Focus
Optimum Transitions by Dillon, Ltd. would be referred to by some as a Boutique Investment Banker Firm or Business Brokers. We prefer the term Business Transitions Advisors or Mergers & Acquisitions Consultants. Either way, we’re focused on helping businesses achieve their goals, including M&A activities. Our target clients have revenue in the $2MM to $200MM range and/or an EBITDA (Earnings) of $0.5MM to $20MM, although we can often help clients outside of this range. We take on an advisory role with our clients to help them achieve their objectives. We shy away from the term “Business Broker” because this term focuses primarily on the transaction. Our focus is on clients who want help achieving their goals, not just someone to confidentially list their business for sale. We have worked with nearly all types and sizes of business, however, we have found particular success in Manufacturing, B2B & B2C Services, B2B & B2C Suppliers, as well as the Technology Industry.
“We start by helping business owners’ clarify their goals. Only then can we help them chart a course to reach those goals.”
~ Drew Siebert, Business Transitions Advisor
Acquire or Sell
Strategic Sale/Purchase
A strategic purchase is completed by an individual or company in a unique position to leverage the company beyond it’s financial value. In M&A math, this is where 1+1 > 2. This may be a simple consolidation/reduction in expenses or more likely, it creates a new market, marketing strategy, or some other synergy with a complementary product or service already offered by the purchasing company. For maximum value, sellers should focus on potential strategic buyers first.
Financial Sale/Purchase
When a business sells primarily based on earnings history and growth rate translated into future earnings expectations, this is a financial purchase. In this scenario, a lender and buyer would generally expect a purchase price that would pay the owner a salary while covering debt service of 4 - 7 year amortization (excluding any real estate). This type of transaction is the most common in the indusry.
Distressed Sale/Purchase
As the name implies, this is the least desirable type of sale for a business, but could be the most desirable type of acquisition. In a distressed sale, typically the business does not generate a large enough profit to cover debt service for the assets (if they were leveraged to a reasonable level). In this scenario, businesses typically sell for close to their liquidation value… which is somewhere between the assets’ fair market value and auction value.
Optimum Transitions by Dillon, Ltd. Transitions Advisors can assist clients in moving a business that might have sold as a Distressed Sale to a Financial Sale or from a Financial Sale to a Strategic Sale. Owners who are willing to wait a few years to sell and put in the time and effort to improve the business are great candidates for increasing the sale price through our Business Lifecycle Enrichment Services.
Merger or Alliance
Merge
When two companies with synergistic client bases both wish to continue forward in business, but see a strategic advantage toward being one company, a merger is a great option. The end result is a single company comprised of the assets, people, client list, and goodwill with the end result being more effective at attaining business goals than either company could be operating independently. Under a merger, equity participation continues by most (if not all) of the original owners of the two independent companies.
Align (Alliance)
An alliance is similar to a merger in that the two companies believe they’re stronger as a result of a formal relationship between them. The difference being, in an alliance, separate entities continue for each of the companies. While equity may change hands as part of the alliance, it is not a requirement to be an alliance. The only requirement is a formally defined agreement between the parties on how they’ll work together to the benefit of each.
Exit
Sell to Outsider
There are several outsiders interested in owning your business. This may include a strategic addition to a business they already own, an investment opportunity with greater return than publicly traded companies offer, or someone who wishes to move from being an employee to being a business owner. Optimum Transitions by Dillon, Ltd. consultants can discretely advertise your business for sale finding the right outside buyer while avoiding jeopardizing the business by vendors, employees, and customers learning of the proposed sale.
Management Buyout
The existing management is likely interested in buying out the ownership interest of one or more of the existing business owners. A sound management team can attract the necessary capital to buy the business even if their financial situation is somewhat limiting. Some business owners elect this option seeing significant benefits from the consistency it offers and rewarding those who helped make the business great.
Employee Work-in Buyout
Somewhat unique to Optimum Transitions by Dillon, Ltd., our consultants can help create a situation where employees/management (new or existing) help increase the value of the businesses. Employees escrowed bonuses can provide the needed down payment to finance the transition of ownership without the need for outside equity investors. This can be independent of those employees’/managers’ previous financial situation. This can result in a better transaction price than if the business were sold to an outside buyer without the enrichment process the employees’/managers’ helped facilitate.
Family Transfer
Business owners may not immediately recognize the importance of a consultant to help with the transfer of their business to the next generation. Far too many businesses fail when passed on to the next generation. A critical component is the transfer of leadership - which has little to do with ownership and more to do with when and how to relinquish control. Furthermore, our advisors will work to help everyone clarify and meet their goals… which sometimes can be difficult for close parties to talk about.
Take Public
For businesses that qualify, going public can be the best way to execute a growth strategy while creating liquidity for shareholders. Our consultants will help qualified companies determine which markets (US or abroad) fit the venture’s financial needs. Utilizing alliances, we can document and complete the process with the owner(s).
Re-capitalization
Different from venture capital and angel investors, private equity groups are constantly in the market for middle market businesses as platforms or add-ons. These private equity groups (PEGs) can invest in a majority or minority position creating liquidity and/or creating growth capital. Ask an Optimum Transitions by Dillon, Ltd. advisor how you can extract 70% of the business value while only selling 30% of the company. We realize that may sound too good to be true, but it can be an option.
Financial
Re-capitalization
Different from venture capital and angel investors, private equity groups are constantly in the market for middle market businesses as platforms or add-ons. These private equity groups (PEGs) can invest in minority position creating liquidity and/or creating growth capital while you retain control. Ask a Dillon, Ltd. advisor how you can extract 70% of the business value while maintaining control by only selling 30% of the company.
Capital Formation / Debt Funding / Equity Funding
Starting or growing a company requires thoughtful planning and capital formation. A Dillon Ltd. consultant can help determine the right combination of debt and equity components.
Components of Debt
Asset-Based Lending
Cash-Flow Lending
Mezzanine Funding
Vendor Funding
Components of Equity
Personal Cash/Assets
Friends & Family
Angel Investors
Venture Capital
Private Equity
Public Equity