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In special situations, SealedBid offers business owners an Accelerated M&A process that allows a quick exit and the ability to obtain financial relief through a structured transaction process.

Distressed Situations

Negative Cash Flow: When a company is spending more money than they are making during a specific period.  In most instances, negative cash flow means that your company is losing money.  However, in other instances, negative cash flow can reflect bad timing of income, expenses or capital expenditures.  It is possible to have a net profit and have a negative cash flow.  If there is continuous, long-term negative cash flow this can be very harmful to businesses.

Creditor Pressure: When a Company receives pressure from creditors it is a clear sign that there is financial distress.  One example of why creditors may start pressuring a company is because the company is in arrears or default (they are failing to pay financial obligations in a timely manner).  Another reason is if a company breaks a loan/bank covenant (a clause in a loan agreement that requires the borrower to do/refrain from doing specific things).

Avenues of Relief for a Financially Distressed Company

Turnaround Management/Workout Consulting: A company that is having financial issues and/or failing performance can hire a turnaround management/workout consulting company to help correct these issues.  A turnaround management company will identify the root issues and then help create a long-term strategic plan.  A workout consultant will help create a strategy to negotiate with lenders and creditors in order to restructure any debt.

Asset Based Lending/Factoring/Alternative Financing: Another option for a financially troubled company is asset-based lending.  Asset-based lending is lending secured by primary current assets or fixed assets.  Companies that are asset-heavy may find this is a good option.  Choosing a factor is also an option.  A factor is an intermediary that provides cash or financing to companies by purchasing their accounts receivables.  This helps improve a company’s short-term cash needs.  It is important to note that a percentage of the receivables is typically kept by the factor.  Lastly, there are many alternative financing (non-bank financing) options such as online business loans, crowdfunding and merchant cash advances.

Chapter 11 Bankruptcy: Filing Chapter 11 bankruptcy protection is typically a last resort.  A business usually files for Chapter 11 bankruptcy protection if they require time to restructure their debts.  This type of bankruptcy gives the debtor/company immediate protection from creditors.  Chapter 11 bankruptcy is also known as “reorganization” and can subsequently result in an Accelerated Transaction* through a 363 sale.  A 363 Sale refers to the sale of a company’s assets under Section 363 of the US Bankruptcy Code.  The sale allows debtors to fulfill their obligations to creditors by selling their assets and using the funds collected to settle their debts.

*An Accelerated Transaction process: Companies in financial distress often need to move quickly.  Although an accelerated transaction process may sometimes yield a lower selling price, this is not always the case.

Unique Aspects with a Financially Distressed Transaction

When it comes to the M&A transaction process of a selling a Financially Distressed Transaction, there are many differences compared to a standard M&A process.

Reduced Timeframe: Usually the negotiation timeline will be accelerated due to the worsening financial situation of the target, creditor demands and the potential near-term loss of significant business relationships (customers, employees, suppliers, etc.).

Due Diligence Challenges: Specific pressures will adapt a normal due diligence process in a financially distressed M&A transaction.

Risk of Challenge/Litigation: A financially distressed company usually leads to a depressed valuation.  In the context of an M&A deal, lenders, other creditors and/or equity holders may not receive full value on their debts or investments.  Because of this, a buyer faces the risk that the sale process or the terms of the sale will be challenged by equity holders, creditors or trustees, either during the sale process or after closing.  Through structure and drafting, these risks can be reduced, but not eliminated.

More Parties Involved: In addition to the usual buyer/seller negotiations, there is more need to coordinate with lenders, lien holders, landlords, suppliers, customers, management teams, etc. so that the acquired business remains viable post-closing.  More parties create more complexity and communications must often be carefully managed and coordinated by the M&A intermediary.

Purchase Agreement: In order to account for the typically reduced recourse against sellers, the purchase agreement in a Financially Distressed M&A Transaction often looks quite different from a purchase agreement for a financially healthy target.

Source: https://www.natlawreview.com/article/covid-19-distressed-ma-era-pandemic

Example Transactions

SealedBid’s Role in Distressed Transactions

The best way to decide if now is the best time to sell your business, is to speak with an M&A advisor.  SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.

Our Transaction Professionals use a team approach and have completed many Distressed Transactions in the past.  SealedBid uses an extremely Confidential approach in standard transactions and Accelerated Transactions that has led to great success.  Clients can be assured they are working with a strong deal team that can support a Distressed Transaction from pre-marketing to marketing to Due Diligence to closing.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

What Does Selling to a Strategic Buyer Mean?

When marketing a company for sale, one must consider all types of prospective buyers.  There are two primary categories of buyers – strategic and financial.  Our Maximizing Value Spotlight expounds upon the “Different Types of Buyers” but it is important to clearly define each category:

Strategic: A strategic buyer is an operating Company with existing knowledge and/or expertise in the target company’s market or industry.  This could be a competitor, vendor, customer or simply a company within the same vertical industry looking to expand offerings.  Unlike a financial buyer, a strategic buyer will focus on finding a company that adds immediate benefits to its existing business and can provide synergistic opportunities, i.e. a one plus one equals three scenario.

