My Business is Having a Soft 2020 due to COVID, But I’m Ready to Sell. Should I Test the Market?

Yes, especially if you believe your business will rebound in the next 1-2 years to pre-2020 revenue and EBITDA levels. Private equity firms exist to deploy capital and acquire and grow companies, and they begun to embrace alternative approaches to valuing businesses. Some are valuing businesses based on 2019 performance. Others are agreeing to contingent payments (earnouts) when the businesses they acquire bounce back from 2020 lows. In fact, if you’re struggling to find labor to fill orders, selling your business may provide you with additional resources or additional manufacturing sites to move the work, thereby accelerating the recovery of your business.

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If I Believe My Business Will Grow In The Next Few Years, Should I Hold Off On a Sale?

Not necessarily. Acquisitions often include additional purchase price – known as an “earnout” – paid to sellers if the acquired business grows in the future,

Improvement Opportunities In Manufacturing Targets

While none of these should preclude an acquisition, we’ve come to witness several variables that suggest that an acquired company may need extra help. These

Tips To Execute A Successful Industrial Roll-Up

Acquiring several companies in the same or complementary industries is easier than making them work together harmoniously to create a business capable of achieving above-market

Planning The Future State For You (The Seller)

We’ve seen too many instances where sellers hoped to stay with the business after its sale, but their employment was ultimately terminated by the buyer.

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Joe DeMartino

Machining Executive

C-level Executive and author, Joe DeMartino has more than 30 years of experience in the Aerospace & Defense and Building Material Supply industries. He is currently CEO of Precision Holdings, LLC and has served in other executive leadership roles as COO, President, or EVP with such companies as Barnes Aerospace, GKN, and LMI Aerospace as well as managed a successful consulting practice for the past 7 years. Highlighting his record of transformational management include leading diversification and significant global growth at 5 companies, bringing a high-tech business from start-up to maturity, driving multiple M&A ventures, directing major integration and rationalization of acquired businesses, and orchestrating 2 successful turnarounds as well as holding Board positions with 2 organizations.

Select Accomplishments:

Growth and Scaling: Joe is currently leading a major strategic turn-around of a private equity owned business, pivoting to aerospace, maintaining market diversity and has grown substantial backlog in the past 2 years. He catapulted a divisions of a Tier 1 supplier from $5M to $50M business in <6 years with >23% EBIT, leveraging cutting-edge composites and an innovative, high-tech strategy to capture a long-term sole source agreement on Lockheed Martin’s F-35 program (F135 engine). He developed the business case, secured investment commitment, and penned a partnering deal with Northrop Grumman on the B-21 Strike Bomber program. He effectively positioned LMI, through strategic and operational improvements, to substantially grow revenue at 10+% CAGR and help ready the business for sale.

Innovation: At GKN Aerospace, Joe developed and led incubation through high-rate production of first-time “smart” composite components and assemblies, critical on the F135 engine application. This resulted in a long term, sole source 9-figure contract. At DOW-UT, he designed, developed, and managed the first composite rotating fan platform for Pratt & Whitney and GE commercial engines. This IP-rich application led to a high-margin annuity generating millions of dollars of revenue over >25 years.

Turnaround: Hired to turn around LMI following the Valent acquisition, Joe transformed operations and positioned the company for double-digit growth. In 2 years, he implemented a Center of Excellence-based organization and optimized operations, realizing >$9.5M YOY cost savings. He achieved wrap rate improvement of 5 to 30% by streamlining operations and closing 5 facilities while expanding a machining facility and the Mexico operation. A major cost reduction initiative resulted in substantially improving working capital, reducing inventory by >10%, improving free cash flow, reducing debt ratio (8.0 to 5.5), and slashing costs by >$17M.

Rick Bloom

Executive Team Leader

Rick is currently a director and Chief Executive Officer of WestMountain Gold, Inc, a publicly traded precious metals exploration company overseeing the Terra Project in a remote part of Alaska. He was most recently the President, CEO and CFO of Support.com, Inc., a publicly traded leader in outsourced call center and direct-to-consumer tech support services business and continues to serve as a director.

Previously, Rick served as Executive Chairman of Arcata LLC, a web-based marketing execution services company, and was President and Chief Operating Officer of Renaissance Acquisition Corporation, a publicly traded special purpose acquisition company. Rick also served as Chief Executive Officer and Vice Chairman of Caswell Massey, a branded personal care consumer product company with an online and catalog division as well as retail stores throughout the country. Prior to that, Rick was President, CEO, and COO of Marietta Corporation, a maker and marketer of personal care and household products for the country’s largest consumer product companies with production facilities throughout the country.

Rick is currently a director on the advisory board of and operationally active with PakLab, a Southern California based contract manufacturer of prestige personal care products. For over a decade, Rick has also been a director of NexCore Group, LLC, a national healthcare real estate developer, operator and property manager. Rick served as a director of Glide Rite Corporation, a national field-service operator that provides equipment repair and maintenance services to the country’s largest retailers. He also served on the board of AmeriQual Group, the nation’s largest producer of meals ready-to-eat for the United States military and was a Founder, director and Managing Director of Imperial Capital, a successful Beverly Hills based, full-service investment banking firm focused on raising capital, research, sales and trading and asset management. Rick was also the developer, a director and President of Mountain City Casino Hotel, at the time, the largest casino hotel in Colorado. Prior to that Rick worked for investment banks Dabney/Resnick and Donaldson, Lufkin & Jeanrette (DLJ).

Rick earned a BS summa cum laude in Economic Science from The Wharton School, University of Pennsylvania.