Acquisition Search

Grand Avenue Capital Partners can be engaged to search for acquisition candidates. Grand Avenue seeks exclusive engagements from both corporate clients and individuals who wish to acquire a company. Similarities exist in the proactive and disciplined process and steps for both parties seeking an acquisition. See Buy Side Engagements for details.

Corporate Clients

Phase 1:

Establish Acquisition Criteria

  • What are the client's business drivers, competition, markets, strengths, weaknesses, opportunities and threats?
  • What are the client’s goals and objectives?
  • Where does the client fit in the market: size, concentration? What is the growth potential in the market?
  • What avenues for growth can the client expect: horizontal integration (related markets and distribution channels, complimentary products, or different products), vertical integrations (vendors/suppliers)?
  • Given the size of the client and financial capabilities, what is the size of the prospective target?
  • What dilution does the client expect if outside financial equity partners are needed?

Phase 2:

Target(s) Identification

  • Understand market segmentation, margins, and competition in the industry
  • Develop a data base of industry segment players of interest to client… utilize trade association members and trade show exhibitors, industry directories, research studies and proprietary data bases
  • Obtain industry-specific consulting reports if available, examine public competitor data for profitability and valuation metrics
  • Rank-order target list for match with client criteria and capabilities…narrow the list of prospects

Phase 3:

Candidate Marketing

  • Based on narrowed target list, develop marketing campaign to approach candidates
  • Approach targets simultaneously discussing Grand Avenue’s client specifically
  • Broadly discuss the state of the industry as learned by client and Grand Avenue, discussing strategic issues and collective knowledge of the industry
  • Propose obtaining information on confidential basis and establish rapport with target…there will be no cost to the target for this preliminary assessment if there is a possible opportunity in matching target with Grand Avenue’s client

Phase 4:

Candidate Introduction to Client

  • The client is introduced to the acquisition candidate
  • Further relevant financial, operational and other necessary materials are gathered
  • Grand Avenue assesses valuation of the candidate, performing preliminary analysis to determine that target meets client’s profile, past performance is examined, financial modeling with sensitivity analyses prepared
  • Valuation and possible deal structures are vetted
  • Major terms and conditions are negotiated with candidate

Phase 5:

Oversee/Manage Client’s Due Diligence, continued Negotiation

  • Oversee due diligence of the candidate
  • Assist with accounting, legal, tax and other matters
  • Continue negotiation with respect to issues found in due diligence, if necessary

Closing the transaction

Individual Clients

Frequently, Grand Avenue is approached by individuals seeking an acquisition of a company. Grand Avenue has assisted individuals who are very focused on their acquisition criteria, have financial capabilities to initiate an acquisition, and are amenable to having financial partners who will assist in growing the company acquired. Grand Avenue Capital bankers find the following acquisition template and questionnaire useful for individual acquirers.

Acquisition Criteria

  1. Industries of interest
    • Define the major industry and specific business subsets you have an interest in (try to be as specific as possible)
      • Examples: software, subset CRM....
      • Automotive parts manufacturing, subset OEM aftermarket parts in electrical component area....
      • instrumentation, subset process analytics and water treating instrumentation....
      • fasteners, subset aerospace segment
  2. Specific examples of companies within the Industries of Interest section
    • Define the major industry and specific business subsets you have an interest in (try to be as specific as possible) ... identify specific companies that you have a potential interest in
  3. Industries of interest
    • Strengths that client brings to the table?
    • Management experience in industry of interest
    • Marketing
    • Manufacturing
    • Financial management and control
    • Engineering
  4. Acquisition Criteria
    • Target will have revenues of $_X__million, and EBITDA of $__Y__ million
    • Number of employees
    • Share of market
    • Any other generic indices of size
  5. Geographic Preferences
    • Be specific: Orange County... Irvine... Southern California... anywhere west of Mississippi River... Chicago only... no preference
  6. Management profile of acquisition candidate
    • Owners are retiring and will not remain... owners will remain as partners with you... owners will be required for transition
    • Management who are not owners... what are you looking for in terms of necessary strengths... eg: if you’re not a strong marketing person, these skills better be in the target...
  7. Industries/companies/investments of absolutely NO interest
    • Specific negatives... could be no retail, no high tech, no to anything start-up…no restaurants, no real estate, etc. Be very specific regarding those industries in which you have absolutely no interest
  8. Personal capital committed to equity component of acquisition
    • How much personal equity are you and your partners planning to invest... size of equity component from you and others can determine the level of the rest of the capital structure, and should be consistent with the size of company. (eg: look at various scenarios of possible capital structure: $30m revenues, with $3m in EBITDA, could translate into a $12-15m acquisition... possible leverage on working capital might be $2.5m, senior term loans might be $4.0 m on equipment, seller subordinated financing might be $3.5 m, earnout of $2 m and your group’s equity of up to $3m... work various scenarios that will help establish the size of company consistent with the risk equity you have available). Personal financial statements should be shared early with your adviser Investment Banker so that expectations are managed. Liquidity of assets ready for an acquisition is a priority upon starting the process.