Sun Acquisitions Secures Six Domestic Buy-Side Mandates

March 3, 2021 by Ellen Park

Sun Acquisitions is pleased to announce six new buy-side engagements. These campaigns will be primarily focused on domestic privately held businesses. Sun Acquisitions is working with a variety of clients consisting of strategics, private investors and private equity firms.

The engagements consist of a search for companies in the following industries:

Private equity firm looking to acquire a US based alarm or fire suppression business
Partnership looking to acquire a Midwest based specialty chemicals, pharmaceuticals or plastics business
E-Commerce business looking to acquire a US based add-on
Textile manufacturer looking to acquire a screen-printing business in the Midwest or Southeast
Private investor looking to acquire a Chicago area assembly, packaging or HVAC business
Public company looking to acquire an electronics distributor

Larry Sanderman, Vice-President of Buy-Side Services at Sun Acquisitions, will be leading the search and managing these engagements to ensure the transactions are successfully completed on behalf of our clients. Engaging an intermediary in a buy-side search ensures that the campaign is clearly defined and generates proprietary deal flow with numerous qualified targets, through a streamlined process.

About Sun Acquisitions

Sun Acquisitions is a Chicago based mergers and acquisitions firm. We work with clients that are interested in the confidential sale, acquisition or valuation of privately held middle market companies. Our professionals have significant experience and knowledge to thoroughly guide clients through each stage of the sale or acquisition process. Sun Acquisitions has successfully managed and handled engagements across all industries and is recognized as a leading M&A advisory firm.

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If you are interested in buying or selling a business, contact us at (773)-243-1603 or email [email protected].

Sun Acquisitions Announces the Sale of a Mobile Document Destruction Firm

January 14, 2021 by Ellen Park

Sun Acquisitions is pleased to announce the successful acquisition of Land Shark Shredding, a mobile document destruction firm based in Kentucky.

Land Shark Shredding was founded in 2007 and operated as a certified Service-Disabled Veteran-Owned Business. They provide mobile on-site recurring document destruction services, one-time purge shredding projects, and media & product destruction. The company services both commercial and federal customers, with over 60% of revenue stemming from Federal Government contracts. The company also operates with extremely low customer concentration.

There are major growth opportunities for the new ownership to continue to grow the business. These opportunities include: implementing online marketing strategies, increasing local commercial business and expanding to other markets, improving route density, and hiring additional sales employees to grow recurring revenue

Sun Acquisitions generated over 60 potential buyers for the business which led to 3 final offers. The team at Sun Acquisitions facilitated a strategic acquisition for the client by creating a carveout deal that separated the business into two components, despite Land Shark Shredding being one legal entity. The business was acquired by two separate strategic buyers.

Matt Brunstrum, Advisor, led the transaction and Joseph Beer, VP of Operations, facilitated the closing coordination for the client. After completing the sale of the company, Matt stated, “Land Shark Shredding was a great company ran by Don Gerard Jr. for over 14 years. We were able to help Don maximize value from the sale of his company by carving out his entity into 2 pieces and finding 2 separate strategic buyers who respectively bought the commercial component and the Federal Government Service-Disabled Veteran Owned Business (SDVOB) component.”

Preparing Your Medical Practice for a Valuation

July 29, 2020 by Sun Acquisitions

If you’re looking to sell all or a portion of your practice, determining an accurate value is key for selling a practice. You may have checked an online practice value calculator which pulls in simple data such as earnings, member compensation, growth, risk, and discount rate and churned out a number that feels right, yet it misses the mark with regard to market position, operational and process efficiency, assets and liabilities, and future opportunity. A simple calculation like this could either dramatically inflate or deflate the value of a practice. Let’s dig into a few areas of consideration calculators often miss, which a practice valuation expert will capture.