Financial: A financial buyer is a buyer that invests in private or public companies on behalf of a larger shareholder/investor group.  Once acquired, a financial buyer will work to improve the company’s operational and financial performance over a certain period of time and eventually sell the business to create returns for its investors.  Financial buyers are generally private equity firms, investment funds, family offices, etc. that offer a wide variety of options for business owners from a reinvestment to a complete exit.  When there is a strong owner and/or management team of a company, a supportive financial buyer can help the company grow by various Recapitalization scenarios.

Note: Financial buyers with existing holdings or portfolio companies can very easily become a Strategic Acquirer as they look to complete add-on transactions and grow through M&A.

Strategic Buyer Industry Snapshot

According to Pepperdine’s “2019 Private Capital Markets Report”:

• About 55% of closed business sales transactions over the last 12 months involved strategic buyers.
• About 39% of the 92 respondents to the investment banker survey indicated that there was an increasing presence of strategic buyers making deals over the last 12 months.
• About 21% of respondents did not see any premium paid by strategic buyers, while 56% saw premiums between 1% and 20%.  The remaining 23% saw premiums more than 20%.

Pros of Selling to a Strategic Buyer

Selling to a strategic buyer creates many advantages for ownership and the company as a whole.

• Possibility of a Higher Valuation: An operating company looking to grow through acquisition(s) may look beyond a seller’s profitability when preparing their valuation.  Often Strategic Buyers are quick to identify synergies that could immediately enhance the target business and/or their own existing business.  Example synergies include expanded customer reach, new vendor relationships, capability expansion, product cross-selling and improved market share among many others.  In the article “Should You Sell to a Strategic Buyer?” JP Morgan states, “buyers are often willing to pay more than the accepted ‘going rate’ for companies in whose data, products or processes they have a vested interest.”  The objective of SealedBid when marketing to Strategic Buyers is to highlight these synergies and provide accurate information to improve a respective buyers model.
• New Opportunities for the Company’s Stakeholders: In the lower mid-market, strategic acquisitions almost always create exciting opportunities for Employees, Customers and Vendors.  When an acquirer begins with the mindset of growth, existing employees, especially the key management team, are relied upon to both plan and execute the strategy for capturing/realizing the identified synergies between the businesses.  Employees also find themselves a part of a larger organization, which includes additional resources, career advancement opportunities and benefits that did not exist pre-transaction.  Customers and Vendors often experience similar benefits through increased resources and support.
• Streamlined Due Diligence & Closing: There is a higher likelihood that a transaction with a Strategic Buyer will close and that diligence efforts may be less intensive.  Due to the acquirers existing knowledge of the industry as well as their focus on specific synergistic elements, the diligence team will move quickly to verify their expectations without the hurdles that exist for a buyer who is completely new to the space.  Additionally, transaction funding or financing relationships are likely to be already in place making the closing process less complicated than other ownership-transition options.
• Reduced Ownership Transition: Often business owners and entrepreneurs culminate their professional careers with a transaction and are anxious to retire or pursue other personal or professional ventures outside of the business they’ve built.  The transition of knowledge, relationships and responsibilities is an absolutely necessary part of the Succession Planning process and this can often take years and depending on the situation, this transition may be required post-transaction.  A Strategic Buyer with intimate knowledge of the industry often has an experienced team in place that can greatly reduce or eliminate the learning curve and transition period.
• Long Term Vision / No “Flipping”: Strategic acquirers use M&A to supplement organic growth and quickly work to fold the acquired company into their operation.  This is in stark contrast to financial acquirers who typically have a 3 to 7-year investment horizon before the company/team must undergo another transaction.

Cons of Selling to a Strategic Buyer

Although there are many positive reasons for choosing a strategic buyer, there are risks and cautions that must be taken when considering a Strategic Buyer.

• Confidentiality & Trade Secrets: Despite the execution of Non-Disclosure and Confidentiality Agreements by all parties, there remains understandable concern when disclosing information to a competitor, customer or any industry player.  The challenge is to disclose enough for a prospective acquirer to make an educated, valid offer without giving away any “secret sauce.”
• Role Duplication: With the merging of two similar companies, there can be role duplication that leads to adjustments in the organizational chart.  This truly is a case by case basis for each scenario, but the most common duplication is in the finance, HR and payroll areas of the company.
• Company and Brand Legacy: In some cases, synergies that create higher valuations also come with reduced expenses such as the consolidation of operations or the roll-up of a product portfolio.  Business owners and entrepreneurs who have spent years building a connection to their community and a reputation within the industry may not feel comfortable moving forward with an acquirer who would make sweeping changes.

SealedBid’s Role in Selling to a Strategic

SealedBid uses a Structured Transaction Process to identify and directly solicit potential Strategic Buyers.  We work closely with our clients to understand the most important issues/concerns they have with competitors, customers, vendors and other industry players and then work to ensure those issues/concerns are addressed early on in the process.  SealedBid coaches prospective acquirers based on our client’s ideal transaction and scenario all while working to Maximize Value.  SealedBid is the buffer between sellers and prospective acquirers, and we help manage information disclosure, timelines and ultimately the entire transaction process.

Example “Selling to a Strategic” Successes

SealedBid is proud to have successfully served clients for over 25 years by providing Sell-Side and Buy-Side M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.

