This is the main driving force behind the success of the industry as a leader in the global economy. However, as organizations expand, it is amidst the turmoil and uncertainty of political factors such as trade agreements and tariffs. It is this that seems to be the primary compulsion for most of the merger and acquisition activity. 

Despite the potential threats posed by the politics of trade, many businesses in this area demonstrate tremendous growth metrics, which pitch them as viable targets for acquisitions or mergers. In that sense, 2019 could be one of the most advantageous ears to sell or purchase a company in the manufacturing industry. 

Manufacturing Market Opportunities 

One of the most advantageous factors for companies in the manufacturing industry is the critical nature of the work done, which has fostered continued economic growth. Over the past few years, the industry has seemed to thrive, recovering from the recession of the early 2000s and is likely to surpass growth expectations for the second year in a row. 

Additionally, many businesses in this sector have spent the past few years identifying opportunities to implement technology that will increase production yields. Manufacturers have multiple points across their entire organizations that lend themselves to technological advancements. 

For product innovation and design, three-dimensional prototyping can be integrated. Cognitive technologies, such as artificial intelligence, can be applied to enhance the customer life cycle by creating exceptional experiences which foster continued growth. Engaging automation tactics during the manufacturing process, like using robotic arms on production lines, can increase outputs while implementing automation in other parts of the business, such as the finance office, can shorten the length of time receivables are outstanding and improve cash flow. Positively impacting these business metrics prime the business for a transaction. 

Finally, coming out of 2018, the merger and acquisition activity not only increased, but the average deal size grew as well compared to what we saw in 2017. This seems to have positioned the industry for an active 2019, driven by an increasing focus of U.S. companies to expand their geographic presence and product portfolios. 

Environmental Services Market Threats

However, the growth of the past year was also tarnished by tariff activity and negotiations between the United States and China, two of the most dominant players in the global manufacturing industry. The uncertainty began when the U.S. introduced tariffs on imported steel and aluminum which kicked off a volley of trade restrictions between the two nations. The situation creates several risks for those operating within the industry and leaves many questions regarding the impact such regulations will have on profit margins as the price of raw materials remains in flux. 

Throughout the turmoil of trade restrictions, we have also seen talent retention among top executives becoming an issue. The job vacancies have been growing at double-digit rates beginning in 2017 and are poised to surpass the record high seen in 2001. 

The manufacturing industry also faces a talent shortage of skilled workers, which could significantly impede the rapid growth and regeneration we have seen over the past few years. Without a workforce that has the right skill set, manufacturers will not be able to keep up with growing demand, will be unable to respond to new market opportunities, and will fail to pursue innovations that would continue to propel the industry’s growth. 

How The Hatteras Group Can Help

The Hatteras Group is a collaborative team of professional intermediaries and advisors that guides business owners and entrepreneurs as they navigate the complex process of mergers or acquisitions in the manufacturing industry. Generally, we work with those companies whose annual revenues are $5MM to $100MM. 

If you are trying to value your business in an effort to sell it, we can help you audit the health of your company with an advanced 10-point evaluation checklist to determine if there are any issues that could potentially derail a sale in the future. Contact us today for more information!

The post Manufacturing Industry: 2019 M&A Outlook appeared first on Hatteras Group.

This shift in focus is driving an increasing presence of environmental service subsectors. However, as the industry expands, it is simultaneously consolidating. Larger businesses are investing in the acquisition of niche companies who offer services that can help to round out their existing offerings.

Businesses in this sector tend to exhibit some key criteria that investors find attractive including high barriers to entry, demonstrated track records of organic and acquisitive growth, and a limited number of established regional and national organizations. For these reasons, 2019 could be the most advantageous year yet to sell or acquire a company in the environmental services industry.

Environmental Services Market Advantages

Perhaps the most beneficial element of the environmental services industry is the essential nature of the services provided. From waste disposal services to compliance and regulation training, this relatively small industry will continue to grow as technologies develop and new products come to market both for consumers as well as manufacturers.

Combined with the limited number of players in the game, this could help explain why there has been an explosive uptick in capital markets and private equity investment across a number of environmental services subsectors. As a result, the industry is prime for another wave of consolidation in the coming months and years as regional organizations look to combine in an effort to scale their services to a national level. In fact, this level of consolidation has already begun in certain subsections of the industry including industrial cleaning services and the wastewater space.

Environmental Services Market Challenges

However, the nature of these industries can be fairly technical and unique which leaves many employers with the challenge of not only finding employees capable of performing those tasks but also keeping them. As a result, many firms will need to become more creative in their talent acquisition tactics and proactive in keeping their existing employees happy as they vie for the attention of a limited pool of potential candidates.

