2024 West Michigan M&A Guide

A special report for deal makers focused on middle-market growth

PRESIDENT’S LETTER

ACG Western Michigan committed to advancing collective progress

By Kelly Plawinski

As I reflect on my time in West Michigan over the past six years, it’s clear that many of my deepest relationships and now friendships began at one of the many ACG Western Michigan gatherings. In talking with others, I believe the same is true of many West Michigan professionals. The relationships formed at these events are the backbone of our professional community and the catalysts for significant business transactions.

West Michigan boasts a thriving business environment. The members of ACGWM are at the heart of this vibrant scene, bringing unmatched expertise, energy, innovation and deep-rooted relationships.

ACG Western Michigan provides an array of networking opportunities through its annual flagship events, including the ACG Cup and the Outstanding Growth Awards, as well as its more frequent events such as Signature Programming, curated small-group

networking and robust NextGen Programming.

Having joined ACGWM weeks before the pandemic, my first task was helping our signature programming committee navigate those uncharted waters. Thankfully, that’s behind us! I’m honored to now serve as the president of our Western Michigan chapter. Despite the inevitable ebbs and flows of the business climate, ACGWM remains a welcoming platform for nurturing connections and uncovering opportunities. It’s a privilege to contribute to an organization that fosters such active engagement and growth.

In September 2025, Grand Rapids will have the distinct honor of hosting the Annual Great Lakes Capital Connection, a premier event focused on the world of deals. This conference travels among seven ACG Great Lakes Region

cities, bringing together key players in private equity, debt capital and the middle market. This is a golden opportunity to network and exchange insights with more than 1,200 attendees, including 400-plus leading owners, buyers and sellers of middle-market businesses and 800-plus intermediaries and service providers from a national perspective. Mark your calendars for this monumental event. You won’t want to miss it!

If you have yet to attend an ACGWM event, I welcome you to do so. I assure you that you will be greeted with handshakes and introductions. If I’ve learned one thing about WM since moving here, it’s that the people here care deeply about helping others. We hope to see you soon!

As the chief operating officer at Adamy Valuation, Kelly Plawinski brings a wealth of experience and leadership to ACGWM. Feel free to reach out to her at 616-284-3708 or kplawinski@adamyvaluation.com.

ACG is a global organization focused on driving middle-market growth. Its 15,000-plus members include professionals from private equity firms, corporations and lenders that invest in middle-market companies, as well as experts from law, accounting, investment banking and other firms that provide advisory services. For more information, visit acg.org/wmich

The pursuit of growth: Which path is right for your business?

By Brandon Derusha and Ben Soodsma

How has your business grown in recent years? What are your plans for future growth? These are questions any business owner is likely to hear from prospective investors and lenders.

In general, companies have two options when looking to grow. A business can take the organic approach, utilizing internal resources (capital, personnel, processes) to execute a growth plan. Alternatively, the inorganic approach calls for one company acquiring another. The key is determining which one is right for your business.

Acquiring another business

One business acquiring another can result in a powerful combination when the two companies have overlapping strategic initiatives, complementary services or product lines, and the ability to achieve greater economies of scale. In addition to synergies, acquiring another business can provide immediate access to a new segment or market, positioning your business to realize growth and profits from day one. While many companies rely on mergers and acquisitions (M&A) to fuel their growth strategies, the territory comes with a host of considerations:

• Does your team have prior M&A experience, or would you need external advisers to help navigate the process?

• How will you source potential targets? What criteria will you use to narrow the search?

• What is the current state of M&A markets within

your industry? Are potential targets available at reasonable valuation multiples?

• Is the target a cultural fit with your organization? Will you be able to retain key individuals?

Building it yourself

Like building a new home versus buying an existing one, using in-house resources to develop a new service or product line often gives business owners more control of scope, timeline and costs. While building out a new line of business is typically less costly than acquiring one, speed to market is a drawback. Factors to evaluate before pursuing a significant organic investment include:

• Do you currently have unfulfilled demand within your customer base?

• Will the expansion require additional labor resources? Or will you be able to manage with your existing infrastructure?

• Is your supplier base equipped to support your growth?

• How will this investment strengthen your company’s overall value proposition?

