Sun Acquisitions has successfully facilitated MCPX International’s acquisition of Protech Water Damage

August 30, 2021 by Ellen Park

Sun Acquisitions announced today the successful acquisition of ProTech Water Damage, a Chicagoland provider of remediation and restoration services, by MCPX International. MCPX International engaged Sun Acquisitions in a national search for a targeted services company to acquire and operate.

Tony Han, Founder of MCPX International, stated, “I am very pleased to acquire ProTech and continue to offer its high-quality services throughout the Chicago area. I would also like to thank Sun Acquisitions for all their support and advice throughout the acquisition process.”

Larry Sanderman, Managing Director with Sun Acquisitions, led this Buy-Side engagement for MCPX, which generated ProTech as one of many proprietary deal flow opportunities.

About ProTech Water Damage

Founded in 2003, ProTech offers remediation and restoration services for water, sewage or mold damage. It is currently featured in the Quality Home Services Guide Best Pick Reports as an industry leader. ProTech has its offices in Elk Grove, IL and primarily supports clients across the Chicago area (www.protechwaterdamage.com).

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 and main street 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 in the Midwest.

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

What Value Drivers Should You Consider During Business Valuation?

July 13, 2021 by Sun Acquisitions

How to get the best business valuation?

It’s a topic of great interest for both buyers and sellers.

According to Google’s Keyword Planner, on average 10,000 monthly searches are conducted on the term business valuation alone.

Clearly, there are scores of people eager to understand valuation and its importance during mergers and acquisitions.

It’s a no-brainer.

Being prepared allows you to maximize your returns as well as minimize your risks.

And by giving careful consideration to value drivers, sellers will be able to position the company favorably to show good cash flow and reduce apparent risk; while buyers know which metrics to keep an eye on.

So, before we take a look at the key value drivers to focus on, you may be asking but what are value drivers anyway?

Let’s find out.

Value Drivers Defined

The Corporate Finance Institute gives us a clear definition of business valuation drivers or value drivers. These are:

“…factors that increase the value of a business in the event of a sale opportunity.”

It follows then that every business has value drivers but not all value drivers are equal.

There will be some businesses that bear industry-specific value drivers. In summary, there are generic and specific value drivers.

Armed with a clear understanding of value drivers, let us turn our attention to the drivers you should be cognizant of during business valuation.

Value Driver #1 Financial Metrics

A business’s financials are arguably an essential part of the valuation.

The better the quality of the financials, the cleaner those financials, the higher the value of that business because it becomes easier to get that business financed if you need to go get a loan.

Example questions to ask pertaining to these metrics include:

What is the quality of the financials like?
How clean are the financials?
Are these financials a true reflection of operations?
Does the business have debt?
Does the balance sheet add up?
Is inventory flow represented honestly?

Unclear, inconsistent, and incongruous financials drive down the value of a business.

Value Driver #2 Recurring Revenues

When companies have recurring revenue, it drives the value of a business up because there’s some consistency there. You can rely on those revenues coming in on a monthly basis.

Without consistent business, a company will soon run aground. Does the company you’re interested in have loyal customers? Regular clients? Or retainers?

These questions and the volume of monthly revenue must be known in order to ascertain just how much work you’ll need to put in to keep the business running.

The more work you will have to do to secure new clients, the lower the value of the business.

Value Driver #3 Owner Involvement Level

The risk goes way up when you take over a business that the owner was so involved in. Those types of companies tend to get a lower value.

Businesses that revolve around the owner are exceedingly difficult to take over.

It’s not uncommon to find that most small businesses were founded on the personality and strengths of the owner.

This can make operating difficult as, without the owner, the culture and essence may shift the business’ dynamics considerably.

If on the other hand, there is minimal owner involvement it makes the transition smoother and improves business valuation.

Value Driver #4 Employee Caliber

Questions to ask in order to understand the role of employees in the company include:

What’s the culture like?
The turnover rate?
Are there any employees who if they left, their absence would cripple operations?
Have the employees signed non-solicitation clauses?
How autonomous are the employees?

Having an exceptional employee base is great and can certainly reflect favorably on the value of the business, but employees should not become liabilities.

Value Driver #5 Barriers to Entry

How easy is it for others to set up shop in the industry the business you wish to purchase operates in?

Is there any technical know-how that makes it an exclusive niche?

Who are the main competitors and the industry’s dominant players?

Knowing this particular piece of information is key in evaluating the competitor’s risk.

When the barrier to entry is high, the business merits a little bit more consideration when it comes to value.

The more specific the niche, the higher the barrier to entry, the better the valuation.

Value Driver #6 Business Systems

Does the business have clearly defined business systems and processes in place?

Well-defined company practices make the transition easier and demonstrate the level of care, thought, precision, and foresight the owner has.

It should give you confidence. And consequently, the clearer the systems the higher the value of the business.

Owner and managing partner of Sun Acquisitions Domenic Rinaldi put it this way, “I always love when I see documented practices in a business. Infrastructure matters and will determine whether or not you’re decreasing or increasing value.”

Where Do We Go From Here?

These are six key value drivers you should be considering when analyzing offers and during business valuation.

If it appears intense, that’s because it is. There is a lot involved in mergers and acquisitions.

Fortunately, you don’t have to navigate the buyer/seller process alone.

At Sun Acquisitions, we’re an experienced M&A firm that can assist you in evaluating offers and further understanding value drivers. Don’t hesitate to contact us.

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.