[Editor's note: In April 2009, we published this article. Many business owners had missed the window of opportunity to sell during the 2003 -2007 window when selling price multiples were at all-time highs. In 2014-15, we again have market dynamics that mirror 2006-7 - selling price multiples are again at high levels. It is a sellers' market with far more buyers than sellers. How long will this cycle last? . Many economists expect the next downturn as early as 2017. No one knows for sure. However, there is one thing for sure - if you missed the favorable opportunity to sell once, do not let it happen again. -DPM]
Dan McCallin, former owner and CEO of Commerce City-based Timberline Steel recently made an interesting statement about his company: "We missed the selling boom of the late 1990's and were determined that we would not miss another opportunity to sell during the next upcycle. We decided to take the steps so that we were prepared." While Dan originally made that statement during the recession of 2002, and later sold the business in early 2006, it could certainly apply today.
The full exit sales process may take several years. With credit markets tight, the economy in recession, and bad news seemingly everywhere, it may seem counter-intuitive to be writing about preparing your company to be ready to sell during the next economic upturn. While some business owners may believe they can pull the string when they are ready, the truth is, for many business owners, it may be exit sales cycle may take several years to execute. Professionals will tell you that in order to sell at highest value, the process includes 1-2 years to get ready, 1 year for the transaction, and then you may have to spend another 3+ years with the company after the sale.
Much of the preparation can be accomplished during the down cycle. Companies can focus on making fundamental improvements to their business during the downturn that will help them emerge faster and healthier than their competitors.
1. Focus on customer net profitability
2. Upgrade management
3. Cleanup business processes
4. Develop a strategic growth and execution plan
5. Position the company for the upturn
6. Never waste the opportunity of a good downturn
Customer net profitability.
The tendency during a downturn is to cling to any customers and revenue no matter the profitability level. A common comment is that "at least they absorb overhead." The notion of unprofitable business absorbing overhead may be one of the greatest false beliefs in business. In many cases, overhead that has been viewed as fixed is really a cost that can be minimized or shed. Carrying unprofitable business will be a continuing cash drain that may inhibit your business' ability to grow as the economy improves.
There is a great supply of good talent now available in the marketplace. In many cases this may be talent that would not be available in better times. Take advantage of the opportunity to improve. Similarly, this is a great opportunity to review all of your employees and weed out those with below average performance, poor potential, or unrealized potential. Our clients use a simple tool to rank all employees in terms of potential and performance - the results make it very clear which ones have been a drag on the company.
Cleanup business processes. During boom times, many companies claim they are too busy to scrutinize business processes to make improvements and to streamline in order to increase throughput. That "excuse" typically does not apply during the downturn.
Develop a strategic growth and execution plan. You need a plan not only to help you survive the downturn, but also that will allow you to be agile enough to take advantage of opportunities in the recovering marketplace. There may be market segments that will be slow to come back; some may never come back the same way. Other market segments, however, may present huge new opportunities. Your organization needs to develop a plan and be prepared to execute.
Position your company for the upturn.
The most significant competitive gains are made during a downturn. Companies that are prepared and well-positioned can accelerate very quickly as he markets healthy. Competitors that are under stress during the downturn will actually be under greater stress as the economy improves. Cash demands can be low when demand is low. Cash needs, however, will increase as the economy improves. Companies will need cash to hire more people, invest in inventory and equipment, etc.
Never waste the opportunity of a good downturn
During downturns, companies have the opportunity to examine everything, reduce unnecessary expenses, trim those under-performers, examine unprofitable business, streamline business processes, etc.
Take a lesson from the Boy Scouts: Be prepared.
These steps can add value to your business - even during a downturn. When the economy improves, your business can accelerate faster and be well- positioned. The market for selling a business will be ripe in late 2010 and 2011. Those businesses that are ready will find a hungry group of buyers and investors who have been sitting on their hands during the recession.
What's the old saying - "Miss your chance once, it's a shame; Miss twice, shame on you!"
If you have not yet prepared your company ready for sale, we can help. The Mead Consulting Group has been helping companies prepare to maximize value for exit for many years. We have helped over 50 client companies successfully sell outright or recapitalize their business to take "chips off the table." See what some clients have said about their experience with Mead Consulting.
