Punching Out: With M&A Deals, Timing is Everything

Business owners frequently ask whether the time is right to sell their business. Timing can make all the difference in getting a premium value for your business. If all signs are positive, more buyers will be interested, investors and lenders will feel that, and deals will go more smoothly. But getting the timing right is tricky and depends on many variables that I will review here.

Business Results and Trends
How is the business doing? This one question can lead to getting premium value on a sale. When sales, backlog, and profits are up, it’s the perfect time to initiate a sale. Meeting or beating forecasts is the grease that fuels the deal process and gets competitive bidding fires burning. Missing forecasts is a problem, as it seems like you get dinged several dollars for every $1 of forecast missed. Commonly, we hear from owners who want to sell after a few bad months, but then change their minds after a few good months. In fact, if you want the best deal, the opposite is true: Owners and management teams need to stay focused on business results while working their second job of selling the business.

Industry Trends
A positive industry balance sheet helps everyone involved, including buyers, sellers, investors, lenders, and others. Conversely, when a business is doing well in a down industry, it helps the company stand out. You can still get a premium value when you sell your business.

Kastner_hero_0523.jpgBuyers’ Status
The seller may be doing everything right with their business, but if the buyer’s business is having issues, it may be tough to get a deal done. Sellers should do their due diligence to the buyer and their investors in advance, especially if a large part of the deal is in after-closing compensation, such as earnouts, rollover equity, seller notes, etc. The seller might worry that the buyer cannot come through. Even if the deal is all cash and the seller will walk away soon after closing, the seller may still worry the buyer is not the best custodian for the company’s employees and other stakeholders. A buyer may be doing well, but they may have two or three other deals lined up ahead of yours or are too busy shipping products to focus on deals.

Equity and Debt/Investor Sentiment
Usually, if the company and industry are doing well, then investors and lenders will be positive about the deal as well. Sometimes, an industry can be counter-cyclical to Wall Street, which is not optimal for promoting a premium deal value, but deals can still be completed in that situation. 

State of the Economy
The overall state of the economy is a key factor in getting a great valuation for a seller. If everyone is feeling good about the economy and jobs, it helps all aspects of a deal. Conversely, if the economy is slowing and everyone is tightening their belts, then enthusiasm for deals can fall and all data is scrutinized more carefully. Changes in tax laws can impact the after-tax proceeds of a deal, so it is important to have a great tax/wealth advisor to help the seller through any potential changes.

World Events
Everything can be going swimmingly with a deal and then suddenly a fire, earthquake, rocket failure, or political unrest on the other side of the globe occurs; the deal is put on hold. It is impossible to control these events, so just keep the deal moving rather than waiting for the dust to settle. Even a global pandemic didn’t keep deals down for long.

Your Personal Status
The biggest factor is one that the owner can partially control: your readiness to sell. As a seller, be sure that for you, personally, the time is right. It is difficult to start and stop the process. Of course, health and family issues can influence a deal, but if the owner is otherwise well-prepared, it’s more likely that a deal can overcome any issues. Once an owner commits to selling, it is important to stay positive, communicate, and keep things rolling. It is good to always be ready, since a great opportunity comes knocking when we least expect it.

Something Will Go Wrong
Murphy’s Law dictates that something unusual will happen during a deal. Each deal has peaks and valleys, just like there are ups and downs in life and business. Carefully monitor what’s in your control; don’t worry about what you can’t control. For example, just when everything is working in your favor, the buyers start to worry the industry will trend downward or that because times are good and everyone wants to sell, the market may seem overcrowded.

It's important to establish trust early in the process; be sure there is a great fit, communicate often, and make going forward the “default position” instead of hitting pause every time there is an issue. Rather than just hoping all the planets line up to create a good sale, a little planning, and smart decisions about timing can lead to where you want to go.

Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures. 



Punching Out: With M&A Deals, Timing is Everything


Business owners frequently ask whether the time is right to sell their business. Timing can make all the difference in getting a premium value for your business. If all signs are positive, more buyers will be interested, investors and lenders will feel that, and deals will go more smoothly. But getting the timing right is tricky and depends on many variables that I will review here.

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Punching Out: Seven Drivers of Market Success


Throughout my years in electronics mergers and acquisitions (M&A), I have seen some companies succeed and others fail. A variety of factors determine the success of a company, from great leadership to a strong corporate culture and luck. I define a successful company as one that is profitable and receives attractive offers in the market, whereas a failing company doesn’t generate money, is shunned in the market, and often shutter. So, what exactly do companies need to succeed? Here are seven drivers to consider.