Proper Documentation Contributes To Practice Value

When you think of documentation for a practice valuation, does your mind immediately go to P&L statement? While this is important, but in addition to high-level financials, understanding the ins-and-outs of a business’ operation is key. Standard operating procedures (SOPs) clearly documenting processes, critical steps, KPIs, and who the key players/roles are in the practice. If you haven’t already created them, develop SOPs for every department in your business. In addition to SOPs, produce a marketing plan including KPIs and projected production. Providing these documents articulates to the broker how the practice operates and sets expectations for the earning potential for the practice.

Record Clear and Complete Financial Information

Practice owners often manage their practice finances in a manner to reduce taxable income, however this can artificially deflate the value of the practice, as it does not accurately demonstrate the earning potential of the practice. In light of this, you may need to adjust the historical financial records to more accurately represent the practice’s earning, profitability, and asset utilization.

Who Are The Patients?

Supply a patient list and patients metrics such as retention rate, acquisition cost, customer lifetime value (LTV), and any exclusive contracts you have with customers/dealers/vendors. If patient recall is low and acquisition cost is high, consider it your mission to improve patient recalls in the months (or years) as you prepare for sale. Don’t consider the recall program the next owner’s nightmare, tackle it now and develop an SOP for post treatment patient engagement.

Partner With The Right Practice Broker

Selling a practice can be a complex process; having a seasoned practice broker guide you through the process can both expedite and maximize the deal. Owners must remember, though, even the best M&A firm cannot waive a wand or shoot a sale price off the cuff. A practice owner must remain engaged in running the practice and providing as much detail as possible to the broker for the most accurate practice valuation and deal possible.

Outsourcing the Corporate Development Function at Your Company

February 17, 2020 by Ellen Park

Corporate Development 101

The largest companies, approximately $500 million plus revenue, typically employ their own Corporate Development teams. The team is typically made up of VPs, Directors and Analysts. The primary goal is to develop an acquisition strategy that is signed off by both the Executive Team and Board of Directors, and to close on those identified targets. From time to time, these teams will also execute on divestitures or other special projects that do not fit into other corporate functional groups.

Smaller companies still want to focus on Corporate Development, but due to budget constraints, the task is often given to the CFO. This generally comes up when banking contacts or other intermediaries inform the CFO of a potential acquisition. Unfortunately, this approach is opportunistic and not strategic; it does not consider the universe of companies that fit the core strategy. Additionally, it will put the company in the middle of an auction process. Such processes are designed to create competition and inflate the selling price multiple. Internal Corporate Development teams are much better positioned to develop proprietary deal flow and avoid a costly and stressful auction process.

Corporate Development Services at Sun Acquisitions is your outsourcing partner for companies lacking the capital and human resources to pursue a strategic approach. Our process includes:

Strategy Development:

Understanding target markets
Developing a list of potential acquisition targets that fit the strategy
Providing strategy summary presentation materials

Acquisitions:

Calling on the target list and building the on-going relationship with those companies
For actionable deals, providing initial deal pricing and presentation materials to Management and the Board
Drafting and negotiation of the Letter of Intent
Due Diligence support
Final negotiations, pricing and presentation materials
Integration advisory services

Divestitures:

Preparing your business segment for sale
Generating the suggested sale price and related presentation materials
Confidentially marketing the business through our established sales channels and industry experts
Active sale updates provided to Management and the Board
Diligence and closing support

Process matters in every business function. Large companies benefit from their scale to establish M&A teams and robust processes to develop and execute the strategy. On the other hand, small companies generally use an ad hoc process that can be inefficient and costly.

Let our team of experienced Corporate Development professionals at Sun Acquisitions help drive your business to the next level.

How To Manage The Culture Aspects of a M&A Transaction

February 12, 2020 by Ellen Park

Research shows that 53% of startups in the United States have planned to use an acquisition as their exit strategy. In 2019, there were 348 M&A deals valued between 25 and 49.9 million USD. It’s clear that the U.S. has a strong M&A tradition; however, not every story has a happy ending.

