Most business owners are conditioned to the difficulty of obtaining bank financing for general business operations and are not fully aware of the abundant availability of funds from private equity firms, family offices, hedge funds and non bank lenders that are seeking qualified prospects. There are estimates that the US is home to three or four thousand funds and non bank sources of liquidity for business acquisition and investment, with aggregate investment resources exceeding $1 trillion.
The definition of mid market is broadly defined but can include established businesses with revenues of $10 million to $ 1 billion. The investment criteria of most funds investing in this market require twelve month trailing profits exceeding $2 million, the bigger the better. A few funds will consider $500,000 to $1 million minimum as add on acquisitions to their existing portfolio companies.
Many business owners who could benefit from these resources are not aware of the deal structure flexibility that has evolved in the current market. This is no longer a one item buyout menu. Every imaginable iteration of deal structure can be considered for companies that meet the criteria of the mid market investors. Matching the deal structure preference with the business client’s best interests is part of the value added contribution of an experienced and capable business advisor.
Structures include the traditional buyout, with owner transition and variants such as buying out a partner, minority or majority equity participation, recapitalization, multiple debt based strategies and equity/debit hybrid transactions.
From the perspective of business owners, we are enjoying a golden age of liquidity. Never has the amount of investment capital and investment sources so far exceeded the number of viable opportunities to invest. The reason for this market anomaly, where the money is chasing the investment opportunities, is that the historic performance of investments in established mid market companies has produced better and more consistent returns to investors than the vast majority of available alternative investments.
For the current and foreseeable future, historically low interest with volatility and uncertainty in traditional alternative investments argues well for continued demand for mid market business investments. This is evidenced by current successful and oversubscribed fund raising by many private equity funds, which in some cases create successor funds with several $billion of fresh capital to be invested over the next several years.
Even though the supply of funds far exceeds the identifiable, qualified investment targets; the mid market focused buyers and investors have not generally embraced risk and extended their investment criteria to encompass early stage or less qualified ventures. These investors are laser focused on transactions with the mid market companies.
WORKING WITH NICHE SPECIALISTS
First Boca Associates is a mid-market merger and acquisition specialist, maintaining relationships with a global network of well-funded buyers and investors primarily focused on the acquisition, merger, or recapitalization of all or part of mid-market, US based companies (revenue over $10 million or EBITDA over $2 million). FBA also provides M&A related consulting and advisory services at the board and/or CEO level. Experienced analysis and innovative strategies can often resolve complex business matters for clients.
During the last 20 years FBA has been establishing relationships with a broad spectrum of qualified investors, including private equity and institutional funds, strategic investors and family offices. FBA is in active daily communication with buyers regarding their target investment criteria. Through their global network of investors they generate confidential inquiries from those that see investing in, recapitalizing or buying a company as a mutually advantageous deployment of their capital. FBA has been continuously involved, since 1994, in consulting engagements with a U.S. and international client base that focuses on M&A, strategic planning, marketing opportunities, capital formation, and private to public market transitions.
Robert Weinberg, chairman and president of First Boca Associates, Inc. (FBA), has been a business advisor specializing in mid-market M&A transactions for more than 20 years. As the principal of his own businesses he has received national recognition for award winning marketing programs, publications and as a business strategist. His extensive experience in corporate governance, structure, and restructure has provided the foundation for the development, staffing, and growth at FBA. These achievements include: chairman and founding investor of a precision valve manufacturer that he negotiated and sold to a NYSE firm after only six years of exceptional growth. He was the sole owner of a national award winning electrical distributor that he grew from two to 270 employees, owner of one of the first Apple retail stores, chairman of a private satellite cable company, sole owner of medical device, electronic assembly and radiant heat manufacturing companies, extensive real estate and more.
“This exceptional front line business experience allows us to provide confidential customized solutions that are tailored to the present and future needs of each company,” he explains. “We assist in connecting our network of strategic investors, with their extensive knowledge and experience, with companies that have requested assistance to help optimize critical decisions and facilitate the determination to grow, recapitalize or sell. Many of our investors are past owners and operators of businesses in all regions of the world and every industry you can imagine. They are looking for opportunities. We can help them find you.”
FBA has received numerous awards and recognition in the last few years for its M&A business and within the oil and gas industries, and prides itself on offering a free, confidential, “no obligation” consultation. “Because we are confident in our ability to successfully close transactions and we value the opportunity to represent our clients, we do not require exclusive agreements or any fees other than a market reasonable “success fee” when our client receives funds from an investor that FBA has introduced,” assures Bob. “We are delighted to receive the recognition of the Business World Wide organization for our efforts and success in facilitating M&A transactions in the USA mid-market. FBA is proud to have closed more than $150 million in business sales for our clients in the past year and we have a very active pipeline for 2015.”