To Tell the Truth Sell-Side M&A Versus Estate Planning

We are constantly hearing that a family business owner is “going through an estate planning” initiative to understand their potential value. In many cases, the value created from a competitive M&A process is a better use of time.

The professional industry supporting estate planning has a good reputation. It has a comprehensive network of knowledgeable advisors with strong academic backgrounds, subject matter expertise and it is an area that is heavily regulated. In a broad sense, these estate planning professionals include accounting, financial advisors, commercial bankers, real estate, community stewards, wealth planners and legal advisors. Please note, the author has great ties with members of these professional organizations.

Let’s not forget the “non-professional” members supporting the business owner. This group includes the multi-generational extended family members. This mix includes current and former spouses, uncles, aunts, in-laws, children and grandchildren of the owner.

An evolving third element in the estate planning game involves the university and religious institutions that are extremely active courting the business owner. Also not to be forgotten are the private undergraduate and elementary schools looking for a charitable contribution when your grandchild graduates from third grade.

• Do these various groups have an impact on how the value of the business is determined for estate planning purposes? You bet they do!

• Do these various groups attempt to sway discussion on the value determination? Unfortunately, yes.

• Do these various groups agree with the ultimate decision regarding valuation? No.

Enter your experienced investment banker to lead a sell-side M&A process for the business owner. Creating a competitive M&A sell-side process will provide a value that the market is willing to pay for your business. I would like to review some actual advisory scenarios involving families:

Board of Governors of the Federal Reserve System (US), Industrial Production: Total Index [INDPRO], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/ INDPRO, June 12, 2023.

Case Study #1

• At the passing of the parents, CEO is gifted additional shares to become 51% majority owner of family business. Two (2) siblings (not involved with the business) given 49%, in aggregate.

• Siblings want to be “bought out.”

• Three years later, with high professional expenses deployed and multiple estate valuations rejected, an agreement for a valuation is agreed upon with CEO now controlling 100%.

• Six months later, the company is sold for 2x above the estate planning valuation.

• Professional estate planning advisors followed the conventional conservative practice to generate the valuation.

• Conversely, the M&A market spoke loud and clear that the company’s niche was more valuable in a competitive process.

Case Study #2

• Founder passes and provides children (3) from first family 58% ownership, while his stepchildren (3) receive 42% of the family business.

• Founder had established a 70% super majority vote requirement on all business initiatives. Since this threshold was established 35+ years ago, the 4 children/stepchildren have never had a vote pass due to the 70% threshold.

• Professional estate planning advisors followed the wishes of the founder and saddled the next generations with a challenging burden at exit.

• The investment bankers were highly confident the business market value of $200+ million would be attainable.

Please consider all your options and tools when considering your estate planning initiatives. We would encourage you to ask your team of professional advisors to invite an investment banking team to speak with you and your family to further evaluate your options.

Kelheim Fibres and Santoni Win the ITMF International Cooperation Award 2023

INDA’s Wes Fisher Named a 2023 Top Lobbyist

INDA, The Association of the Nonwoven Fabrics Industry, announced that Director of Government Affairs Wes Fisher was named a 2023 Top Lobbyist by the National Institute for Lobbying & Ethics (NILE). The list includes professionals with significant legislative success in 2023, have been innovative in their field, are held in high regard by their peers, give back to their community through charity or pro bono work, and adhere to the highest ethical standards.

in 2021 and now we are continuing our journey. We are constantly looking for various ways to decrease the greenhouse gas emissions from our operations. In 2022 we also installed a solar panel plant with over 2200 solar panels to our Alicante site,” said Juan Carlos Esteve, Director, HSEQ.

Kelheim Fibres GmbH, a leading manufacturer of specialty viscose fibers, and the Italian textile machinery manufacturer, Santoni Spa, were honored with the ITMF International Cooperation Award 2023 during the ITMF Annual Conference in Keqiao, China. This prestigious recognition by the International Textile Manufacturers Federation (ITMF) acknowledges outstanding achievements in international collaboration within the textile industry in alignment with the values of the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development.

