Midlands Business Journal • NOVEMBER 29, 2019 •
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Mergers & Acquisitions A section prepared by the staff of the Midlands Business Journal
November 29, 2019
To sell or not to sell? Global volatility, uncertainty may drive heightened M&A business in 2020 by Michelle Leach
A confluence of factors may be pushing owners off the sidelines, potentially toward contributing to merger and acquisition activity. “2019 is certainly a down year for the M&A industry,” said Corporate Finance Associates Worldwide Managing Director Jim Zipursky. “In 2020, what we’re seeing is guarded optimism for several reasons.” Zipursky referenced the stronger log or count of deals to be marketed in the new year. Zipursky “Interest rates remain historically low, which means the borrowing ability is still there and it’s not as expensive for buyers to borrow money for acquisitions,” he said. “We’re still seeing as much equity capital in the marketplace today as we did in the last two years — if not more.” Lenders, he noted, are concerned about how much longer the strong economy can hold. “We’re getting a lot of questions from buyers about, ‘How did you do from 2007 to 2010?’” Zipursky said, referencing the last recession. “Everybody is still expecting a recession to hit …. And we can talk ourselves into a recession.” Tariff threats such as those that rocked the ag and steel industries contribute to the “guarded” outlook, as does uncertainty about Brexit in the U.K. Domestically, there are the headwinds of people saying, Zipursky remarked, “We have now had unprecedented growth in the economy since 2010 … when is the other shoe going to drop?,” further combined with the fact that a major election year is on the horizon. In Goosmann Law Firm Attorney Andrew Simpson’s view, the local market is centered on mid-sized, closely-held companies’ exploration of succession planning for aging majority shareholders and officers. Companies may look to merge with (or sell to) other local or regional businesses, bolstering longevity and strength. “These strategic buyers often can gain the most traction from the deal,” he said. “When exploring outright sale, these businesses are not averse to exploring national or private equity buyers, especially private equity that they have formed a relationship of trust with.” When compared to a year ago, Simpson said the credit market has tightened some. So,
Jennifer L. Cooke-Yin, partner at Stinson. financing can be harder to get for smaller deals, Strategic buyers and investors in the Midespecially newer business owners. west, Simpson noted, have held record levels “A year has also brought a further sense of of cash as they pursue increasingly scarce urgency by these mid-sized, closely-held com- attractive target opportunities, and limited panies,” he said. “Their majority shareholders qualified targets drives competition. and officers are a year older and given some “Many private equity firms have been perceived uncertainty in the national financial more willing to make minority equity investmarkets, these owners have been much more ments, which has been uncommon in the past active in pushing forward.” in middle-market M&A,” he said.
Reaanddit
These businesses may have started many years ago on a small scale, and Simpson said the founders dedicated their lives to the business. “They are just now starting to explore the M&A market as a means to protect their legacy while still reaping the fruits of their labor,” he said. Locally, Simpson referenced a number of trades, medical staffing and practices such as small animal vet, physical therapy and dental — active sectors due to the strength of the conSimpson struction industry, the succession plan-driven nature of small business professional practices, and the recession-proof nature of services like orthodontia and pet care. From an acquirer perspective, Stinson Partner Jennifer L. Cooke-Yin said it’s key to understand the reasons for the acquisition; for example, if the main driver is taking on technology, do thorough diligence to understand what rights the target has with respect to technology and what rights others may have. “Obviously, it is critical to avoid paying for technology only to find out after closing Continued on next page.
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Mergers & Acquisitions — inside NOVEMBER 29, 2019
THIS WEEK 'S ISSUE:
THE BUSINESS NEWSPAPER OF GREATER OMAHA, LINCOLN AND COUNCIL BLUFFS
$2.00
VOL. 45 NO. 48
Universal Information Services taps AI for competitive advantage by Richard D. Brown
Tavern 180’s chef-driven concept leads to Lincoln, Sioux Falls expansion. – Page 2
40 er d Un 40 Skalberg brings artists, philanthropy together through NoteWorthy. – Page 4
s ing eet M s , w ns tio sho ven Trade n Co &
Local convention market is steadily growing. – Page 22
Omaha-based Universal Information Services is a 111-year-old firm that for decades specialized in largely clipping newspaper articles that mentioned its clients, but since 1991 the firm has identified the latest in technology and invested in writing the software necessary to give the 18-employee firm a competitive advantage in global news monitoring. “Our biggest challenge today is staying competitive and making sure from a technological standpoint that we are investing in the right equipment and people to maintain the right edge in our industry,” said President James L. Murphy, who in 1959 purchased the firm — then called the Universal Press Clipping Bureau — from its founder Katherine Allen. James Murphy’s son Todd Murphy, who joined the business in 1991 and purchased the company and became its CEO in 2015, said his interest in media monitoring can be traced back to his ninth Continued on page 8.
From left, President James Murphy and CEO Todd Murphy … Aiming to stay competitive in media intelligence with use of latest technologies. (Photo by MBJ / Becky McCarville)
Union Omaha kicks off pro soccer club at Werner Park, gains pre-season following by Becky McCarville
Soccer fans have reason to cheer with the addition of Union Omaha, Nebraska’s first professional soccer team, a move intended to bring the community together and make the Omaha metro more attractive for businesses and workers. Thirteen local investors led by Dan Houghton, co-founder of Buildertrend, have pledged their
support for the Alliance Omaha Soccer (USL Omaha) League One team that will share a field and facilities with the Omaha Storm Chasers at Werner Park. Marty Cordero serves as the president of both the Omaha Storm Chasers and Union Omaha, and Laurie Schlender, general manager of the Storm Chasers, is the CFO and director Continued on page 9. From left, Vice President of Operations Brady Marlow and President Rob Wellendorf … Company focuses on client’s ideal scenario to map out business succession or exit plans.
ExecSo focuses on entrepreneurs’ ideal scenario to plot exit strategy by Savannah Behrends
Union Omaha COO Matt Homonoff, left, and investor Dan Houghton and co-founder of Buildertrend … Taking aim to be the flagship League One soccer team within its first year.
Out of all the questions a wealth or business succession planner could ask a business owner, the most important question for ExecSo is “What does your utopia look like,” both for the business owner and their business? “Emotionally what does it look like? Financially what does it look like? Then when you add
in the human element, perhaps there’s children in the business, it becomes a really complex problem and that’s were we thrive,” said ExecSo President and founder Rob Wellendorf. Whether the answer is selling the business, stepping back, or handing it to the next generation, ExecSo works with all the business advisers to put a plan in Continued on page 9.