SealedBid works to understand our clients’ goals and identify, contact and engage ideal prospective acquirers, and create a go-to-market strategy that will maximize enterprise value.  Although we NEVER market a business with an asking price, we will conduct preliminary financial analysis and provide valuation guidance.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

At SealedBid Marketing, we are actively entrenched in the lower mid-market M&A transaction space and we closely monitor valuation across many industries.  The SealedBid team routinely meets and consults with business owners and their Deal Team advisors regarding Succession Planning and Exit Planning as well as valuation expectations.  “How much is my business worth?” is an important, if not the first, question on every owner’s mind and through this Spotlight we explore several high-level example scenarios that will help to define valuation expectations.

There are many factors that can affect valuation.  Certified Business Appraisers use several methods (outlined below) when completing their analysis for estate and banking purposes, but determining Market Valuation, when the business is truly put up for sale, is both an art and a science.  Creating a competitive process through a Structured Marketing Campaign and targeting different prospective buyer types will bring a variety of valuations/structures and will ultimately maximize and determine the true enterprise value!

Valuation: The Textbook Definition

A valuation is the process of figuring out a fair market value of a company. In addition to selling/buying a business, there are numerous other situations where a valuation could be required, including; reorganizations, shareholder disputes, estate planning, etc.  The method of valuation can vary by each situation, however the goal is the same: determine a present value, in today’s market, for an operating business.

Market Approach: For this approach, a valuator/appraiser decides the fair market value of the company by researching actual business transactions that are similar to the company they are trying to valuate.  It is important that the valuator finds companies that are of similar size to the target company since a company’s value can change drastically depending on the revenue/EBITDA of that company.

Asset Approach: The asset approach is when the company’s current value of tangible net assets is used as the main decision maker of fair market value.  The Asset Approach is more common when a business is no longer operating as a going concern and/or the liquidation of the assets creates more value than the profitability of the business.  Additionally, reviewing the value of the assets can impact financing availability and other valuation considerations.

Income Approach: The income approach is commonly used when valuing private small to medium-sized businesses.  This approach uses a company’s revenue and profitability to determine a valuation.  There are multiple ways to model the Income Approach such as Multiple of Discretionary Earnings, Discounted Cash Flows, and a Multiple of Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”).  Regardless of the Income method used, the valuation is a result of a predetermined or desired Return on Investment of the buyer based on today’s and future cashflow of the business.  Businesses showing strong trends, stability and limited risk receive higher multiples.

Note: At SealedBid, we primarily see prospective buyers using a Multiple of recast EBITDA.  Applicable recast adjustments made to EBITDA, or the removal or normalization of extraordinary expenses, will vary depending on the buyer, making it extremely important to understand an Owner’s ultimate goals and all potential prospects.

Different Types of Buyers

Not only are there multiple different valuation approaches, but there are also numerous different types of buyers that will all approach valuation for the same company differently.

Strategic: A strategic buyer is an operating Company with existing knowledge and/or expertise in the target company’s market or industry.  This could be a competitor, vendor, customer or simply a company within the same vertical industry looking to expand offerings.  Unlike a financial buyer, a strategic buyer will focus on finding a company that adds immediate benefits to its existing business and can provide synergistic opportunities, i.e. a one plus one equals three scenario.  Because of these potential synergies, a strategic acquirer will model the valuation differently and could potentially bring a higher valuation for a company.  The tradeoff of pursuing these synergies and realizing a higher valuation means there is a potential for the Seller’s business to be moved, consolidated, renamed or changed in other ways.

Financial: A financial buyer is a buyer that invests in private or public companies on behalf of a larger shareholder/investor group.  Once acquired, a financial buyer will work to improve the company’s operational and financial performance over a certain period of time and eventually sell the business to create returns for its investors.  Financial buyers are generally private equity firms, investment funds, family offices, etc. that offer a wide variety of options for business owners from a complete exit to reinvestment.  When there is a strong owner and management team of a company, a supportive financial buyer can help the company grow by various recapitalization scenarios.

Individual or Small Group: An individual or small group buyer typically focuses on acquiring a single business with the intent of owning/operating the business going forward.  Typical individual buyers include professionals who are transitioning from the corporate space.  Although these buyers are not always the most sophisticated, they do create many benefits to a seller including maintaining the Company’s existing name, location, employees, etc.

Important Note: There are positives and negatives to each type of buyer and understanding the Ownerships’ goals is key to facilitating the ideal transaction.  Strategic, financial and individual buyers will approach each transaction with varying equity/debt resources, expertise and post-close expectations.

Transaction and Valuation Examples

Below are three real example transactions, along with their approximate valuation.  Since each transaction is so unique, it is difficult to pin point exact multiples (by industry, etc.), but these examples give an idea of different structures/valuations.  At SealedBid, we never go to market with an asking price and have closed transactions with valuations above 8x EBITDA!!!

Certified Business Appraisals and analyzing valuation techniques will provide insight into a specific business’s value, but to truly know what the Company will bring requires going to market and successfully reaching the ideal buyers!

SealedBid’s Role in Market Valuations

SealedBid is proud to have successfully served clients for over 25 years by providing Sell-Side and Buy-Side M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.