Together, Kelheim Fibres and Santoni have developed an innovative and sustainable period panty, built upon advanced machine technology and highperformance viscose fibers. The result is a sustainable and high-performance underwear garment that seamlessly combines comfort and functionality.

Santoni’s specialized machinery enables a significant reduction in fabric waste, or even the potential for entirely waste-free production. Simultaneously, it enhances production efficiency, leading to cost savings. Kelheim Fibres’ woodbased specialty fibers, such as the trilobal Galaxy® and the hollow Bramante fiber, replace synthetic materials in the absorbent core of the menstrual underwear. They offer excellent performance and reliable protection for the wearer. www.kelheim-fibres.com

Fisher joined the INDA staff in 2022, he previously held senior government affairs positions at the Pet Advocacy Network and the National Automatic Merchandising Association. His work at INDA has included interfacing with lawmakers, regulators, and stakeholders at the state, local, federal, and international levels and participating in UN negotiations regarding the ongoing Global Plastics Treaty. He serves on the board of directors of the Washington Area State Relations Group (WASRG) and in 2022 was appointed by the Governor of Virginia to the Virginia Rare Disease Council. www.inda.org

Suominen Goes Green in Brazil

Nonwovens roll goods manufacturer Suominen with headquarters in Finland, continues its work in reducing its greenhouse gas emissions as its Paulínia, Breazil site is now shifting to fossil free electricity.

“Suominen shifted entirely to fossil free electricity in all our European plants

Reducing the environmental impact of operations ensures that the company can offer more sustainable products to their customers. By shifting to fossilfree electricity sources, Suominen can significantly reduce the carbon footprint of their products. As part of Suominen’s sustainability work, they are calculating the carbon footprint of their nonwovens as well as corporate level emissions annually. www.suominen.fi

Milliken & Company Named a Best Employer for Veterans

Diversified global manufacturer Milliken & Company was recognized as one of America’s Best Employers for Veterans 2023, a list compiled by Forbes and Statista. Milliken, included on the list for the first time this year, is one of seven manufacturers recognized.

“Our veterans come to work each day demonstrating their commitment to our values and to our people,” said Halsey Cook, president and CEO of Milliken & Company. “We’re proud of their contributions, and we’re grateful for the skills they bring to the table as part of Team Milliken.”

The cohort of America’s Best Employers for Veterans 2023 all exemplify company cultures that are welcoming and supportive of veterans. Nearly 8,500 U.S. veterans, all of whom work at companies employing at least 1,000 people, were surveyed by Statista, and both their direct and indirect recommendations informed the rankings. www.milliken.com

Heberlein Completes Sale of its Business to New Owners

Swiss firm Heberlein, founded in 1835, has successfully completed the sale of its business on October 31, 2023. The new joint ownership comprises the company’s management, alongside industry expert Daniel Lippuner and the Renaissance investment foundation. Starting in November, the company will operate under the name “Heberlein Technology AG.”

INDA Releases New North American Nonwovens Industry Outlook Report

INDA, the Association of the Nonwoven Fabrics Industry, has released a new report, North American Nonwovens Industry Outlook, 2022-2027. This report is the twelfth edition detailing demand data for 2017 through 2022, with forecasts to 2027, and is now available for purchase on the association’s website.

The report provides analysis across all nonwoven end-use markets, providing a comprehensive and accurate view of the total North American nonwovens industry. INDA redesigned this report to support strategic business planning and decision-making. The projections in the report were made by analyzing current market trends and drivers to highlight the market potential in terms of dollar value, units, and volume in both square meters and tonnage.

Tony Fragnito, INDA’s President, said, “This report provides insights on nonwoven demand in the short-life and long-life market segments. The intelligence included in this report is critical for business leaders who manage the assets or operational planning for their organization.”

This report includes:

• Economic and population drivers contributing to market growth over the next five years for markets in the U.S., Mexico, and Canada.

• Disposable, Filtration, Wipes, Medical and Other applications.