There are numerous reasons behind companies merging or getting acquired. The biggest goal is to achieve a synergetic relationship where the combined entities are more productive and financially sound than the sum of the individual entities. But, it’s no secret that such transactions can end up as disasters if the integration plans are not well thought out and planned. Culture clashes top the list as the leading factors of M&A failures.

So, how should prospective buyers and companies getting acquired manage the culture aspects of their intended M&A transaction?

1. Research extensively before committing to anything

Mergers and acquisitions have been likened to a couple getting married – and with due reason. Before you marry anyone, there should be a significant amount of time spent getting to know the other party. Their likes and dislikes. What makes them tick and what puts them off. Business entities are similar. They have their own unique traits and characteristics. During the due diligence phase of M&A, attention must be paid to each aspect of the company and not just the financials. Whether you’re considering a horizontal, vertical, conglomerate or concentric merger it is imperative that the company as a whole is looked at.

2. Conduct a formal cultural assessment of both companies

The process of due diligence will give a holistic overview of a company. However, this research may not be enough to fully understand and appreciate the core cultures of both entities. For this reason, a separate formal cultural assessment needs to take place. Not only of the company being acquired but also of the entity intending to buy the former. Going back to the marriage analogy, it is preferable for a person to understand who they are first before courting someone else. This increases the chances of a successful relationship. The same holds true for M&As.

3. Appreciate the corporate cultures of both entities

One of the biggest reasons the Daimler Benz and Chrysler M&A dissolved in 2007 after less than 10 years was the failure on both sides to fully appreciate the different core cultures involved. Where Daimler had a more “conservative” culture, Chrysler was all about being “daring” and this led to the two automotive giants being at constant loggerheads with each other.

At times, even when a formal cultural assessment has been conducted, and especially in the event of a hostile takeover, many may be quick to dismiss culture as a minor aspect which can be dealt with later on. However, nothing is further from the truth and this is often reflected when skilled employees begin to leave the company. Thus, it is imperative to understand and appreciate that the corporate cultures of the merging companies are different.

4. Define the objective of the M&A to employees on both ends

M&A can be a trying time for employees because their livelihoods are at stake. When companies merge, there may be significant impacts on personnel. As such, employees are generally emotionally tense during the entire process. This is worsened if there is no clear directive or communication coming from the top.

You cannot expect people to dance to the beat if they are not aware of what’s being discussed and where they stand in the new re-structuring process. You must remember that it’s people who set the tone of a company. It’s the talent in a company that defines its culture. Therefore, if you wish to avoid culture clashes, be clear and define the objective of the M&A and keep your people in the loop of things.

5. Plan for a new corporate culture and inform your employees

In most cases, the end goal of an M&A is to create a new entity that’s stronger and better placed to dominate in the respective industry. A new business should mean a new corporate culture, however things don’t always flow as smoothly, and why is that? Because the dominant company almost always assumes that their corporate culture will be adopted. As highlighted before, culture is defined by people, and people are emotional creatures.

Ideally, a nouveau culture must be created and it ought to be addressed during the M&A process. And it should be a culture that combines aspects of both sides of the company. If people have been doing business in a certain way for decades and then are suddenly told they have to change, it will most certainly take some time to get used to the new culture.

6. Have a clear strategy of how culture clashes will be handled

Pre-marital counseling is often recommended for engaged couples or those considering getting married. These sessions are designed to give the prospective couple an insight into the potential problems they will face within their marriage and also propose solutions of how to handle the disputes and clashes. A similar counseling process is needed for the entities considering an M&A to discuss how problems will be resolved.

There must be clear strategies in place on how culture clashes will be handled. It’s not a matter of if they arise but when such clashes happen, what will be done? Forewarned is forearmed. Take advantage of teams, such as Sun Acquisitions, that help companies find strategic solutions before the need arises. Having such strategies in place will help to diffuse tense situations and facilitate a smoother transition.

Get in touch with one of our friendly advisors to learn more about how Sun Acquisitions can help during business mergers and acquisitions.

Disclaimer: Any information provided in this blog is not intended to replace legal, financial or taxation advice given by qualified professionals.