SealedBid works to understand our clients’ goals and identify, contact and engage ideal prospective acquirers, and create a go-to-market strategy that will maximize enterprise value.  Although we NEVER market a business with an asking price, we will conduct preliminary financial analysis and provide valuation guidance.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

Selling (or buying) a business is a full-time job!  SealedBid has provided Merger and Acquisition (”M&A”) guidance for over 25 years and has extensive experience maximizing value for our clients.  As a facilitator and intermediary, we work closely with clients, management teams and advisors from pre-engagement to engagement and from engagement to closing.  But this spotlight is not just about SealedBid, it is about the importance of having a team with strong M&A experience – – attorneys, certified public accountants (“CPAs”), wealth managers and bankers all play key roles in putting together a successful deal.

Creating a Deal Team

In the lower mid-market, companies rarely have in-house professionals with M&A expertise (unlike many larger businesses) and must rely on outside advisors when building their “Deal Team.”  In most cases, an owner or ownership group has worked with numerous attorneys, CPAs, bankers and other advisors throughout the course of starting, growing and operating their business.  However, not all professionals have experience or the expertise to properly assist in an M&A transaction.  Selecting and creating a Deal Team begins in the planning stages of Succession Planning with ownership interviewing and selecting experienced advisors.  In advance of a transaction, the Deal Team will assist ownership in positioning the Company to maximize tax benefit, meet estate planning needs, limit post-transaction exposure and more.  Coordination of the Deal Team and strategic planning pays dividends as Ownership initiates the Exit Plan resulting in maximizing enterprise value!

Role of an Attorney in a Transaction

Having an attorney that is “transaction-savvy” is extremely helpful when completing a transaction and is equally as important for the sell-side or buy-side of the deal.  In the lower mid-market, M&A attorneys bring an understanding of today’s marketplace and access to legal expertise across multiple disciplines (e.g. documentation, tax, real estate, employment, benefits, representations & warranties, etc.) to assist in negotiating a fair transaction.

Listed below are some examples of specific tasks that M&A attorneys take ownership of in a transaction:

• Reviewing and offering input as to the Letter of Intent
• Conducting legal due diligence (typically with coordination assistance from the Intermediary and amassing information)
• Reviewing and advising on all third-party (customer, supplier, etc.) relationships and agreements to ensure a smooth transition of the operation
• Drafting, reviewing and negotiating purchase agreements
• Drafting, reviewing and negotiating secondary documents including real estate leases, employment agreements, non-compete agreements, bill of sale, escrow agreement, etc.
• Once a transaction is in motion, a seasoned transaction attorney provides great value in helping to drive the deal forward to a successful closing.

Role of a CPA in a Transaction

A strong CPA with M&A experience is an important asset to the Deal Team.  In the planning stages of a transaction, CPAs play an important role in providing, among other analysis, detailed models for tax and estate planning (in coordination with wealth manager on sell-side) as well as feasibility and return-on-investment planning (buy-side).  The CPA helps ownership understand what they own, what they owe and what will be included in the transaction (material assets and liabilities).

Below are a sample of specific tasks that CPAs oversee in an M&A transaction:

• Lead the financial due diligence (typically with coordination assistance from the Intermediary)
• Prepare, review and present financial reports and transaction models during the due diligence process
• Verify the accuracy of business reports and the Company’s overall reporting methods
• Organize, document and verify the business’s tax filings, in addition to giving a sense of the other party’s tax status
• Negotiate working capital and purchase price allocation calculations specific to the transaction
• The CPA’s role continues in transition post-transaction verifying all financial detail during the true-up period as well as assisting in earn-out calculations (if applicable) and post-closing debt structures.

Role of a Banker in a Transaction

In the simplest terms, the main role of an M&A banker is to assist their client in finding money that is needed to complete a merger or acquisition.  Recently, banks and non-traditional lending sources have become ever more aggressive in the lower mid-market and there are many options to structure financing tailored to each transaction (e.g. SBA loans, senior debt, mezzanine debt, unitranche financing, etc.).

Working with an experienced business banker allows individuals or companies completing a transaction to have access to a tailored financing approach.  Tailored financing tends to result in a smooth closing process and can add tremendous value by positioning the Company for success post-closing!

SealedBid’s Role in a Transaction

An intermediary is the hub of the deal, whereby coordination, facilitation and striving for client success is the ultimate goal.  As a trusted advisor and intermediary, SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  SealedBid works as a central point of the sell-side (or buy-side) Deal Team from the planning stages to the closing – while managing/coordinating all the phases in between.

Having built relationships while working closely with attorneys, CPAs, bankers and other transaction professionals on many successful transactions in the Upper Midwest and throughout the country, SealedBid truly understands the importance of the Deal Team.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

Many business owners are seeing the benefit of Recapitalizations as opposed to a complete sale of their businesses.  Would you like to…

• Remove personal guarantees with the bank and capture partial liquidity?
• Expand geographically, increase production or acquire another company?
• Participate in future success of the Company?

If you answered yes to any of these questions…a Recapitalization or “Recap” may be the right solution for your business!

What is a Recapitalization?