Analytical considerations

Once you’ve evaluated potential growth options, it’s prudent to evaluate the return delivered by the intended strategy and to consider the returns of any competing options. Required inputs for this analysis may include:

• The purchase price for an acquisition or the production costs associated with organic growth.

• Capital structure. Performing a dry powder analysis can help show a company’s potential funding sources, including the ability to obtain bank financing.

• Financial projections. Based on your best assumptions, determine whether the strategy exceeds your firm’s weighted average cost of capital to ensure it is an accretive use of capital.

With a strong business case, analytical approach and proper resource allocation, your business can be on a path to achieving sustainable growth.

Brandon Derusha, director, and Ben Soodsma, director, BMO Commercial Bank are based in the Grand Rapids office located at 37 Ottawa Ave. NW, Suite 650. Contact Brandon at 616-901-1571 or brandon.derusha@bmo.com. Contact Ben at 616-446-6962 or benjamin1.soodsma@bmo.com. For more information, visit commercial.bmo.com.

DERUSHA

SOODSMA

Business growth, sale or transition – you have options

By Matthew Miller and Rajesh

Myriad options and strategic considerations mark the journey of growing, selling or transitioning a business. Each avenue offers business owners and shareholders unique opportunities to chart their course toward success, from acquisitions and mergers to divestitures, financing and private equity partnerships. Following are a few of the diverse pathways to navigate business evolution dynamics.

Catalyzing growth and expansion

Acquisitions and mergers are powerful strategies for businesses seeking to accelerate growth and expand their market footprint. Strategic acquisitions allow companies to secure new technologies, customers, geographies, talent and scale, enhancing competitive advantage and fueling growth. By combining complementary strengths and resources, entities can unlock value, streamline operations and create a more vital, resilient organization.

Whether pursuing acquisitions or mergers, the foundation must be built on a well-thought-out strategy, thorough due diligence, integration planning and a realistic market-based assessment of deal value, return and synergy. All are essential to ensure success and maximize the investment return.

Streamlining operations

In certain instances, businesses may divest non-core assets or business units to streamline operations, realize value and sharpen their strategic focus. Strategic carve-outs enable companies to reallocate resources, reduce debt, enhance profitability

and concentrate on core competencies and growth opportunities.

Divestiture strategies can take various forms, including selling subsidiaries, spin-offs or asset sales. By divesting underperforming or nonstrategic assets, businesses can optimize capital structure, improve financial performance and drive shareholder value.

Fueling growth and innovation

Access to capital is crucial for businesses at every stage of their lifecycle, whether seeking acquisition funding, internal expansion initiatives, research and development investments or navigating challenging economic conditions. Today’s financial markets offer more financing options than ever. From traditional bank loans and lines of credit to private credit lenders, mezzanine lenders and private equity (majority/ minority) investors, driving a managed process tailored to an organization’s needs can yield broader solutions than many realize.

Equity financing can provide businesses with financial resources, strategic guidance, industry expertise and network access. These partnerships can catalyze growth, accelerate market penetration and present new opportunities for innovation and expansion.

Partnering for strategic growth and value creation

Private equity plays an increasingly significant role in the corporate landscape, providing capital, expertise, and strategic guidance to businesses across industries and stages of development. This is driving consolidation and competition across industries. Through equity investments, leveraged buyouts and growth capital infusions, PE partners collaborate with management teams to drive operational improvements, execute strategic growth and create value.

PE partnerships offer businesses access to additional resources, industry insights and operational expertise, enabling them to pursue growth opportunities, optimize performance and achieve their full potential. They also help organizations increase risk profile to support bolder actions while increasing discipline in quickly addressing underperformance. The result is often more

successful growth and expansion and increased investment in the business. PE transactions also help address other goals, including ownership transitions, succession planning and liquidity (partial or complete) events for business owners.

Embracing opportunity and choice

The journey of growing, selling or transitioning a business characterizes a wealth of options and opportunities. Whether through acquisitions, mergers, divestitures, financing or private equity partnerships, business owners can chart their course, pursue strategic objectives and unlock value.

