Understanding the intricacies of operating a lower middle market (LMM) company is crucial for accurately assessing the challenges and opportunities these businesses face. While external perspectives can offer valuable insights, only those in touch with industry knowledge can truly grasp the nuanced hurdles hindering organic growth.
Common obstacles that inhibit LMM business growth include:
- Limited access to capital
- Insufficient strategic planning
- Underinvestment in technology
- Lack of scale
- Lack of a skilled workforce
LMM businesses can make M&A their superpower to overcome these obstacles.
How exactly can M&A be a superpower?
A superpower refers to an exceptional ability or skill that sets something apart, enabling extraordinary results or the ability to influence outcomes significantly. M&A, akin to superpowers in the Marvel universe, empowers organizations to transcend ordinary boundaries and achieve extraordinary outcomes. By leveraging M&A as a strategic tool, companies can drive meaningful change, distinguish themselves in the industry, and capture market share.
As expert M&A advisors and CEPAs step in to guide business owners and executive management teams, there are several key advantages when unlocking the superpower of M&A:
- Strategic Vision: Determining where the company is, where it wants to get to then use M&A to guide the path forward.
- Access to Networks: Leveraging networks, CEPAs facilitate introductions to REAG that lead to introductions to potential buyers or investors, granting access to resources and opportunities that expand the scope of possibilities for business growth.
- Value Optimization: With meticulous planning, negotiation skills and decades of experience, M&A advisors are able to optimize deal structures to ensure key stakeholders maximize their returns and achieve their objectives with precision and efficiency.
Case Study: The Minnow Can Swallow a Whale with REAG
The owners of a successful group of manufacturing facilities approached REAG seeking growth opportunities. While they excelled in operations, they recognized their limitations in salesmanship.
The company, established in the mid-1980s, initially focused on fabrication, and by adding partners, expanded into assembly. Bolstered by high-quality delivery, the group accommodated higher production volumes over time.
Over the past decade, REAG helped them execute a “growth through acquisition” strategy. We orchestrated transformative deals where our client (the minnow) was able to strategically absorb larger companies (whales) with enduring success.
As advisors on their growth trajectory, the company is now considering a strategic change due to retirement and familial ties. To finance this new direction, REAG is assisting in selling a portion of the company to generate the funds required to achieve their new goals, bringing this client relationship full circle.
With guidance from experienced M&A advisors and CEPAs, firms with a strategic appetite for growth can navigate intricate deals, mitigate risks, and unlock synergies, propelling them to greater success in the competitive landscape.
Why Your Exit Advisory Team Needs an Embedded CEPA
Maintaining client focus on needed transformations over the long term is always a challenge. An Embedded CEPA significantly enhances the effectiveness of Exit Advisory Teams by acting as an internal advocate, consistently focusing on key value growth initiatives. This direct integration into the leadership team ensures a streamlined approach to coordination with the advisory team and its execution advocate, mitigating challenges commonly faced in traditional advisory team structures.
Early Collaboration is the Key
It's important to highlight the significance of having an M&A advisor on the team when strategic decisions are being made early on. M&A advisors bring a unique perspective to the table, which can be invaluable in shaping the strategic direction of a business. By introducing REAG to your clients early in the process, CEPAs can ensure that M&A can be used as a strategic tool to drive growth and maximize value throughout the lifecycle of the business.
With REAG as a strategic partner, the convergence of Private Capital Market Advisory using M&A can be a catalyst for companies seeking growth, expansion or transition.
This synergy between advisory and action is not merely transactional but transformative. It can reshape industries, optimize operations, and unlock new opportunities for executive management teams, shareholders, businesses and their communities alike.
Private Capital Market Advisory provides insights into market trends, investor sentiment, and capital availability. It uses M&A to lay the foundation for strategic initiatives by identifying potential investment opportunities and assessing the financial landscape. It transforms market intelligence into actionable strategies, driving successful business outcomes.
Our experienced team at REAG delivers exceptional results, offering more than just transactional services. With a personalized approach tailored to each client's unique needs, we ensure success from consultation to execution by leveraging our network, years of experience, creativity and work ethic.
By integrating M&A into initial discussions, CEPAs can help businesses unlock exponential value and secure long-term success in today's increasingly competitive landscape.
If you're ready to use M&A as your superpower, it's time to collaborate with our expert advisory team.
About REAG
REAG specializes in Mergers and Acquisitions and Private Capital Market Advisory in the Lower Middle Market, offering expertise in mergers, acquisitions, business valuations, strategic ownership planning, and private capital markets advisory. With a commitment to meaningful engagement and long-term collaboration. For over two decades, REAG has helped leadership teams, private equity groups, and family offices optimize cash flow and overcome challenges to grow, maximize the value of their businesses, and successfully transfer ownership.