A Recapitalization provides business owners a “private liquidity event” similar to an initial public offering, which provides owners with a public liquidity event.  In a Recapitalization, a Private Equity Group (PEG) or Financial Buyer acquires an interest of a company from the owners, while partnering with them to continue the development of the company through internal growth initiatives and potential acquisitions.

How does Recapitalization Work?

A Recapitalization involves exchanging the owner’s equity for a combination of cash and a piece of the capital stock of new entity.  A Recapitalization is designed to support the company as it continues, as well as future growth.  This allows the owners to receive a monetary gain while staying involved in the future potential of the company.

Are You a Good “Recap” Candidate?

Private Equity Investors (PEG) and Financial Buyers look for companies that have defined growth plans, consistent earnings or growth, significant market share or a niche position and experienced management teams.

What Should You Look for in a PEG or Financial Buyer?

When looking at potential buyers, consider the investor’s experience in your industry, their reputation among other management teams for integrity and delivering on promises and value they can add to your operations.  In addition, could you still operate independently if you decide to remain at the company, will they provide capital to support growth and will the transaction close in a timely fashion?

Example Transaction:

Terry is the owner of “OldCo” but decides that capital is needed to grow the business, so a decision to recapitalize is made.  Terry partners with SealedBid to facilitate a relationship with a financial buyer or PEG. With an exchange of ownership, “OldCo” becomes “NewCo” and Terry no longer has majority shares of the business.  But Terry still benefits from “NewCo’s” future growth in value and realizes an opportunity to benefit again at some point in the future when the decision is made to sell his/her remaining interest in the company.

Prepared by SBM.  All statements and figures presented herein are for example purposes only and are not guaranteed.

Intermediary’s Role in a Recapitalization

• SealedBid will assist in determining the business value range as well as identify and qualify prospective buyers (i.e. PEGs).
• SealedBid will create, coordinate and execute marketing plans to position the company.
• SealedBid will also negotiate on your behalf with multiple prospective buyers.
• SealedBid will oversee the due diligence process, making sure progress stays in line with the timeline that was initially established.
• Finally, SealedBid will manage the closing process until the very last signature!  Including any post-closing issues…

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

SealedBid had an exciting, milestone year in 2018 so we thought it made sense to create a page to highlight the activity!

Historically, our M&A Spotlights have tended to be educational in nature but since 2018 was such a big year for us, we decided to shift the focus a bit – please take a look:

• The first M&A Spotlight was released in April. This was the “Special Founder’s Spotlight: The Guy Who Ties the Knot” which highlighed the founder and managing officer of SealedBid, Jerry Clark.  You will learn about Jerry’s career history, and how it led to the creation of SealedBid.
• The second M&A Spotlight was released in October and focused on the history of SealedBid as a Company.  The Spotlight “Sealedbid M&A Spotlight: 25 Year Anniversary” discusses SealedBid’s formation and how the Company has grown/transformed throughout these past 25+ years.

What is a milestone year without a milestone event…so once again, a big “THANK YOU” to everyone that attended or acknowledged SealedBid’s 25 year anniversary celebration in November!  Despite the not so great weather, we hope you had as great of a time as we did. Below are a few photos that we wanted to share from the event:

Recent SealedBid Successes:

SealedBid has been the intermediary in over 250 successful transactions throughout the past 25+ years!  We have experience with a variety of industries including distribution, manufacturing, technology and service based companies.  Below are some of our recent successful transactions:

2018/2019 Holiday Charity:

Instead of having our typical Holiday Charity Voting Campaign, SealedBid has decided to choose the organization that will receive our 2018 Holiday donation and our support throughout 2019.  SealedBid has chosen to give a donation to one of our favorite charities (and a past Holiday Charity Voting Campaign recipient!), St. Jude Children’s Research Hospital!  Thank you St. Jude Children’s Research Hospital, for all you do, we look forward to supporting you throughout 2019.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

For twenty five years, Minneapolis-based SealedBid Marketing, Inc. (“SealedBid”) has negotiated successful merger and acquisition transactions for its clients.  Since its founding, SealedBid has built a strong reputation in the upper Midwest and beyond as the “go-to” M&A firm for the lower mid-market which is defined as privately held companies with revenues between two million and fifty million dollars.  The SealedBid transaction team has over 50 years of experience providing financial, marketing and advisory services for clients pursuing a sale or growth through acquisition.

SealedBid built its reputation as a boutique firm through:

• Outstanding client service
• Expert advice
• An orderly and methodical transaction process
• Consistently excellent results

SealedBid offers its clients diligent research and discreet marketing paired with hands-on, senior-level attention and the full spectrum of its transaction team’s combined expertise.  The business practice of focusing on a limited number of engagements at any one point, ensures clients have a dedicated claim on its most valuable resource – time.

SealedBid was founded in 1993 by Gerald Clark―“Jerry” to everyone who knows him.  As SealedBid’s Founder and Managing Officer, Jerry leads the transaction team, and is involved in every phase of the transaction process.  His 30-plus years of M&A experience allow SealedBid to offer its clients an organized, pragmatic and ultimately successful sales experience.  Jerry is an expert M&A negotiator, praised by both buyers and sellers for his integrity, his willingness to listen, his disciplined approach to process and his ability to negotiate a win-win scenario even in the most challenging transactions.