As you navigate the complexities of business evolution, evaluate options carefully, align decisions with long-term goals and leverage the expertise of trusted advisers and partners. By embracing opportunity and choice, business owners can navigate corporate transformation with confidence, resilience and a strategic mindset—ultimately realizing their vision of success and sustainability.

Matthew Miller, Cascade Partners managing director, has 30-plus years of expertise in finance, M&A and business development.

Rajesh Kothari, Cascade Partners founder and managing director, has 30 years of expertise as an investor, financial adviser and entrepreneur.

To get in touch with us, visit media.cascade-partners.com/43SHe37.

Kothari

MILLER

KOTHARI

Investment bankers an asset Key tips for sell-side M&A

By Mark Streekstra

Selling your business is a momentous decision, and navigating the complexities of the process can be daunting. It’s tempting for business owners to “go it alone,” but investment bankers can play a critical role in maximizing the value you receive from your business. By leveraging their expertise in M&A, marketing and negotiation, investment bankers streamline the process, help secure the best possible price and ensure a smooth transaction.

1. Providing M&A expertise

Selling a business is a full-time job, and there’s no substitute for experience. Investment bankers live and breathe M&A every day, and that experience is critical throughout the sale process. This includes developing a sales strategy, preparing marketing materials, navigating due diligence and negotiating terms of the deal.

2. Maximizing value

Valuing a business is complex. Investment bankers excel at identifying value drivers, whether they be strong brand recognition, recurring revenue streams or a dominant market position. They strategically position these strengths to help maximize buyer interest and the price they’re willing to pay. Investment bankers can pinpoint potential weaknesses that might suppress valuation and develop strategies to mitigate their impact.

3. Creating competition In any negotiation, buyers naturally aim for the lowest price. So how can a seller be sure they’re getting the best possible deal? Investment bankers leverage their deep industry connections and negotiation

expertise to attract a pool of the best buyers. This creates a competitive environment where buyers are incentivized to put their best foot forward. Sellers then get a clear picture of their business’s true market value and maximize their chances of securing the highest possible price.

4. Limiting transaction burden

Managing the sale of a business can be an extremely time-consuming and onerous process. An investment banker can take on many of these responsibilities, freeing up the owner and management team’s time to focus on running the company. Investment bankers also serve as the primary negotiator in the transaction, which allows seller and buyer to maintain a strong relationship through and after closing the deal.

By partnering with an experienced investment banker, you gain a trusted adviser with the industry knowledge and negotiation skills to achieve your financial goals. Investment bankers free you to focus on your core business while ensuring a competitive bidding process that helps secure the best offer for your company. The result? A successful transaction that leaves you confident you’ve made the most of this pivotal moment in your company’s journey.

Mark Streekstra, partner and managing director, is known for his client-centric results in investment banking advisory services. He offers more than 16 years of versatile financial expertise spanning multiple sectors.

By Justin Pinto

Many business owners are overwhelmed by the prospect of selling their company and are unclear about what it takes to do so successfully. This article navigates the critical steps needed to properly prepare and execute an efficient process aimed at maximizing value for the business.

1. Selecting the right advisers

The groundwork for a successful sale begins well before engaging potential buyers. Assembling a team of trusted advisers experienced in M&A can make a significant difference in achieving goals. Investment bankers, M&A attorneys, accountants and tax advisers, and wealth managers will provide invaluable guidance throughout the process and help ensure the business is properly prepared for a sale.

2. Pre-market preparation

In a well-run M&A process, internal preparation is key. This involves financial and legal housekeeping, crafting a narrative that showcases your company’s value and growth potential, creating a buyers list, and addressing weaknesses in the business that could negatively impact valuation, much of which can be done with the help of investment bankers. Proactively compiling necessary books and records of the business required for due diligence is also critical to drive a smooth due diligence process.

3. Marketing and buyer discussions

Now it’s time to ignite the bidding war. Working alongside investment bankers, sellers reach out to identified buyers, highlighting the company’s value and future growth potential. The goal is to generate excitement amongst a group of buyers, thus creating a competitive dynamic and driving up

the deal price. It also provides the opportunity for sellers to interview buyers to determine cultural and operational fit before selecting a final party.

