MA2020Q1

1ST QUARTER 2020 M&A UPDATE

This update is brought to you by Pompeo Group and its strategic merger and acquisition partner Tounge Associates.

Thinking of retiring soon?  Do you know how much your business is worth? This month we will discuss the importance of a business leader or owner knowing how much their business is worth. If you are the owner of your business, have you considered your retirement timetable?

Many entrepreneurs and family business owners have much of their wealth locked up in their business. As we age and look toward retirement it is imperative to understand the value of your business in today’s market. Unfortunately, most owners are less than objective when it comes to estimating that value which is understandable given how much sacrifice it takes to create a successful business. There is a lot of emotion tied to the business that is often founded by the current owner and grown over many years. Therefore, many business owners are passive about valuation assuming they know where they stand and are often very surprised when the market speaks, and rarely is it a case that the market says it is worth more than the owner thought.

You might think it is not that important at this time if you are 10 or 20 years from retirement. We highly recommend that you should know your company’s value today and review it annually as part of your business planning and growth strategy. This makes good business sense as it gives the business owner(s)a concrete benchmark to plan from. However, there are other reasons to stay current with the valuation. Consider the scenario we all avoid thinking about, which is if the founder or key owner has a life crisis (such as a serious illness, accident, etc.). Each year you should know what valuation level your company is at. This allows you to divest it profitably either when you choose or, God forbid, if a life crisis event should occur.

Most business leaders in lighting, electrical, IoT and controls have a series of KPI’s (Key Performance Indicators) that are critical to running their business successfully. However, a valid and current market valuation is the ultimate KPI to assess the true worth/value of their organization.

To help business owners establish that key valuation we are pleased to offer a 20% discount from our regular valuation fee for the next 60 days (through April 30) which can help facilitate both your internal business planning for 2020 and beyond, whether that decision is to sell in the near future or to simply establish a benchmark for growth to attain the value you desire to be able to live in comfort whenever you choose to retire.

A lot of M&A activity in our segment over the past 90 days—at the tail end of 2019, ALW (Architectural Lighting Works), a respected provider of architectural and decorative fixtures acquired V–2 LightingWESCO had jumped into the bidding for Anixter with ElectricalTrends observing that “…the merger could potentially have an effect on manufacturers as well as utility or datacom companies.”** EdisonReport reported in early January that WESCO ultimately beat out CD&R [a private equity firm based out of NYC] to acquire Anixter,which included multiple bids with the ultimate deal valued at $4.5 billion. At the same time, ER reported that Green Creative & ILP announced a new parent company, Illumus. Early this month Signify and Cooper Lighting successfully completed their acquisition* with official comments from both Signify’s Eric Rondolat as well as Cooper Lighting’s Kraig Kasler. However, the blockbuster acquisition in the past months was the most recent— Legrand North & Central America’s acquisition of Focal Point.” EdisonReport noted that this is Legrand’s fifth acquisition in the lighting sector, which makes Legrand now (if they weren’t already) a major player in lighting.

Tounge Associates’ excellent source of M&A experience combined with Pompeo Group team’s nearly three decades of lighting and electrical industry recruitment experience will help firms—whether it is a manufacturer, wholesaler or design firm—to source the right buyer, the best merging partners or the most strategic acquisition targets. Both Tounge Associates and Pompeo Group understand the importance of confidentiality and base our reputations on extreme sensitivity to this matter. As a result, much of our work comes through recommendations from satisfied clients.

In honor of the 4th anniversary of Pompeo Group’s joint alliance with M&A firm Tounge Associates, we are offering a discount of nearly 30% off our standard business valuation for the next 60 days.  This business valuation by our professional M&A Advisory partners can be used for exit/succession planning, estate planning, buy-sell agreements between partners and yes, even divorce settlements.  Our normal valuation fee of $7500 is reduced to $5500 until May 15, 2020.

If you would like to arrange an initial confidential discussion to discuss these options, please contact us here.  If you’d like to learn more about our firms, please visit our about us page and www.toungeassociates.com.

*Acquisition data courtesy of www.edisonreport.com except for **courtesy of David Gordon.


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