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Punching Out: Selling a Business vs. Selling a Board


Over the years, you became an expert at selling products, so much so that it became second nature. Now, it is time to sell the business, and suddenly you are feeling uncomfortable. Many owners become educated by experiencing one or more busted deals. With a little preparation and research, you can help increase the odds of a successful and smooth sale.

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Punching Out: Here’s the Deal About 2022


Last year turned out to be a fairly slow year for mergers and acquisitions (M&A) in the North American PCB and EMS sectors. We counted just seven completed or announced deals in the PCB sector last year, compared to 13 in 2021, nine in 2020, and eight in 2019. Firan Technology Group announced two of 2022’s seven deals with a 2023 target for completion for both. On the EMS side, only 13 deals were completed in 2022, down from 24 in 2021, 24 in 2020, and 23 in 2019.

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Punching Out: When Less Might Actually Be More


According to GP Ventures’ database, the number of PCB companies in North America is now down to 170. Just 22 months ago, the number was 199. Frankly, the actual number of active PCB manufacturers in the United States and Canada is probably closer to 150, but it is hard to keep track of the smaller shops. To clarify how we count companies, we are counting only PCB fabricators (excluding pure importers or assembly shops), and each company counts as one (for example, TTM counts as one company, Summit and APCT count as one company, etc.). Although the number of shops is down, the companies at the top of the list continue to grow.

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Punching Out: Breaking Out of the Box


Many businesses are “in a box,” that is, stuck within a range of revenues and profits. Some boxes can be velvet-lined and comfortable; others are lined with sandpaper. Buyers will usually pay more for companies that are growing, profitable, investing, and are doing something different from the competition. Buyers will pay less for companies that are in a box, then will turn around and sell them for a lot more in a few years after breaking out of that box.

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Punching Out: Mid-Year PCB and EMS North American M&A Update


Mergers and acquisitions in North America in the PCB and EMS sectors during the first eight months of 2022 were down compared to the same period in 2021. In the PCB sector, we counted four deals in 2022 compared to seven during the first eight months of 2021. In the EMS sector, we are aware of 10 completed deals so far in 2022 compared to 13 during the same period in 2021. Activity remains very strong in 2022, so it is possible that deals this year will catch up to the pace of last year.

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Punching Out: Concerns About ESG Issues in PCB M&A


Recently, ESG issues have become more prominent in business as well as in M&A deals. ESG stands for environmental, social, and governance. The PCB industry has dealt with environmental issues before, so it’s not really anything new. Water and waste treatment regulations have been in place for many years and the standards continue to increase. Most PCB shops recycle scrap materials, and many have started recycling water and using solar panels. On a related note, conflict materials regulations have been passed down for some time and the industry has learned how to be compliant.

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Punching Out! How to Incentivize Employees During a Deal


Many owners like to reward their employees when a business is sold. It is a great way to thank the employees for their years of service and to help keep them around for the buyer. In addition, it is a good idea to pay key employees a bonus during the sale process. Not only will they be doing extra work during the sale, but a key person leaving can derail a deal and/or lower the value of the deal. Key things to consider are who, how much, what, when, and does this also benefit the buyer?

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Punching Out! The Unwritten Laws of M&A


There are many unwritten laws of sports. For example, when a batter gets a hit in baseball, one of the greatest sins of the game is to flip (throw) the bat. However, when we were kids and we got a hit in whiffle ball, we would throw that bat as high in the sky as we could. In the Major Leagues, the next pitch is going in your back. In whiffle ball, the next kid tries to throw the bat higher. Because every company and individual is different, in M&A it is hard to determine what are laws, unwritten laws, or acceptable behavior.

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Punching Out! 2021 Year-End PCB/EMS M&A Update


M&A activity in the PCB and EMS sectors in North America continues to be strong despite the COVID pandemic. According to our research, there were 23 M&A deals in the EMS sector in 2021 (compared to 24 in 2020) and 13 deals in the PCB sector (compared to nine in 2020).

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Punching Out! Year-End Preparation for Selling a Business


The end of the year is a great time for an owner to step back and take a bird’s eye view of the business. Whether you are thinking of selling in 2022 or 2030, taking the time to get prepared and organized will help save time and effort in the future. Here are some items that every business owner should review on an annual basis. e year-end is a good time to remind your CPA to clean up income statement and balance sheet items that are no longer relevant. If the company has only internal financials, have the CPA do a compilation.

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Punching Out! What Does Private Equity See in the North American PCB Sector?


