Curated news articles and commentary on SMB investing, acquisitions, and market trends.
This article on Onrec highlights a valuable resource for those involved in Entrepreneurship Through Acquisition (ETA) and small business investing: a database of top search fund investors specializing in acquisitions with $1M - $5M EBITDA. For investors and operators in the SMB space, this database is crucial as it identifies potential funding partners who understand the nuances of small-scale acquisitions. Search funds are a popular vehicle for entrepreneurs looking to acquire and grow established businesses. The focus on the $1M - $5M EBITDA range is particularly relevant, as it represents a sweet spot where businesses are often profitable and ripe for operational improvements without the complexities of larger deals. For SMB investors, having access to this database can streamline the process of identifying aligned investors, thus accelerating deal flow and enhancing the potential for successful partnerships. It also serves as a strategic tool for entrepreneurs aiming to connect with investors who have a track record of supporting small acquisitions. Overall, this resource underscores the growing sophistication and specialization within the SMB acquisition market, providing a competitive edge to those who leverage it effectively.
- SFV Team
It seems the article content was blocked by Cloudflare, which is a common security measure to prevent online attacks. This highlights the importance of cybersecurity in today's digital landscape, an area that SMB investors and operators should not overlook. As more small and medium-sized businesses (SMBs) transition to digital platforms, ensuring robust security measures becomes crucial to protect data and maintain trust. Investors in the SMB space should prioritize companies that have strong cybersecurity protocols in place, as this can significantly impact operational stability and customer confidence.
The article features an insightful interview with Nicolò Vergani of V&A Capital, shedding light on the investment strategy and outlook for middle market M&A. This is particularly relevant for investors and operators in the SMB acquisition space, as it highlights the opportunities and challenges within the lower middle market—defined as companies with $15-50 million in revenue and $2-8 million in EBITDA. Vergani discusses V&A Capital's strategic focus on U.S. manufacturing and distribution businesses, emphasizing the value in these niche sectors. His approach leverages deep industry experience to create value through operational improvements and strategic growth, rather than relying heavily on debt. This reflects a broader trend in ETA (Entrepreneurship Through Acquisition), where creative deal structuring and active management are critical. The team's diverse expertise, including backgrounds in private equity, management, and accounting, sets V&A Capital apart in the competitive independent sponsor landscape. This diverse skill set is crucial for navigating the complexities of lower middle market deals. For SMB investors and entrepreneurs, the article underscores the importance of experience and strategic focus in successful acquisitions. It also suggests that the lower middle market remains fertile ground for finding value-driven opportunities, making it a key area for investors to watch. Overall, Vergani's insights provide a valuable perspective on navigating the middle market M&A environment, with practical implications for those involved in ETA and SMB investing.
The article from Osler, Hoskin & Harcourt LLP delves into the significant succession challenges facing Canada’s SME market due to the impending retirement of a large number of business owners—a phenomenon termed the "silver tsunami." Over 75% of Canadian small business owners plan to transition out within the next decade, yet less than 9% have formal succession plans. This presents a critical opportunity for investors focused on search funds and the Entrepreneurship Through Acquisition (ETA) model. Search funds provide a compelling solution by pairing long-term capital with dedicated owner-operators, ensuring continuity and stability in businesses valued between $5 million and $50 million. These businesses, often too large for individual buyers yet too small for traditional private equity, are ripe for search fund acquisition. The ETA model addresses the common pitfalls of traditional succession routes such as impractical family transfers and misaligned private equity strategies, by offering a personalized approach that prioritizes business continuity. For SMB investors, this article underscores the vast potential in leveraging search funds to tap into the $2 trillion wealth transfer. It highlights the importance of strategic alignment, structured deals, and investor support in executing successful acquisitions. The demographic shift presents both a challenge and an opportunity, positioning search funds as a pivotal mechanism for sustainable business transitions in the Canadian SME landscape.
