COULD YOU SHARE ANY ADVICE FOR GROWTH-FOCUSED ACQUISITIONS?
I'm in a few conversations with small firms with a lot of growth potential that are seeking acquisition (similar to start-ups). These opportunities are different from traditional acquisitions in that:
+ relative valuation is higher (e.g., usually multiples of revenue, not EBITDA);
+ significant additional investment might be required to grow (e.g., the firms typically have a great product but lack the infrastructure to scale, such as sales, marketing, product support etc.);
+ the founders often want to continue on in some capacity (e.g., as a limited owner) and are often directly very intimately involved in all aspects of the business
Do any searchers/investors/operators have experience with this type of acquisition? Specifically, I'm wondering ...
1) Does it even make sense to pursue these types of acquisitions? (e.g., vs. a more 'creative' solution like just partnering with the founder as an employee with significant equity)
2) Assuming answer above is yes, how have others approached these types of acquisitions? (e.g., where did you seek funding? Did you acquire first then raise further funding for growth or do it all at once? What did the capital structure look like?)
Any advice would be greatly appreciated--thank you!