The Transaction Abstract Podcast – Détails, épisodes et analyse

In this latest episode of The Transaction Abstract, Joe Hellman sits down with Alex Stuart from PGIM Private Capital to discuss current market conditions and transaction trends.

PGIM Private Capital, part of Prudential Financial's investment management business, operates across various asset classes including public debt, real estate, and private equity. Their Minneapolis office covers five states—Minnesota, Iowa, Nebraska, and the Dakotas, providing senior debt financing, structured financing, and minority equity investments for businesses across the credit spectrum.

The current market is experiencing a convergence in transaction multiples, marking a positive shift from the valuation disconnects seen 24 months ago. While seller expectations have moderately adjusted, Stuart notes that deal flow remains selective. 

As Stuart observes, "If the only way you can make the deal work is by getting a rate cut, so you get the cost of financing, I can guarantee you this is not the right deal for you." Private businesses are currently more active in completing transactions compared to public companies, largely due to their ability to make decisive moves without extensive stakeholder consultation.

Successful transactions in the current market share several key characteristics:

• Direct sourcing through long-term relationships

• Strong cultural alignment between buyers and sellers

• Integration and cost synergy potential

• Emphasis on higher-quality assets

• Increased utilization of junior capital as an alternative to traditional senior debt financing

Quality remains paramount in today's market. "This is not a great market for storied credits. It is going to be higher quality assets, and in those situations, there is plenty of money available on the sidelines," Stuart notes.

While optimism exists for increased deal activity in 2025, market participants await greater clarity on interest rates, tariffs, and U.S. policy. The financing market remains broad with ample capital available, though accessing it requires the right partnerships and connections. 

When discussing market outlook, Stuart states: "There is a trove of sellers on the sidelines waiting to do something, but the true unleashing requires resolution on both the economic and political fronts."

To hear more about this informative discussion of market trends and transaction insights, listen to the full episode of The Transaction Abstract Podcast. 

In this latest episode of the Transaction Abstract Podcast, Joe Hellman explores the crucial differences between private equity and strategic buyers in mergers and acquisitions, providing valuable insights for business owners considering a sale.

Joe is joined by Ben Axelrod, Managing Director at Borgman Capital, bringing over 20 years of M&A experience. Drawing from his extensive background, Axelrod offers a unique perspective on how different buyer types approach acquisitions and what organizations should consider when evaluating their options.

The M&A landscape features two primary types of buyers, each with distinct approaches:

• Strategic buyers typically operate within the same industry as their acquisition targets, focusing on operational synergies and long-term integration. Their goal is to create value through combined operations, with no predetermined exit timeline.

• Private equity firms represent financial buyers backed by investors seeking returns on their capital. These firms focus on operational improvements, revenue growth, and margin optimization, typically planning for an exit within five to ten years. 

• Axelrod also introduces "quasi-strategic" buyers: private equity-backed operating companies that bridge these approaches by combining industry expertise with financial backing.

Common private equity misconceptions often stem from highly publicized negative cases, but the reality is different. Axelrod explains how private equity ownership frequently preserves existing operations and supports management teams, particularly in the lower middle market where Borgman Capital operates.

Unlike strategic buyers, who might consolidate facilities due to operational overlap, private equity firms investing in standalone businesses often maintain existing infrastructure and workforces. This approach promotes sustainable growth rather than immediate cost reduction.

Private equity firms can move quickly and adapt to different situations. While strategic buyers, especially larger corporations, might be constrained by board meeting schedules and rigid approval processes, private equity firms can often respond quicker to opportunities.

Axelrod highlights how Borgman Capital balances this speed with thorough due diligence, ensuring both efficient execution and proper evaluation. The firm can deploy resources quickly while maintaining its commitment to careful analysis.

The approaching "Great Wealth Transfer" can be beneficial for M&A transactions. As baby boomer business owners prepare for transition, private equity firms are offering more sophisticated approaches that address both financial and operational considerations.

Whether choosing a strategic or financial buyer, owners should find a forward-looking partner whose approach aligns with the organization's objectives. To hear more insights from this informative discussion about the evolving landscape of private equity and strategic acquisitions, listen to the full episode of the Transaction Abstract Podcast.

There are countless matters to consider when preparing to sell your business—one of which is your supply chain. 

In this episode of The Transaction Abstract, Rob Kress, CEO of Waypost Advisors, joined Joe Hellman, partner at Redpath and Company, to discuss opportunities to shore up supply chain challenges or concerns to maximize the value of your business—or make your business more attractive—when searching for buyers.

Rob points out that there are a few main focus areas—low-hanging fruit—that provide significant opportunity to improve cash flow prior to sale.

• SLOB (slow-moving, obsolete) inventory
• Eliminating backlogs
• De-risking your supply chain and diversifying key supplier concentration
• Implementing strategic sourcing to drive cost reductions

In addition, Rob stresses that you need to understand your KPIs to identify where to focus for greatest impact—and always have a continuous improvement mindset. Just because you’ve always done it one way, doesn’t mean you should rest on your laurels and never consider new ideas or new ways of doing things.

Finally, don’t underestimate how much time some of this takes. If you really want to prepare for sale and implement new ideas and improvements to effectively improve your cash flow and attractiveness, you cannot start right before you go to market. Be proactive and plan ahead!

Mike Hirschberg, Director at Northborne Partners, joined Joe Hellman, Partner at Redpath and Company, to reflect on 2023 M&A activity and discuss the current state of the marketplace for low to middle market organizations. 

2023 finished the year as a tale of two time periods. The first part of the year provided a bit of market turmoil (including the failing of some major banks). Deal flow slowed and venture and private equity activity dried up, according to Hirschberg.