4. Buyer selection, due diligence and closing

The culmination of buyer discussions arrives with a call for final offers, with investment bankers guiding interested parties in submitting their best proposals, outlining both price and key deal terms. Leveraging the competitive environment that’s been created by the process can also be critical to securing the most favorable offers at this time. Once the final buyer has been selected, a letter of intent (LOI) formalizes the agreement to proceed with due diligence. Here, buyers meticulously examine the company’s financial and legal records, while legal teams work concurrently to draft and negotiate the final sale documents. This two-pronged approach streamlines the process, paving the way for a smooth and efficient closing. By understanding these key steps, and the importance of expert guidance, sellers can approach the sell-side M&A process with confidence, maximizing chances of a successful exit from the business.

Justin Pinto, a vice president at Charter Capital Partners, is responsible for managing and executing Charter’s M&A and capital raise engagements, as well as providing consulting services to our clients. For more information, visit chartercapitalpartners.com.

STREEKSTRA PINTO

Is this the right time to sell? M&A wisdom

By Cristian Anastasiu

If you are a business owner, you probably receive several solicitations a week from strategic or financial buyers interested in acquiring your business, and you will ask: Is this the right time to sell my business? Instinctively, business owners first think about the price they would fetch and if that matches their goals. But before getting to a price and embarking on a lengthy, distractive and exhausting M&A process, a business owner should first revisit their personal goals by answering a set of questions:

• Are you still enjoying what you are doing?

• Did your role and the job requirements change?

• Did your skills evolve and scale with the growth of the company, or have you become a barrier to growth?

• Have you become more conservative when it comes to reinvesting and growing the business?

• If there are two or more partners, are you starting to have divergent goals?

• Is there something else you would rather do? Start another business? Teach? Travel? Retire?

• Are there any significant family or health aspects? Then they can turn their attention to the financial goal. The purchase price for the company will be determined mainly as a combination of three factors:

• Internal metrics: EBIDTA, adjustments, revenue, profitability, growth rates, recurring revenues, renewal rates, employee certifications, customer

base and concentration, scalability, quality and depth of the management team and competitive advantage.

• Fit with the buyer: Who will the actual buyer end up being? Each buyer will value different elements of the company differently. What one given buyer might consider a weakness could represent a great synergy for another. Does a given buyer value more size, growth or profitability? What is the seller bringing to the buyer (new technologies, territory, customers). And most importantly, what is the buyer bringing to the transaction? A buyer’s appetite for a given acquisition will increase with their perceived ability to impact the seller’s business in a very positive way.

• External metrics: The state of the market, the level of consolidation in the industry, etc.

One single change in any of these factors can result in a significant change in price. Entrepreneurs can control their personal goals, while outside factors are not controllable, especially since the sale process itself can take nine to 12 months during which a lot can change. The best timing for satisfying and successful transactions is when personal and financial goals intersect with the outside factors.

Let’s talk about the right time to sell your business. Email ca@excendio.com.

By Cristian Anastasiu

One of my favorite courses in business school was Business Communications. One of the assignments was to summarize a 60- to 70-page business case, initially in a few sentences and ultimately in a few words. Thus, it is no surprise that throughout my 20-plus years in M&A, I came to appreciate adages that capture so much wisdom in just a few words. Here are my favorites:

• You can set the price if I set the terms. The message here is that an M&A transaction has multiple components, not just the price. There are many parts of a deal that must be considered holistically: cash at closing, earnout, seller note, adjustments to EBITDA, asset versus stock transaction, working capital, escrow, covenants and many other terms that are addressed in a purchase agreement. The approach a seller should use is to negotiate holistically and not piecemeal while prioritizing their goals.

• Would you buy it for $1?

The late Len Fassler, founder of CORE BTS, architect of several successful M&A consolidation plays and a past client, used to ask this very simple question when analyzing a potential acquisition: “Would you buy it for $1?” Reflecting on this question helped him focus on the fit, synergies and value creation rather than the price of the company he was considering buying, without getting carried away by the deal structure too early.

• Every good deal has to die three times before it closes. This adage captures the complexity of M&A deals and the ups and downs the parties often navigate

before closing. That is why building trust early on in a deal is so critical. Surviving several “deaths” strengthens the relationship and increases the deal’s likelihood of success. Be flexible and focus on your goals. Never say never in deal-making.

