TechStrat and the Latest Mid Market Activity
Week of September 6th Lower Middle Market Highlights
Happy Friday and thanks to the 40 new subscribers who joined this last week. We’re the only news source tracking lower middle market M&A. Our goal is to keep you up to date on the latest information/transactions in the market and highlight market participants that are doing interesting things in the space.
This Week’s Feature
This week we’re featuring a group on the sell-side: TechStrat. As the firm’s name suggests, TechStrat is a technology M&A firm focused on middle market clients. The firm was started by Nat Burgess, who has over 20 years of experience with software and technology-enabled services transactions. Nat’s tombstones include many transactions in the middle market including the sale of Ghost to Symantec, the sale of Caligari to Microsoft, and the sale of Instantiations to Google. The firm’s focus within technology includes security, infrastructure, internet health technology, embedded systems, and more.
As former investors and managers, we appreciate Techstrat’s advice for helping CEOs, investors, and managers build value in their technology companies. The framework begins by starting with an exit in mind. This entails outlining the ecosystem to understand who a company’s most natural acquirers may be. It also helps map out a dialogue to not only explicitly sell but also create awareness with both corp dev and product line owners at target acquirers. The framework also moves on to address how to best respond to potential inquiries from buyers.
For example, their advice for responding to inbound M&A inquiries when it’s too early to sell is to explain that:
“We are creating value quickly; it is too early for us to sell” but, “we are interested in exploring partnership opportunities (not M&A) that can accelerate growth.” This is an invitation for a buyer who’s really interested to lean in and value the company on forward performance or figure out how both parties can begin to work together.
If responding to inbound inquiries when ready to engage, you can respond with,
“We periodically get similar inquiries” (of course we get approached we’re a great company!) and “we have multiple shareholders and a fiduciary duty to protect their interests and we’d have to get approval at the board level before we could engage - and they have made it clear that when the time comes, we will run a process.” This dialogue has the effect of not only sending away opportunistic, low-ball offers but also gives the impression that your team expects a professional process.
If you’re a manager or CEO and want to learn more about Techstrat’s “Start with the Exit in Mind” process you can do so by clicking here.
If you’re interested in technology/SaaS M&A and want to learn more about the firm and reach out directly to the team you can do so by clicking here.
This Week’s LMM Activity
Edgewater Capital Partners acquires polymer components business from EnPro Link
Mill Point Capital partners with E&M Logistics, a distributor of ice cream, frozen and fresh foods, and beverages Link
BelHealth Investment Partners completes sale of home care business, Care Advantage, to Searchlight Capital Partners Link
Brynwood Partners acquires frozen food manufacturer, De Wafelbakkers, from Anschutz Corp Link
May River Capital’s portfolio co., Unibloc Pump, acquires Flotronic Pumps, a UK-based diaphragm pump pioneer Link
Bluestone Investment Partners invests in BI, data analytics, and business automation solutions provider, cBEYONData Link
Fulcrum Capital Partners invests in Creative Outdoor Advertising Link
The CapStreet Group invests in industrial monitoring, alerting, and notification software company, WIN-911 Link
Fairchild Capital Partners-backed Caitec, acquires pet subscription box company, VetPet Box Link
Fundraising
Falfurrias Capital Partners raises $850m for Fund V in oversubscribed round Link
Tecum Capital Management closes third SBIC fund at $240m Link
Other Stuff
PitchBook analyzes the benefits of specialization strategies in US PE funds Link
Boomer business owners may want to avoid the tax bills by selling quickly Link
Views from the market with a focus on Canada: Midmarket M&A and Private Equity Podcast Link
M&A Healthcare Advisors (MAHA) announces launch of boutique advisory firm focused on healthcare Link
Every deal has risks…
