opportunities to sell and the marketplace is very aware of this. As Generation X and Y continue to develop and build on their entrepreneurial backgrounds, there are many opportunities to buy businesses and grow businesses exponentially through M&A.

Mergers and acquisitions are not prevalent in every industry. However, there are some industries that are considered very active. These are the industries focused on growth through M&A:

  1. IT/Technology Companies
  2. Construction Companies
  3. Property Management Companies
  4. CPA Firms
IT/ Technology
Why M&A?

Technology companies want to gain access to intellectual property and talent, enhance new product lines (through acquisitions), acquire innovative product lines/technologies, and finally technology companies want to enter new markets. In addition, technology companies realize that these achieving these objectives through in-house operations would be very expensive and time-consuming. M&A gives these companies instant solutions and results.

Trends Driving M&A In The Technology Industry:
  • Cloud Computing
  • Mobile Technology
  • Data Analytics
Construction Companies
Why M&A?

Construction companies want to gain access to an expanded geographical footprint with new markets, a larger workforce, increased financial flexibility, and additional service offerings. Acquisitions have been increasingly popular among construction companies as larger companies are looking to add a specialty service offering. For example, lets say you hire a contractor to come in and install new siding on your house. They do a great job and you are pleased with your decision to use their services. If you find out they just added custom garage door installation to their list of services, you will probably use them again. The increase in service offerings through mergers and acquisitions gives construction companies the ability to sell multiple times to the same client which increases revenue.

Trends Driving M&A In The Construction Industry:
  • Favorable capital market conditions
  • The shale revolution
  • Labor shortages
  • Aging and retiring population of owners
Property Management Companies
Why M&A?

Property Management Companies are using M&A in order to gain: size, proximity to new locations, economies of scale, and additional management offerings. In some cases, especially the Charlotte area, management companies are looking to grow across state lines. Rather than a Charlotte management company opening a new location in South Carolina, they will often times acquire an established management company in South Carolina. This can be seen in the state of North Carolina, when management companies based in Charlotte use this tactic to gain access into new cities, such as Raleigh, Greensboro, etc.

Trends Driving M&A In The Property Management Industry:
  • Real Estate brokers wanting out
  • Lack of succession planning
  • Competition: National players coming to Charlotte
CPA Firms
Why M&A?

Growth through M&A has steadily increased for CPA firms. Firms want to gain access to talent, new marketplaces, and new service offerings. A CPA Firm may lack the time and the talent to grow a certain niche or service offering that they see an opportunity in. The best way to achieve instant entry into the marketplace is often times through a merger or an acquisition of a smaller firm that specializes in that service/nice and has the talent in place to achieve results. These can lead to an INSTANT increase in revenue and a larger footprint.

Trends Driving M&A In The CPA Industry:
  • Aging and retiring population of owners
  • New service offerings
  • Lack or decrease of talent
  • Increase in competition

Growth through M&A is our specialty. If you are in one of these four industries and are interested in exploring how M&A can grow your business, contact us for a no-cost consultation.