In the past few years, the investment by private equity (PE) firms into the PCB and EMS sectors has been increasing rapidly. Just in the past few months, APCT and Summit Interconnect have changed PE owners, American Standard Circuits was acquired by a PE firm, and Lenthor Engineering was acquired by a PE-backed firm. According to our firm’s data base, out of the top 10 independent PCB manufacturers in North America, two are public (TTM and FTG) and five are owned by PE firms. In addition, in the past few weeks, Tempo/Advanced Circuits/Whizz Systems announced an IPO via a SPAC, which shows further confidence in the direction of the PCB market. In addition to investments in the PCB market, as of today, at least 15 North American EMS firms are owned by private equity.

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Punching Out! Tips From Recent Sellers and Buyers


M&A activity is at a very high level in the PCB and EMS sectors, as well as in most sectors of the economy. We recently talked with a wide variety of buyers and sellers and scribbled down some of their insights (names not given due to confidentiality).

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Punching Out! 2021 Mid-Year PCB/EMS M&A Update


M&A activity is booming in the U.S. as the nation emerges from the COVID pandemic. Thanks to video conferencing and adjustments in procedures, M&A was also pretty busy in 2020. Now that the economy has opened and everyone is traveling, more deals are being discussed.

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Punching Out! Keep Your Saw Sharp


It sounds very simple, but work is much easier with a sharp saw. Abraham Lincoln may have said, "Give me six hours to cut down a tree and I’ll use four hours to sharpen the ax." Chainsaws are much much quicker, but the concept still applies. Tom Kastner explains how this relates to your business.

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Punching Out! How to Stand Out Among Other Sellers


It is a very busy time in the M&A world. Many owners in the electronics industry, especially in the PCB and EMS sectors, are of retirement age. Meanwhile, there is a lot of interest from both competitors and private equity firms in making acquisitions in the space. Because there are a lot of deals happening, it is important to know how to stand out compared to other sellers.

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Punching Out! 2021 COVID and Post-COVID M&A Outlook


The first quarter of 2021 was the busiest opening quarter ever for global M&A (since records started being kept in 1980), according to financial data company Refinitiv. The total global deal value was $1.3 trillion, which is a 94% increase over the same quarter in 2020, which was feeling the effects of the pandemic. But don't pop open the champagne quite yet.

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Punching Out: ‘If I Were 20 Years Younger’


We hear a lot of owners say, ‘if I were 20 years younger, I would…’, meaning they would make major investments or strategic changes if they had the time to realize the return on investment. Other reasons for not making investments are the lack of funds, lack of energy, etc. However, we feel that the return on investments does not always take as much time, money, and energy as owners think.

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Punching Out! The ROI of M&A


The common stigma surrounding M&A is that 80% of deals do not reach expectations. Still, deals grab headlines, and many companies use M&A as their primary growth strategy. Is there a disconnect between reality and the headlines, or is the stigma of M&A failure not really true?

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Punching Out! The ‘Dream’ Business Exit


Almost all business owners have a “dream exit”: a well-financed buyer flies in, offers up a suitcase full of cash with no strings over a steak and lobster dinner, and the next day the owner is sitting on a beach with a mai tai. These kinds of dream exits do occur, but they are extremely rare. Tom Kastner explains.

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Punching Out! 2020 M&A Wrap Up


According to our count, there have been 19 EMS deals and 7 PCB (bareboard) deals in North America so far in 2020. There are several deals that we heard of that are in the works and there are probably many small deals that we have not heard of. Given the general economic climate in 2020 and the virtual prohibition on overseas deals, the number of completed deals so far is impressive.

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Punching Out! Dealing With Burnout


Owners of companies in the PCB and PCBA industries are used to ups and downs, but yeesh, 2020 has been tough. The good news is most owners have survived all kinds of stressful situations in the past, and hopefully, better days are ahead. Meanwhile, when an owner is faced with constant, elevated levels of stress, it is easy to feel burnt out. Tom Kastner details ways to deal with burnout at work.

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Punching Out! Bringing PCB and PCBA Industries Back to the U.S.


Although U.S. PCB companies have been waving the flag for years, the COVID-19 crisis has shined a spotlight on the U.S. dependency on overseas suppliers for many electronics products. Tom Kastner lists five ways production will come back to the U.S.

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Punching Out! Are We Selling a Business or Watching ‘Die Hard’?


There is a lot of drama involved in selling a business. According to Wikipedia, the movie series “Die Hard” is about “a police detective who continually finds himself in the middle of violent crises and intrigues where he is the only hope against disaster.” Tom Kastner explains how if you use the “strong or powerful” definition of “violent,” that pretty much describes many M&A deals.

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Punching Out! Due Diligence: Quality Inspection for Business Sales


Although the due diligence process can be exhausting, Tom Kastner explains how it is important that buyers and sellers keep their eyes on the prize of closing, stay positive, and don't allow emotion to run the deal.