Before founding SealedBid 25+ years ago, Jerry was Director of Sales in Minneapolis, Cleveland and Washington, D.C. for the Resolution Trust Corporation, and his successful management of the marketing and sale of two billion dollars in assets helped give him the knowledge and experience that would be the foundation of SealedBid’s success.

When Jerry founded SealedBid, his recent experience at the Resolution Trust made the marketing and sale of distressed companies SealedBid’s early focus.  But as the economy shifted from the recession of the late ‘80s, to the boom of the ‘90s, Jerry embraced the opportunity and quickly added the sale of profitable companies to SealedBid’s services, which is the primary focus today.

It was the first incremental expansion of many for SealedBid.  Jerry explains that at first, SealedBid was a small company―just himself and one office assistant―and he was helping sell companies to small buyers.  “We were dealing with individuals, financial buyers and strategic buyers looking at the companies we were marketing for sale.”

But as time passed, the word started to get out that this M&A company stayed fully involved with the sales process and engaged with clients throughout every phase of the project, working along-side attorneys and CPAs right through final negotiations to a successful conclusion.  Jerry states, “Our reputation was starting to become quite good as far as taking a deal…from pre-transaction to closing with the sellers.”

As word of SealedBid’s expertise and successful results spread, demand for its services grew, and the company expanded the geographical reach.  “We started out…in the Minnesota market, then in southern Minnesota and northern Iowa, and continued to expand,” Jerry says.

SealedBid also expanded in terms of the types of companies that it engaged.  “We sold a plastics company, and…it kind of put us on the map…then we…did another larger…plastics company, and it just opened a lot of networking opportunities in that manufacturing world, with both buyers and sellers,” Jerry explains.

Now, SealedBid’s clients include companies in various industries, not just in the upper Midwest, but across North America.  To maintain the company focus over the last decade, Jerry has worked hard to build a strong transaction team to help meet clients’ needs.  Today’s core team includes Vice President Blake Johnson, Senior Advisor Bill Clark, Financial Analyst Larry Lundgren and Marketing Specialist Isabel Meza with the full team totaling about 10 people across various functions.  The team concept is a crucial element for Jerry and plays to SealedBid’s overall transaction process and success.

Jerry explains, “Over the last several years, our strong team presence…has really given us a reputation in the market as the firm to go to when marketing a company in the lower mid-market.  We strive to provide the same level of expertise, the same process and the same ability to maximize value for clients that don’t attract the big investment banks’ attention.  The crew of Blake, Bill and Isabel have really developed a seamless marketing process for the sell-side and the buy-side that accomplishes this well.”

On the occasion of SealedBid’s 25th anniversary, Bill says, “Consistency is our biggest success. Consistency is…many different things.  It’s…Jerry Clark, as the team captain with teamwork being the cornerstone of what SealedBid is.  It’s the consistency of our process, and the overall success we have brought to our clients for 25+ years.”

Blake adds, “The respect we’ve earned from our peers and transaction professionals throughout the industry speaks volumes to our reputation and quality service.”

As SealedBid celebrates 25 successful years, its founder reiterates his company’s essential philosophy.

“We’re a boutique M&A firm that knows its strengths and enjoys the market niche we serve.  Working with clients to make a transaction successful, typically the largest financial event of their lives, is extremely enjoyable and we’re proud to say we build lasting friendships throughout the process,” Jerry concludes.  “We’re a boutique firm. We want to keep…our personalized touch.”

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If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

Jerry Clark is a man of seeming contradictions – accomplished business professional and contributor, yet nearly a rock star!  On the one hand, Jerry is the one to go to if you want to sell your business.  He’s the founder and managing officer of SealedBid Marketing, Inc. (“SealedBid”), a boutique M&A firm in Minneapolis that’s acquired a reputation for success in the lower mid-market.  SealedBid celebrates its 25th anniversary in 2018, and that kind of longevity provides some insight into the man at the helm.

His colleagues and his clients will tell you that Jerry has a near-magical talent for closing successful M&A transactions.  No one deal is the same and Jerry has a knack for:

• Accomplishing the goals, often differing/conflicting, of each shareholder/stakeholder
• Providing leadership and maximizing value throughout the transaction process
• Completing transactions with added complexity (real estate, distressed assets, strategic/competitive opportunity, crucial IP, health events, etc.)
• And the list goes on…

But Jerry is not just all about deals.  He is also a contributor through his roles as past president of The Minnesota Golf Association, member of the International Business Brokers Association and M&A Source, past president of the Minnesota-Dakotas Certified Commercial Investment Member (CCIM) Chapter and many time speaker/panelist.

Jerry is definitely a left-brain kind of guy: analytical, methodical, logical.

But on the other hand…that career, that life, almost didn’t happen.

That’s because Jerry was also a guitar player in a rock band.  He’s an artist, a musician, a flexible, creative, right-brain kind of guy.  He’s one of the founding members of The Epicureans, a 60s rock band that has been inducted into the Minnesota Rock and Country Hall of Fame.