But the M&A market was resilient in spite of high interest rates, allowing industry experts to look to 2024 with some confidence. Many think that 2024 will be an active year, but how does our guest feel about the potential performance of 2024?

Listen to the podcast as Mike and Joe discuss:

• Performance of different asset types (A, B, and C)
• Leverage in the market
• Timing of diligence activity
• Strategic deal activity
• Amount of uncertainty going into 2024
• Industry-specific M&A activity
• Sustainability of company performance, recession risk, and market timing
• Legal and regulatory insights
• Valuations
• Impact of sunsetting tax provisions

Every company has a story that details how their innovative product or service idea came to be. That story typically includes how they were founded, how they grew and expanded, and how they matured into the organization they are today. That story may encompass a journey that started over one hundred years ago—or it could be the newest startup that began with a fledgling idea less than a few years prior. 

But what type of story does your company’s data tell? Do you even have the data? If so, do you have access to it? And what role does that data play in today’s M&A market? 

The story your company’s data tells is almost more important than the historical record that you might have documented in a book, a brochure, or perhaps in a digital document on your laptop.  So how do you leverage it as part of an M&A transaction?

Aaron Yentz,  Vice President at Blue Ops Partners, joined Joe Hellman, partner at Redpath and Company, to discuss the role that data analytics plays in helping deal teams, management teams, private equity, and investment bankers make the most of data during the sale process and to maximize value for their clients.

Assessing Data Quality: “Garbage In, Garbage Out!”

The quality of your company’s data relies on a myriad of factors including what systems you’re leveraging, how the data gets entered, and how often it gets updated. But what’s certain is that the quality of data is greatly affected by whether or not you have well-established processes and systems for collecting and entering the data you do gather. 

Factors the contribute to less-than-optimal data quality include:

• Data that’s entered manually or multiple times in multiple systems
• Non-user friendly systems that do not get used which results in missing or incomplete data
• Lack of access to an older/previous ERP system and/or a system transition (could be a case that results from the company engaging in a recent add-on acquisition)

What About “Unusable” Data or “Missing” Data?

It’s not often that a company’s data is truly unusable or missing. In many instances, “missing” data might be due to assumptions that it does not exist because there are no KPI’s established that would leverage specific data sets. Typically, this assumption exists because the data was never looked for in the first place or pulled out and used as a measurement tool—and therefore leadership assumes the data is nonexistent. 

Even data considered “unusable” may just need a little more work to mine the information that is there. Even incomplete data can help tell a story and highlight what’s going on in the business. It might just take a little more work to extract those specific nuggets that management can speak to in the transaction process.

How Do Companies Get at KPIs Within the Data Set?

If management doesn’t have the time, resources, or data to invest in integration or dashboard creation, the organization helping mine the data will focus on the “nice to have” KPIs. This includes leveraging the input of other transaction advisors (such as bankers) to understand what buyers are paying the most attention to and to get at KPIs that matter most for the business or industry. 

Sometimes the process includes taking data from different systems and marrying them together to normalize the data set. But no system is perfect and there are typically always gaps in data. The goal when extracting data is to add structure to the data and provide explanations to ensure the analytics are still meaningful.

Be Ready for the Data Request

It’s getting more and more common for more granular data to be requested, especially on the buy-side. Teams should be prepared for those requests by addressing them effectively and in a timely manner—which can help give more comfort to the buyer. 

Final Thoughts From Aaron Yentz:

• Understand the value that data can have on the sell side.
• Tools and technology to leverage data will become more efficient and cost-effective and they will continue to make their way to the lower end of the middle market. Leadership teams will no longer have a reason to not be prepared to leverage data and analytics to tell their company’s story in a transaction. 

There are a myriad of factors that ultimately influence the sale price of a business in a transaction. By properly addressing those factors prior to going to market, sellers can eliminate surprises and work toward commanding a more favorable purchase price. 

For manufacturers and distributors, one area that may be overlooked prior to engaging in a transaction might be their supply chain—including raw materials and/or product inventory. By addressing supply chain challenges early, along with any inventory issues that may negatively impact cash flow and/or revenue, sellers have a better opportunity to correct any issues and communicate the best story regarding the state of their business to interested buyers. 

Rob Kress, CEO of Waypost Advisors, joined Joe Hellman, partner at Redpath and Company, to discuss the impact of a company’s supply chain on revenue and cash flow—and what business leaders can do to improve their current state prior to a transaction. 

Rob advises clients to consider three key areas or concepts to address supply chain and inventory challenges in order to be better prepared to go to market with their businesses.

1. You need to have an effective planning and communication process from sales to operations to procurement. Alleviate the tension and difficult conversations between these functional areas of the business by improving communication channels and planning processes.
2. Effective tools in place to measure KPIs and perform supply chain and inventory analyses—starting with your ERP system. This includes training your team regarding what to look for in the data and metrics. Capture efficiencies through the proper use of your systems—or get the right systems in place (i.e., software vs. Excel spreadsheets).
3. Be in a constant state of improvement to get yourself out of your supply chain issues to improve cash flow. 

Companies have not “de-risked” their supply chains post-pandemic. One of the ways to do this is to diversify their supply chain by looking at where materials and products are sourced. But they need to also balance de-risking their supply chain with the potential cost impacts of doing so.

Rob encourages businesses to see what else is out there for suppliers and ways to make supply chain improvements. Don’t be satisfied with the status quo. Your competition is most likely already doing these things and you need to ensure you can keep up—and surpass them. 

Waypost Advisors is an end-to-end supply chain consulting firm serving middle-market clients. Visit https://waypostadvisors.com/ for more information.