One particularly effective way to find potential employees is to partner with local universities and trade schools with programs relevant to the services you offer. Developing and fostering relationships with program administrators can help you connect with talented students that might not be on your competitor’s radar yet.

Similarly, you may consider creating your own employee training initiatives and programs to help provide on-the-job training for new graduates to learn the business as well as for existing employees to further their skill set. While this typically requires a significant upfront investment on your part, your employees will recognize that you care about their future.

In addition to talent considerations, many environmental service firms may be too niche to thrive on their own. While this is great news for a larger company looking to acquire a smaller one, it is a challenge for that second organization. A lack of diversity in the services offered could impact the valuation of your company as standard business metrics may not indicate the true worth of your company. Investing in some new revenue streams prior to selling could help you achieve positive outcomes that would directly increase your negotiating power when the time is right.

How The Hatteras Group Can Help

The Hatteras Group is a collaborative team of professional intermediaries and advisors that guides business owners and entrepreneurs as they navigate the complex process of mergers or acquisitions in the environmental services industry. Generally, we work with those companies whose annual revenues are $5MM to $100MM.

If you are trying to value your business in an effort to sell it, we can help you audit the health of your company with an advanced 10-point evaluation checklist to determine if there are any issues that could potentially derail a sale in the future. Contact us today for more information!

The post Environmental Services 2019 M&A Industry Outlook appeared first on Hatteras Group.

Step 1: Prepare to Exit  

Waiting for an unexpected factor to force your hand into selling will put you at an extreme disadvantage when it comes to pricing. Illness, lack of a succession plan, or the arrival of a competitive threat could all impact your ability to sell at the price you deserve. So plan your exit strategy way before you think you need to. Having all of the following items addressed will help you be prepared for anything.

Step 2: Determine the Value  

There are a variety of methods you can use to calculate the current value of your business. Each has its own advantages and challenges, with more accurate models becoming increasingly more complex to calculate on your own. This is why using a qualified valuation professional may be your best option if you are seriously considering selling your company. Such individuals will be able to provide you with the most accurate baseline possible.

Step 3: Clean Up Financials  

Keeping up with the hygiene of your financial records with so many other demands on your time can seem next to impossible. But as you approach a potential sale, cleaning up your financials can help to drastically improve the outcome as any possible buyer will want full transparency during their due diligence process. As an owner, you can avoid many red flags by working with an accountant to clean up your financial statements and business tax returns for at least the past three years.

Step 4: Boost Your Sales  

Buyers are most interested in successful businesses, not struggling ones. So if your sales are declining, it is not the time to sell your company. And if a single customer accounts for 20% or more of your revenue, you will want to diversify your customer base prior to a sale as that kind of dependence will make a buyer nervous. Try to boost your sales with increased marketing and promotions so you can present buyers with a better, more valuable reason to make the purchase.

Step 5: Find a Broker  

Selling a business is complex so enlisting the help of a broker can help you get the best offer. Depending on the size of your business, a broker will typically charge a commission of 10% or more. But for this, they will handle the valuation of your company, prepare a prospectus on your business, tap into a large network to locate buyers and list with suitable marketplaces, and may even help guide buyers to financing resources.

Step 6: Prequalify All Buyers  

One of the most common reasons the sale of a company falls through is because buyers are unable to secure the appropriate funding for the purchase. Prequalifying your buyers helps to eliminate some of this risk. Due diligence is not just for the buyer, and as a seller, you should complete your own evaluation of the individual or company making the purchase. Some banks will even require the seller to provide a portion of financing for the transaction to help ensure your continued interest in the success of the business.

Step 7: Finalize the Contracts  

As you can imagine, there are a number of legal considerations and documents that are required to finalize the sale of a company. Among the most critical to close the deal is the asset purchase agreement, the contract for the sale, and the purchase agreement for all business assets, including both physical and intellectual property. All this paperwork will need to be reviewed carefully as they usually consist of non-compete agreements, asset listings, and may even stipulate what you, as the prior owner, can do next and when.

Hatteras Group Can Help

The Hatteras Group is a collaborative team of professional intermediaries and advisors that guide business owners and entrepreneurs as they navigate the complex process of mergers or acquisitions across a variety of industries. Generally, we work with those companies whose annual revenues are $5MM to $100MM.

If you are trying to sell your business, we can help you determine the value and audit the health of your company with an advanced 10-point evaluation checklist to evaluate if there are any issues that could potentially derail a sale. Our team can also provide advice on how to address any concerns that we find. Contact us today for more information.

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