Does anyone have experience in search targets in need of turn-around??

July 04, 2022

by a searcher from Georgia Institute of Technology in Atlanta, GA, USA

Currently in pre-LOI discussions with a 20-year-old technology intensive capital equipment manufacturer here in the southeast. The capital equipment space can be very cyclical in its nature and the previous 2 years of pandemic did not help (although they successfully navigated 2 sizeable PPP loans to forgiveness).

While I realized the traditional search looks for stable profitability as a key deal component, is there anyone in the community that has experience/familiarity in the acquisition of B2B industrial turnarounds (i.e. starting with break-even EBIDA)?? Owners are open to staying on for up to a year, and of course, are open to a seller financing component of the structure. Gross Margins for their products are in the 50~60% range when the market returns.

Appreciate thoughts from anyone with experience in this area.
Thanks!

Reply by a professional
from Vanderbilt University in New York, NY, USA

While I have not had any experience with search specific turnaround opportunities, I began my career in New York working with EY in restructuring. So spent several years works with companies in restructuring and turnaround situations. In addition, my first major client for my CFO consulting firm was a restructuring/turnaround situation with which my partner and I were successful. Happy to share thoughts and help you if I can.

Reply by a searcher
from University of Texas at Austin in Dallas, TX, USA

I don't have experience but most of the people I've spoken to and most of the material I have read has said to stay away from turn around situations. If you've got experience in the industry or with turn arounds maybe you can pull it off, but I think you're doing the right thing in seeking out someone with turn around experience here.

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