Ready for Sale, Opportunity Seized
An exit for Hayes Industries owner Norris Hayes was a long time in the making.
A Doeren Mayhew CPA and Advisors client for some 30 years, as the firm’s investment banking group, we assisted providing sell-side advisory services to the business to prepare itself for sale several years before going to market.
Right away, the private-limited auction process proved successful as not one, but three, offers were submitted by potential buyers. Suitors included private equity firms and strategic buyers. The business ultimately sold to Actuant Corporation (NYSE: ATU).
Persistent Preparation Leads to Pay Day
Throughout the long client relationship, a number of interested parties approached Norris about acquiring his company. Each time, he enlisted the counsel and support of Doeren Mayhew, furthering the company’s readiness for sale.
“It also helped that Hayes had a very strong CFO – someone who had been with our affiliated CPA firm before transitioning to the client’s in-house management team,” explained Doeren Mayhew Capital Advisors’ Vice President Will Rosell. “While many firms in our industry fear their professionals going to work for clients, we find placing highly experienced personnel inside the client’s business helps improve the company, brings more opportunities to collaborate and ultimately positions them toward their exit goals, which we help facilitate.”
Most importantly, though, was the quality of the business Norris Hayes had built, including development of patented products that added significant value to the business during a period of regulatory driven changes in the industry.
Market timing played a factor as well, as the general M&A market was robust. With significant capital raised, investors were on the hunt for quality deals in the middle market, and Hayes Industries was a standout opportunity.
Beyond the patented product lines, the business had been built to support a successful exit. Annual revenue averaging $35 million consistently producing $4 million in earnings, future growth potential in target markets and deep bench strength in a well-established management team made buyers all the more interested.
“The dynamics during a sale can be incredibly taxing on the owners’ emotions,” explained Rosell. “Owners receive many questions from potential buyers and are asked to produce reporting they’ve never assembled before, all while trying to continue growing and ensuring management is working as a team that will remain in place. It’s a lot for anyone, but more intense when a founder or next-generation owner is letting go of an organization he or she built with the help of family and a trusted team. Yes, it’s business, but it’s personal at the same time.”
While the lead up to an eventual sale spanned years, the closing occurred in just 45 days after the letter of intent was signed.
Life After the Sale
Still a client of Doeren Mayhew’s CPA firm, Norris stayed the required 18 months stipulated in his earn-out, remains the business’ landlord and, ever the entrepreneur, is contemplating plans to further develop facilities on the property.
For owners with aspirations to realize the value of the asset they’ve built, Rosell advises, “If you want to sell, get with the firm you want to sell you now. Ideally, a business should be working an investment banker at least one to two years before their desired exit. Find the best and look for an M&A advisor that has both sides of the house – accounting and tax planning to get you prepared and an investment banking team to maximize your deal. Bringing your advisors to the table after several key steps have already taken place may not yield you the best possible exit.”
Doeren Mayhew Capital Advisors’ Managing Director Tim Moore and Vice President Will Rosell, supported by a team of analysts, advised the client. The team of investment bankers leveraged the due diligence work of Doeren Mayhew, led by Houston Managing Shareholder Chris Masters whose intimate knowledge of the client helped create a smooth and seamless path to closing.