Over the last 30 years, we have found that it requires a specific skill-set, network, and approach to successfully close M&A transactions within the middle market.
There are often two kinds of challenges that an investment bank needs to avoid in order to drive its clients' transactions to a successful close. These challenges often include (i) company-specific and (ii) process-specific challenges.
Many companies of this size represent fantastic businesses that are often transitioning into a new phase of growth. However, this growth and opportunity associated with the middle market is often accompanied with certain challenging characteristics that many larger companies do not have. Thus, with respect to the company-specific challenges, some examples of these characteristics that are common in the middle market might be customer concentration issues, supplier concentration risk, non-audited financials, limited bench strength at the management level, and so on. Through decades of experience specializing in the middle market space, we have identified the best practices in how to mitigate these risks as well as the buyers that are comfortable with them.
With respect to the process-specific challenges, our typical sell-side process in the lower-middle market takes 9 or so months, requires 72 unique steps, and results in dozens of deliverables. Within this process there are over a dozen common pitfalls that can derail the process. Not only have we identified these process-related landmines, but we have designed our proprietary, 72-step process in order to avoid these risks. With a time-tested process and a deal team consisting of investment bankers with blue chip backgrounds, our clients are positioned to have a higher probability of close than they may have elsewhere.
The results speak for themselves, with our close rate believed to rank in the top quartile of all investment banks in the country.