“We traveled throughout the Midwest,” Jerry recalls, “we played clubs and ballrooms back in those days, a lot of college bars, and then we recorded a song in 1966 that just about made it called ‘Baby Be Mine.’”

In the 60s and 70s, Jerry was on track to build a successful career in the entertainment industry.  He managed many rock bands in the 60s and was a rock concert promoter and bar/ballroom owner in the 70s, rubbing shoulders with nationally-known bands like Dr. Hook, REO Speedwagon, Styx, Cheap Trick, Black Oak Arkansas and Starland Vocal Band to name a few.  For five years, in the 70s, Jerry promoted the Southern Minnesota Rock Spectacular, an outdoor rock concert that drew up to 10,000 people.

For two decades, Jerry was playing, managing and promoting rock ‘n roll, and his lifestyle couldn’t have been farther from the world of business mergers and acquisitions.  He tells the story of his teenage band arriving at a bar to play a gig, only to find that it had been taken over by Hell’s Angels.  The stage was so tiny, the space was so tight, and the neck of his bass was so long, that he couldn’t stop poking a biker in the head with his guitar.

“We were jammed in there…and I kept accidentally bumping this guy,” Jerry explains, “this was a big guy with a spiked helmet, and I said, ‘Sorry man,’ and he said ‘Okay, okay.’  Then I did it again, and I said, ‘Sorry, man.’ And the third time, the guy said, ‘Don’t let that happen again.’  So we were playing with our guitars stuck next to our bodies and pointing straight up to the ceiling.”

He was once robbed by two men in ski masks, but turned the tables with a bold, spur-of-the-moment gambit.  “In the 70s, I had to take the cash bag to the bank deposit box after the bar closed because there were no credit cards…it was all cash,” Jerry recalls.

“They showed that they had guns in their pockets…And I told them, ‘There’s no way I’m giving you this.  I know your name, I know who you are!’  And I said one of the guy’s names, and they looked at each other, and they turned around and ran.  It was probably one of the dumbest moves I ever made in my life,” he laughs, “but I did it.”

Jerry’s success as a rock promoter soon opened the door to a tempting offer that proved to be a turning point in his career.

“I had a chance to go national…to work in the entertainment world in Los Angeles.  My wife (Betty of 50 years in 2017) and I talked about it, and we preferred not to move to L.A., so I made the entrance into selling small businesses.”

Jerry turned away from the world of rock n’ roll and entered the business world.  But he brought a rich and varied life experience with him, and many skills that would prove invaluable to his new line of work: knowledge of contracts, a history of working with a wide variety of people, and most of all, experience negotiating.

“My father died when I was 15,” Jerry explains.  “I was put in a survival mode at 15 because I had to fend for myself. It was…the school of hard knocks, learning how to run a business.  I ran all the operational parts of the band, the bar, the concerts, you name it.  I did the booking, the financing, the taxes, I did everything.

“I was negotiating from the time I was a teenager.  Through my twenties, I was always in the process of negotiating, whether it was booking the band, getting the right price for the band, the longevity of the show they were going to play… I was a one-man business show.

“So I think the negotiation aspects early on, in all phases, whether it was how much you’re going to pay, what bands you’re going to get, working with contracts at an early age…kind of set the framework for when I started to work.”

Jerry says that his life experience of working with all kinds of different people helped him hone the listening skills that are so critical to successful negotiation.  “From dealing with musicians, to people in the food and beverage industry, working with people on the other side of the bar, you might say, to working with the golf association, which is a totally different type of political environment…it’s definitely been advantageous to work through all of these different venues.

That why it’s…good in our business…to really be able to bend but not break in the process.”

When he entered the M&A world, Jerry learned the ropes by working as a broker.  “Working with smaller, main street businesses, I did all kinds of hand holding and scrubbing to create successful transactions – – for 13, 14 years I had a lot of success doing brokerage for a variety of small businesses.”

“And then, after that…I took a contract for the government as a regional sales center director with the Resolution Trust Corporation.  I was given a management role with a team of people overseeing multi-million and mega-million dollar transactions of varieties of types of businesses that were held by the failed savings and loans.”

Jerry honed another important skill while he was with the Resolution Trust: attention to a methodical and orderly transaction process.

“We used a structured transaction process, from pre-engagement to the whole gamut of it.  We had…Gantt charts that would encompass the room. (If) we were going to do this multi-stage sale of assets, whether it was multi-family or single-family, or commercial, we’d have this Gantt chart flowing across this huge room, showing all the different phases of that transaction. So that was my big takeaway…the structured transaction process.”

Jerry founded SealedBid Marketing in 1993 upon the dissolution of the Resolution Trust Corporation.  He was at first focused on the sale of distressed companies, but he quickly embraced the economic boom of the ‘90s to add the sale of profitable companies to SealedBid’s services which is the company’s primary focus today along with providing buy-side services to both strategic and financial buyers.

His company and reputation quickly grew from a mostly non-Metro-based clientele to the current headquarters in Edina to service not only the Minneapolis/St. Paul area but clients all over Minnesota.  The expansion eventually continued to include neighboring states in the upper Midwest, and occasionally clients across North America.

