Mergers & Acquisitions, better known as M&A are appropriate for more than just late stage businesses. Businesses that have captured market share and demonstrated value may benefit from M&A, even at sales levels below $1M annually.
Traditionally, when a business wants to buy another business or sell the business, they contact a M&A bank or M&A strategist to identify buyers in their industry. M&A bankers drill into the details of the business and the business assets to find weaknesses, opportunities, and identify what the business is worth. Then they typically put feelers out to potential buyers and prepare materials to attract those buyers.
M&A banks or offices tend to specialize in particular fields. If you are considering a purchase, sale or partial sale we suggest research to identify such partners. CV SBDC’s research capabilities can assist in this process.
What is less well known is the utilization of M&A to attract private equity to take partial ownership interest in the business. In this case the owners will likely lose majority control of the company, but may retain an equity stake in the business and possibly a contract for work. The upside is cash and new management enter the business to take it to the next level, which may result in a higher valuation in the future, for the amount of equity the owners maintain.