The article "Where Fundless Sponsors Turn for Capital" explores the growing landscape of independent sponsors in the lower middle market, highlighting their significance in the evolving private equity ecosystem. HighVista Strategies, a key player in this space, has raised $675 million for its latest fund targeting this sector, underscoring the increasing institutional interest in deal-by-deal private equity strategies. For SMB investors and those involved in Entrepreneurship through Acquisition (ETA), this trend is noteworthy. Independent sponsors offer access to unique, often undervalued opportunities outside traditional channels. Their success hinges on performance rather than management fees, aligning their interests closely with investors. This model is particularly appealing as it promises potentially higher returns in a less competitive pricing environment. The article also notes the proliferation of independent sponsors, with over 1,200 groups now active in the U.S., and their growing role in deal flow, as evidenced by their 27% share of closed deals on platforms like Axial. This surge indicates a robust opportunity for investors looking to diversify their portfolios beyond brand-name PE funds. In summary, the independent sponsor model represents a fertile ground for SMB acquisitions, providing investors with access to niche markets and aligning incentives for optimal performance. This is a pivotal development for those focused on lower middle market investments and ETA strategies.
Butler University is set to host a conference focused on "Entrepreneurship Through Acquisition" (ETA). This event is particularly relevant for investors, entrepreneurs, and operators interested in the growing trend of acquiring existing businesses as a pathway to entrepreneurship. The conference will likely cover strategies for identifying potential acquisition targets, securing financing, and managing post-acquisition operations. For investors, this conference represents an opportunity to gain insights into a burgeoning sector that offers potentially lower-risk entry into business ownership compared to starting a business from scratch. The focus on acquisition could appeal to those looking to diversify their portfolios with established companies that have proven revenue streams. Entrepreneurs and operators attending can expect to connect with like-minded individuals and industry experts, enhancing their understanding of market dynamics and operational challenges. Networking opportunities might also lead to partnerships or mentorships that could facilitate successful acquisitions. Overall, the event promises to be a valuable resource for anyone interested in leveraging acquisition as a means to business ownership, providing practical knowledge and strategic connections. This is a must-attend for those looking to capitalize on the ETA trend.
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Search funds are gaining traction in the Asia-Pacific region, offering a unique investment model distinct from traditional venture capital or private equity. Unlike VC, which targets early-stage startups with high risk, search funds focus on acquiring established, profitable businesses. This model involves an entrepreneur raising capital to search for and acquire a stable company, which they then manage and grow. Notably, search funds offer an impressive average internal rate of return of 25%, outperforming both venture capital (12%) and private equity (15%). They are particularly successful in regions like Singapore and Australia, where they provide solutions to succession challenges faced by SMEs. Many businesses, especially those founded in the 1980s and 1990s, struggle with leadership succession, making them ripe for acquisition by search funds. For investors, search funds present a compelling opportunity with lower risk and steady returns. They target companies with operating incomes between $1 million and $5 million, often overlooked by larger funds, providing a niche yet lucrative market. As demographic shifts continue to impact business succession in the Asia-Pacific, search funds could play a crucial role in preserving and growing the legacy of these companies. In summary, search funds are not just a growing trend but a strategic investment avenue offering robust returns and stability, especially in regions facing succession challenges. This makes them a worthwhile consideration for investors seeking diversified exposure in the SME sector.
It seems like the article didn't parse correctly, but from the title, it’s clear that Mare Group and Borgosesia successfully closed an oversubscribed €7.5 million fund for EasyGo. This is a positive signal for investors, indicating strong interest and confidence in their search fund strategy. Oversubscription suggests robust demand and potential growth opportunities that investors might want to explore further. This development could be particularly relevant for those interested in European market dynamics and the search fund model. It's worth keeping an eye on how they deploy this capital for acquisitions and growth.
EasyGo's successful closing of an oversubscribed €7.5 million search fund, backed by notable investors like Mare Group and Borgosesia, is a significant development in the SMB acquisition landscape. This achievement underscores the growing interest and confidence in the Entrepreneurship Through Acquisition (ETA) model. For investors, this reflects a robust appetite for investing in smaller, scalable businesses with strong growth potential. The backing by established entities like Mare Group and Borgosesia not only validates EasyGo's strategy but also highlights the potential for lucrative returns in the SMB sector. For entrepreneurs and operators, this signals an increasing availability of capital and support for those looking to acquire and grow small businesses. This trend is indicative of a broader shift towards value creation through active management and operational improvement in the SMB space. As search funds like EasyGo continue to gain traction, they offer a compelling opportunity for investors to participate in the growth of niche markets and underserved industries. This development should be closely watched by those involved in ETA, as it may signal further opportunities for collaboration and investment in the sector.