And what was once a company that consisted of Jerry and one assistant has grown into a small but skilled transaction team.  The core team includes Vice President Blake Johnson, Senior Advisor Bill Clark (Jerry’s son), and Marketing Specialist Isabel Meza.  But the full team totals about 10 people across various functions.  The team concept is a crucial element for Jerry and plays to SealedBid’s overall transaction process and success.

Now, on the occasion of the 25th anniversary of SealedBid, Jerry reflects on the satisfaction of using all the skills gleaned from his unlikely career path to bring his client together with the best possible buyer for their company.  “What I most enjoy doing, is getting our team together, figuring out an avenue that we have to move forward with our prospective client, getting that done in the most pragmatic way possible to accomplish their goals,” Jerry says.

“It’s really a good feeling, when you can get everything done with as much of a win-win situation as you can make it,” he adds.  “It’s really a feeling of accomplishment, to get everything done in a fashion that meets their expectations. I like getting to the finality of it.

“I like tying the knot.”

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If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

SealedBid’s Jerry Clark was a featured guest on Dynasty Leadership’s podcast. Todd Eberhardt, Founder of Dynasty Leadership, and Jerry discussed what owners really need to know to sell their business.

Since founding the company in 1993, Jerry, and the SealedBid team, have completed over 300 successful transactions across a wide variety of industries.  The SealedBid team works closely with owners and deal teams to maximize value through succession and exit planning.

On the podcast, Jerry explains SealedBid’s Structured Transaction Process which details the marketing and negotiation phases of a transaction and how an owner can exit successfully.  Additionally, Todd and Jerry discuss individual, financial and strategic buyers and the process of purchasing a company.

To listen to the Podcast, press play on the imbedded link below:

Additional Listening Options

• Download the Podcast directly to your phone or computer
• Access the Podcast on iTunes

Selling your business is something most owners do once.  It could represent a lifetime’s worth of work, so why not get the most out of the opportunity?  SealedBid can help maximize the value of your company when you are ready to sell!

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

Business owners face many unique challenges both in the market place and in succession planning.  SealedBid has provided Mergers and Acquisitions (”M&A”) guidance for over 25 years and has extensive experience maximizing value for our clients.  In special situations, SealedBid offers business owners a unique Accelerated M&A process that allows business owners to exit more quickly than the norm without sacrificing value.

What is an Accelerated Transaction?

An Accelerated Transaction relates to an M&A process tailored to a specific client’s need and is designed to engage prospective acquirers, create competition and complete a transaction within an expedited timeline.

How Does the Accelerated Transaction Differ from a “Standard” Transaction Process?

Besides the obvious shortened timeline, an Accelerated Transaction would likely be viewed as being closer to a true/stringent M&A Auction.  Advisors work to create targeted marketing documents, identify likely prospects and define a strict timeline of events.  With an increased sense of urgency, both sides of the table (seller and buyers) must be responsive and engaged to meet bid deadlines and ultimately finalize negotiations.

In addition to shortening the marketing timeframe, Advisors must collect all relevant documentation and reports in advance and prepare for an expedited due diligence period.  In a standard transaction a buyer may request 90 ± days to complete their review, an Accelerated Transaction may call for the same process to be completed in 30 ± days.

The motivating factor for conducting an Accelerated Transaction is unique for each ownership group. Below are examples of the many outside forces that drive transactions:

Why Choose an Accelerated Transaction?

1. For many entrepreneurs and private business owners, their Company and its assets represent a substantial portion of their wealth and are connected with personal credit guarantees.  A transaction may be necessary to prevent a default and/or call of a delinquent note – – owners stand to receive significantly more value by selling their operating Company as opposed to liquidating assets.

2. Transactions are often motivated by changes in the shareholder group to allow exiting owners to capture “market value” for their interest.  These situations can be triggered by retirement, divorce or simply the need to part ways.

3. In the unfortunate event of an untimely death or illness, estate planning can influence a transaction to meet Estate Planning and probate needs.  In these situations, depending on the impact on the Company, it is often important to replace/install a new leader of the business and stabilize the business.

4. In all market conditions, businesses often encounter opportunities to maximize value within a defined window.  Whether it be capitalizing on specific customer/vendor contracts, leveraging economic changes or taking advantage of specific market forces.

Upside and Downside of an Accelerated Transaction Buyer’s Perspective

What are Some Common Risks of an Accelerated Transaction?

What Type of Companies Really Benefit from an Accelerated Transaction?

Companies that have a strong strategic base of potential acquirers, with either strong regional competition looking to expand, and or strong vertical companies looking to add products/service offerings can benefit from using an Accelerated Transaction.  Also, companies that are located in a desired metropolitan area with strong financial prospective acquirers (primarily individuals in small groups).  Most importantly, a company that decides to choose an Accelerated Transaction needs to have desirable assets and or have a well-known brand name.

SealedBid’s Role in Accelerated Transactions

SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.

Our Transaction Professionals use a team approach and have completed many Accelerated Transactions in the past.  SealedBid uses an extremely Confidential approach in standard transactions and Accelerated Transactions that has led to great success.  Clients can be assured they are working with a strong deal team that can support Accelerated Transactions from pre-marketing to marketing to Due Diligence to closing.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.