Buy Side Assignments Continue to Increase

Buy side clients include  manufacturers, service companies, distributors, etc., looking to acquire companies to expand into new locations or expand their products or services. One manufacturer had been looking on its own for over three years without success to acquire another manufacturer that complemented their existing business. Amvest located 8 companies for them to choose from. A large insurance agency retained Amvest to locate other agencies for their expansion program. The insurance agency business was consolidating and this agency wanted to beat the competition to acquire the best agencies. Another reason was that it would be almost impossible for them to contact competitors directly. Amvest presented 6 agencies, and they acquired two of them.

In addition to strategic buyers, we have also been retained by investment groups to find specific add-on acquisitions. Their reasoning was to speed up the acquisition process for portfolio companies so they could enhance their primary portfolio company to meet their exit timing.

Competition for middle market companies is increasing. As more and more companies focus on their core business they are looking for more specific types of companies, and as there are fewer big deals, more investment groups are looking to buy at the lower end of the middle market.

Many buyers have found it difficult to retain a firm to search out and represent them in making acquisitions. The insurance agency contacted several firms over a period of 9 months. They found only one willing to represent them in locating acquisition candidates, and that firm wanted a $50,000 up front fee.

There are many advantages to retaining a merger and acquisition firm to search out and represent the buyer. It is difficult, if not impossible, for a strategic buyer to approach a competitor. Often if a company knew who the buyer was before a price was agreed upon, the price might be inflated. Companies in the same industry don’t want their competitors to know they are for sale. In many cases, the potential buyer doesn’t know how to conduct the search or negotiate an acquisition. We have found that with a third party involved, the seller will open up much more than with the buyer themselves. We are often able to negotiate a lower price and with more favorable terms. We also know the best way to approach possible sellers even before they know they are sellers.

Our program is simple. We charge a retainer with a success fee upon closing, work with the client to determine the exact acquisition criteria, and then begin the search and fine-tune the criteria as we review potential acquisition candidates.

Our fee structure is based on the buyer agreeing to pay our standard contingent fee upon a successful acquisition. Buyers once had a hang-up about paying the intermediary's fee; however, that seems to have taken a big turnabout. Buyers now realize they are really paying the intermediary's fees anyway, so they may as well get the benefit of a buyer's representative.

Amvest associates have been representing buyers for over two decades.

Acquisitions & Acquisition Searches