An M&A transaction has multiple components, not just the price.

• Bad news first.

This advice to sellers might contradict the widely accepted “You never get a second chance to make a first impression.” But in M&A, it is important to make the right impression, set the right expectations and avoid opening the door for a buyer to lower the offer when something negative is being disclosed later in the process — something that the buyer perceives as negative, even if the seller does not.

• Time kills deals.

I have found this to be most true in M&A. Every M&A deal has its own pace, but losing momentum will open the door for mistrust to build, the parties to second-guess the reason for the slowdown, to explore alternatives, lose focus, interest, and disengage.

Cristian Anastasiu is Excendio’s founder and managing partner. Prior to his 20-year M&A career, he was CEO of a company acquired by Infor and held sales and management roles, including in M&A, at Cisco. Learn more about us at excendio.com.

For over 20 years, we have advised business owners and closed deals in Grand Rapids, 28 States and 14 countries worldwide.

We were founders, business owners, CEOs and sold and bought businesses before advising our clients on selling theirs.

For Entrepreneurs – By Entrepreneurs

“Cristian Anastasiu and his team were by our side every step of the journey, with advice, direction, and friendship. Their knowledge of the technology market is exceptional. We made a great decision when we selected who to represent us in the sale of our company.”

JERRY ENGLE Founder, Computer Products & Resources

ANASTASIU

Understanding working capital in M&A transactions

By Jeff Osment

Working capital is a critical, yet frequently misunderstood component of M&A transactions. Far from a simple afterthought, it can have a significant impact on the purchase price and successful operation of a target company after closing. By having a firm grasp on working capital and its role in the transaction process, buyers and sellers can reduce the risk of any post-closing disputes or litigation and better position themselves for a successful transaction. What is working capital?

In its simplest form, working capital is the difference between a company’s current assets and liabilities. In most M&A transactions, the buyer will acquire a target company on a cash-free, debt-free basis. Net working capital, in a cash-free / debt-free transaction, is the result of excluding cash or debt from working capital.

Why it matters and how it fits into an M&A transaction

Net working capital serves as a key indicator of a business’s financial health, representing its ability to meet its short-term obligations and fund ongoing operations. In most M&A deals, it’s included in the sale as part of the assets or equity being transferred

with what they assumed in their valuation of the target company and sufficient to continue operations after closing. Anything less would require the buyer to inject additional capital into the business, and effectively raise the purchase price.

To ensure a seamless transition and avoid the need for any post-closing capital injections, buyers will typically require a seller to maintain a mutually agreed-upon level of net working capital through closing, often referred to as the net working capital target or “peg.”

After closing, any deviation from the net working capital target is reconciled with a dollar-for-dollar adjustment to the purchase price, commonly referred to as a “true-up.” If net working capital is lower than the target amount, the seller will pay the buyer the difference, and vice versa if net working capital is higher than the target.

Far from a simple afterthought, working capital can have a significant impact on the purchase price and successful operation of a target company after closing.

to the buyer at closing. As such, buyers will want to ensure they receive a “normalized” level of net working capital, or a level that is both consistent

Unsurprisingly, the net working capital target is one of the most highly negotiated aspects of M&A transactions. It’s imperative that buyers and sellers have a firm grasp on this concept so they can negotiate and set a target that best reflects the true working capital needs of the business. To determine a target, the parties will conduct a net working capital analysis during the due diligence process. From there, the parties determine what items to include or exclude in calculating net working capital. After agreeing upon a calculation methodology, the parties will typically set a target based on an average of net working capital over a trailing 12-month period.

In nearly all M&A deals, the net working capital

target and true-up mechanism are included in the purchase agreement. Apart from ensuring the target company is left with sufficient operational liquidity, including these items in the purchase agreement protects buyers from any manipulation of net working capital by sellers, and sellers if they inadvertently deliver more working capital than expected. Marking sure net working capital is clearly defined in the purchase agreement and properly developing a target can help ensure a smooth transaction and reduce the risk of any post-closing

The growth of Michigan is at the core of our M+A practice.

disputes or ligation. Ultimately, buyers and sellers who take the time to understand these concepts can better position themselves for post-closing success.