The owners are committed to investing in the long-term success of a business that already combines traditional values with innovative power. The brand is known for its high level of expertise, as well as its tailor-made solutions for the textile business.

As the world’s leading supplier of jets for synthetic yarns, Heberlein develops, produces and distributes key components for the manmade fiber industry. Around 80 employees and an efficient infrastructure in Wattwil, Switzerland, ensure that international customers can continue to rely on quality and reliability.

The Renaissance investment foundation was established by pension funds, for pension funds, and has been investing in unlisted Swiss SMEs for over 20 years.

Under the new ownership, Heberlein will continue unchanged at the current location in Wattwil with the current management and all current employees.

The board of directors and management of Heberlein AG welcome this solution and are convinced that the existence of the company and its traditions will now be secured in the long term and that it will continue to develop successfully – positive news also for the business location of Toggenburg and the canton of St. Gallen. www.heberlein.com

• Long-Life durable sectors for Transportation, Building and Construction, Furnishings, Geo and Agro Textiles, and Apparel.

• Key drivers for the demand models and reasons for market upsets like the COVID pandemic.

• A summary of historical and future trends that will affect the nonwovens market. www.inda.org

Suominen Appoints SVP, Americas

Thomas Olsen, MBA, has been appointed senior vice president, Americas business area at Suominen. He will be a member of Suominen’s Executive Team and report to president and CEO Tommi Björnman. Olsen started in his new position on Nov. 1, 2023.

“Thomas has a strong experience in leading sales in global organizations,” said CEO Björnman. “He also has industry knowledge and proven record in successfully executing company goals. I am sure he will be a valued member in our Executive Team and support us in our journey towards profitable growth.” www.suominen.fi

National Spinning Company to Close Whiteville Plant

National Spinning said it regrets to announce the closure of its North Carolina Whiteville Plant, its last yarn-spinning facility, during the first quarter of 2024. About 100 employees will be affected.

In a filing with the N.C. Department of Commerce, Jim Booterbaugh, president and CEO, blamed declining business conditions over the past few years due to a shift by some customers to import yarns from China, Turkey and India.

“In addition, the rise of import garments due to de minimis shipments for online shopping has deteriorated sales at retail stores, thereby impacting our domestic supply chains,” he said in the letter.

www.natspin.com

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Hygienix Heads to Nashville in 2024

Hygienix 2024 will take place at the Renaissance Nashville Hotel in Nashville, Tennessee, November 18-21, 2024. The event will feature three days of industry-focused presentations on disruptive innovations that are creating new categories and opportunities in the absorbent care and related industries.

www.hygienix.org

Milliken Rebrands Healthcare Business as Ovik Health

Milliken, known as a U.S. specialty chemical company, is rebranding its healthcare business Milliken Healthcare Products to Ovik Health.

“Launching Ovik Health marks a new era in our work to positively impact the healthcare industry,” said Halsey Cook, president and CEO of Milliken. “Through Ovik, we reaffirm our commitment to providing innovative healthcare solutions and open the door to future opportunities that can heal, protect and support patients.” www.milliken.com

The rebranding began on Oct. 31, with an expected completion date of Dec. 1, 2023.

Milliken Healthcare Products will transition to Ovik Health in all brand and visual instances; however, all current healthcare product names will remain the same, Milliken said. Ovik Health, as a subsidiary of Milliken, will carry forward Milliken’s portfolio of wound and burn dressings, compression solutions, cohesive bandages, and tapes.

Indorama Ventures Achieves 100 Billion PET Bottles Recycling Milestone

Indorama Ventures Public Company Limited, a global sustainable chemical company, announced that this fall it had recycled 100 billion post-consumer PET bottles since February 2011. This has diverted 2.1 million tons of waste from the environment and saved 2.9 million tons of carbon footprint from the product lifecycles.

Demonstrating its commitment to support the establishment of a circular economy for PET, in the last ten years Indorama Ventures has spent more than $1 billion towards waste collection of used PET bottles.

www.indoramaventures.com

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