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Punching Out! Acquiring a Distressed Company


Everyone loves a bargain. Just like buying an old car or a fixer-upper house, you can get a great deal, or sometimes you get what you pay for. Tom Kastner shares some thoughts on acquiring a distressed or underperforming business.

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Punching Out! 20 EMS Deals in the Past 12 Months


Does it seem like there have been a lot of EMS deals in North American in the past 12 months (June 2019 to May 2020)? Tom Kastner highlights some of the major M&A deals, as well as predictions.

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Punching Out! Pivot Like MJ


Most successful businesses have pivoted at least 4–5 times during their history. The COVID-19 pandemic has forced many companies to close and many others to find other business models. You might not want to stop making boards and start delivering for Amazon, but Tom Kastner explains how it is good to keep looking for new opportunities.

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Punching Out! Stress Testing Deals


Most M&A transactions fall apart several times before closing, even during normal times. When a major crisis occurs—whether internal or external—a deal can truly be stress tested. Tom Kastner shares 12 tips his company has used (and are currently using) to keep deals rolling.

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Punching Out! What Is a Quality of Earnings Report?


For the past several years, quality of earnings reports (also called “Q of E” reports) have become more popular in M&A deals. Whether the seller’s financials are audited, reviewed, compiled, in QuickBooks, or on the back of a napkin, a Q of E report helps buyers become more comfortable with the seller’s numbers and identifies risks in the business. Tom Kastner explains.

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Punching Out! Why Buy a PCB/PCBA Shop?


Overall, the U.S. economy is strong, and manufacturing has seen a resurgence over the past decade. Still, the overall trend for investors and small company buyers for 20 years has been in asset-light, tech-enabled services businesses, such as Uber, Amazon, Airbnb, etc. Given that background, why should someone buy or invest in a North American manufacturing business such as a PCB or PCBA company? Tom Kastner explains.

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Punching Out! Lessons From Recent PCB/PCBA Buyers


Tom Kastner reached out to several buy-side clients as well as others who have recently made acquisitions in the PCB and PCBA sectors. He shares some common themes and their thoughts on what went right, what went wrong, and what they would do differently next time.

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Punching Out! Trust Is a Major Factor in M&A Transactions


Trust is critical in M&A transactions. Both parties are naturally suspicious of each other, and tensions run high even in the smoothest of deals, so any small molehill can be magnified into Mt. Everest. To avoid bigger problems, Tom Kastner emphasizes the importance of establishing trust from the beginning and continuing to be trustworthy throughout the process.

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Punching Out! SMTAI 2019


My firm goes to a lot of trade shows—at least one each month—because it is a great way to meet business owners as well as their trusted advisors. Trade shows are also an excellent way to hear industry information that otherwise we would not hear (aka rumors).

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Punching Out! What Goes Into the Confidential Memo?


One of the key materials used in the business sale process is the confidential memo or book, which is essential if an owner is considering a sale of the business. Even if you are considering a sale in the future, it is good to have a basic book ready in case an unsolicited buyer comes calling.

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Punching Out! Mid-2019 M&A Round-up


There have been quite a few deals in North America in the PCB and EMS spaces over the past 12 months. I have attempted to track down a fair number of these deals and list them, but many are not publicized. What’s remarkable is that so many of these deals involve private equity. PE firms are certainly a great source of liquidity for owners in these sectors. PE-owned firms tend to make a lot of add-on acquisitions, so we’ll look at these companies to acquire many smaller shops in the coming years. Here are some of the most notable PCB, PCBA, and EMS deals since December 2018.

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Punching Out! Why Can’t You Sell Your Business on eBay?


Wouldn’t it be a lot easier if we could buy and sell companies online? Owners could avoid a lot of trouble and fees as well as get deals done quicker. Unfortunately, it’s not that easy. Here are seven reasons why a business cannot be sold online and how owners can make the sale process go more smoothly.

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Punching Out! Exit Planning 101


Proper planning can take away many headaches for the seller and buyer as well as increase the value of the company, help obtain better terms, and overall, make it easier to complete a transaction.

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Punching Out! Delegate and You Shall Be Set Free


It is good for owners/CEOs to step back a few times a year and think about what they do well, what they like to do, and what others can do better. Delegating simple tasks, like sweeping floors, is easy, but delegating sales management or quality control might be tougher. Although delegating is difficult, almost no business can grow solely on the efforts of the owner.

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Punching Out! What’s Special About Your Business?


To help sell your business to buyers, or to sell your products and services to customers, it is a good idea to find out what is special about your business. It is also important to know how to communicate what's special. Read on to find out how you really compare to the competition, and what concrete metrics and KPIs you can use to judge your own performance.

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