Jeff Osment is an attorney at law at Miller Johnson counseling on governance, finance and corporate matters for public and privately-held businesses in Michigan. For more information, visit millerjohnson.com.

2024 ACG Western Michigan Board of Directors

Chloe Benzer | Crowe, LLP | Treasurer

Elisa Berger | Charter Capital Partners

Brandon Derusha | BMO

Jacob Dunlop | Rhoades McKee PC

Denise Drost | Connection Management | Executive Director

Jacob Helwick | Adamy Valuation

Heather Hoezee | Crowe, LLP

Doug Holtrop | Mercantile Bank

Dustin Jackson | Miller Johnson

Eric Kamstra | Auxo Investment Partners | Vice President

David Kinsman | Huntington Bank

Trevor Mason | Barnes & Thornburg LLP

Greg McCormick | The BeC Partnership, LLC

Kelly Plawinski | Adamy Valuation | President

Todd Tjoelker | Amazon Web Services

Jeff Weir | BDO

Erika Weiss | Waseyabek Development Company

OSMENT

Setting the stage: the M&A letter of intent

By Rhoades McKee’s M&A Team

In the lifecycle of an M&A deal, the letter of intent — or LOI — takes center stage once a buyer and seller reach an agreement on key deal terms. The LOI typically addresses such key deal terms as deal structure (asset or equity sale), purchase price amount and payment (cash, seller financing, earnout, rollover equity, etc.), non-compete term, real estate (lease or sell), the seller’s post-closing role (consultant, employee, etc.), and timing (60 days to close, 90 days to close, etc.). In setting the key deal terms, the LOI is essentially a road map for the due diligence and drafting needed to close the transaction. Following are some LOI tips we share with clients:

Tips for both parties:

• To avoid an LOI being interpreted as a binding agreement, the LOI should state that it is a nonbinding understanding of the parties’ discussions. It is critical that commercial terms remain nonbinding and that neither party is obligated to enter the transaction. The goal is to capture the terms that have been agreed upon to date and set the stage for the completion of due diligence and drafting.

• Despite its non-binding nature, certain LOI terms should be binding, including:

Exclusivity

Confidentiality

Expenses

The non-binding nature of all other provisions.

• While key deal terms are typically non-binding in the LOI, both parties should be certain they’re happy with them because, unless a good reason exists, renegotiation of terms set in the LOI is generally frowned upon.

Tips for buyers:

• Make sure to include a binding exclusivity period during which the seller is dealing with only you and

not entertaining other offers. This period should be long enough to cover your due diligence efforts and, depending on the size of the business, is typically 60 to 90 days.

• Similarly, buyers should push for a binding due diligence provision that requires seller to give the buyer and its advisers access to legal, financial and operational information needed to complete due diligence.

Tips for sellers:

• To maintain confidentiality, sellers should negotiate for a binding provision requiring the buyer to obtain the seller’s consent before contacting the seller’s employees, customers or vendors, or visiting the seller’s facilities.

• If an LOI includes a purchase price allocation and/or a net working capital target or formula, the seller’s CPA should review to confirm that the allocation, target and/or formula are appropriate.

• For sellers that receive proposed LOIs from multiple buyers, require all LOIs to address the same terms, which allows a seller to compare apples to apples when considering the LOIs.

Having an experienced M&A attorney review the LOI before it is executed can help prevent headaches down the road by confirming that key terms are properly addressed. If you have any questions about LOIs or any component of an M&A deal, Rhoades McKee’s M&A Team is here to help.

SPONSORED CONTENT PARTNERS

ABOUT THIS SECTION

This section was produced by Crain’s Content Studio, the marketing storytelling division of Crain’s Grand Rapids Business, in collaboration with ACG Western Michigan. For questions about this project or to participate in the future, please contact Crain’s Grand Rapids Business Advertising and Events Sales Director Jill May at jill.may@crain.com.

and share an interactive version of this report at CrainsGrandRapids.com

Our mergers and acquisitions team takes a holistic approach to understanding your business and tailoring a strategy to position you for success.