Tuesday, July 15, 2014
Friday, July 4, 2014
- MINNEAPOLIS, July 2, 2014 Bio-Techne said Wednesday it closed on its $60 million cash acquisition of Novus
Biologicals, a deal designed to expand the buyer’s antibody business
while complementing its operations in developing and manufacturing
Novus maintains portfolios of both outsourced and in-house developed antibodies and other reagents among its offerings of more than 250,000 products, delivered via its own digital commerce platform. That’s more than 10 times the 24,000 products in Bio-Techne’s portfolio, which during the 2013 fiscal year accounted for about $311 million in net sales.
Novus is the second company to be acquired in less than a month by Bio-Techne. On June 17, Bio-Techne shelled out $300 million for ProteinSimple, whose Western blot products are among its offerings of systems and consumables designed to simplify protein analysis workflows.
Bio-Techne said the Novus deal will enable it to access antibodies for potential inclusion in new assays and kits, as well as for instruments the acquiring company said it intends to bring to market after it completes the deal.
Bio-Techne also said it expects to draw upon Novus' digital marketing capability and management team as it expands its offerings—notably cytokines and growth factors, antibodies, immunoassays and biologically active small molecule compounds, all sold to biomedical researchers and clinical research laboratories.
Bio-Techne is the common brand name under which Techne brought its R&D Systems, BiosPacific, Tocris Biosciences, Boston Biochem and Bionostics products earlier this year. The company is headquartered in Minneapolis and has more than 1,000 employees worldwide.
"This acquisition is consistent with our mission to expand our products offering and ensure that our customers are being served in the most complete fashion with the best quality reagents," Bio-Techne President and CEO Charles R. Kummeth said in a statement.
Added Novus’ CEO Karen Padgett: “The combined business will represent a unique one-stop-shop for our world-wide customers."
Bio-Techne said it will retain Padgett and another Novus executive, Dave Eansor, who serves as svp, corporate development.
Mainsail Partners, a growth equity firm based in San Francisco, has been the sole investor in Novus since 2008.
MINNEAPOLIS, July 2, 2014 /PRNewswire/ -- Techne Corporation (NASDAQ: TECH) (d/b/a Bio-Techne) announced today that it has acquired Novus Biologicals for $60 million in cash. The transaction was financed with cash on hand.
Novus Biologicals is a Littleton, Colorado-based supplier of a large portfolio of both outsourced and in-house developed antibodies and other reagents for life science research. Their collection of greater than 250,000 high-quality products delivered through an innovative digital commerce platform provides customers a unique, one-stop shopping experience.
Bio-Techne is a leading developer and manufacturer of purified proteins -- notably cytokines and growth factors, antibodies, immunoassays and biologically active small molecule compounds which are sold to biomedical researchers and clinical research laboratories. Novus Biologicals is an excellent complement to the expanding Bio-Techne portfolio of products and its addition is consistent with Bio-Techne's overall goal of providing customers the most comprehensive product line for their research needs. More specifically, Novus adds strength to Bio-Techne's antibody business and provides access to a wide range of high quality antibody content for potential inclusion in new assays and kits, as well as for use with instruments Bio-Techne intends to offer following completion of a pending acquisition transaction. In addition, Bio-Techne expects to leverage Novus' excellent digital marketing capability and their strong management team.
Charles R. Kummeth, President and Chief Executive Officer of Bio-Techne, commented, "This acquisition is consistent with our mission to expand our products offering and ensure that our customers are being served in the most complete fashion with the best quality reagents. Over the years the R&D Systems brand has developed a strong reputation for quality reagents for life science research through its protein, antibody and immunoassay product lines. We appreciate the fact that customers' reagent needs change and Bio-Techne wants their first choice to be a Bio-Techne branded product when selecting a supplier of reagents for their experimentation. Therefore, an expansion of our antibody portfolio was a logical step in our long term strategic business plan. We are eager to adopt the digital commercial platforms that Novus Biologicals has perfected over the years to accelerate the growth of our overall business."
Novus Biologicals Chief Executive Officer, Karen Padgett, commented, "We are delighted to partner with Bio-Techne since we see this as a strategically good fit. Both Novus Biologicals and Bio-Techne have a desire to improve life science research by providing customers with the widest array of technical solutions and tools. The combined business will represent a unique one-stop-shop for our world-wide customers."
The Novus Biologicals leadership team, Karen Padgett, and Dave Eansor will remain in place. Mainsail Partners, a growth equity firm based in San Francisco, has been the sole investor in Novus Biologicals since 2008.
For full article in Wall St Journal http://online.wsj.com/article/PR-CO-20140702-909861.html