Axial Radar: When Financial Buyers Turn Strategic

Dani Forman
June 13, 2022

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Radar

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Happy Friday and welcome to another edition of Axial Radar!

Private company valuations have remained quite high despite the reckoning taking place across the rest of the capital markets. Good news for strategic acquirers.

Strategics tend to flourish in inflated valuation environments – they’re able to move quicker than their financial counterparts and have shown a tendency to overpay in competitive bid processes. That age-old dynamic, however, is slowly beginning to change, and it’s in no small part due to add-on investments.

Accounting for nearly one fifth of all private equity deal volume over the last five years, add-ons are effectively transforming PE buyers into strategic acquirers. In this week’s feature Industry Trends article, we take a look at a report focused on trends in add-on investments. Based on a survey of more than 150 deal professionals, the report covers topics such as the objectives that are most important for buyers pursuing add-ons, valuation expectations, and the challenges of successfully executing add-ons. Scroll down to the bottom of the newsletter to access a free copy of the report.

Our featured buy-side members this week include a PE firm focused on the aerospace industry, a private investment firm backed by former business operators and owners, and a strategic in the metal finishing industry. On the sell-side we’ll introduce you to a leading Mexico-based financial advisory firm and an independent, middle market, private investment banking firm.

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Featured Members

	Mustang Entrepreneurs Private Equity Firm Mustang Entrepreneurs is focused on small to medium sized aerospace acquisitions. The firm’s approach is to find U.S. based aerospace businesses to invest in and grow. The team at Mustang does this by capitalizing on their operational experience and industry knowledge acquired from starting and growing a multi-unit aerospace firm, bringing a rare combination of entrepreneurship, leadership, and finance experience to each deal. View Profile

	i-Structure Investment Bank i-Structure is a leading Mexico-based financial advisory firm targeting Small and Medium Enterprises (SMEs). The firm assists corporations with a variety of financial consulting activities including company valuation, business acquisitions, divestitures and spinoffs, capital restructuring, project evaluation, capital budgeting and fundraising advisory. View Profile

	Harbour Grove Search Fund Harbour Grove is a team of entrepreneurs focused on acquiring growing middle-market companies, with a focus on B2B services, healthcare, and technology. The fund has equity resources to transact between $25mm and $100mm in enterprise value, with the unique distinction that their intuitional and family office LPs are all former operators and owners. View Profile

	MelCap Partners Investment Bank MelCap Partners, LLC is an independent, private investment-banking firm providing financial advisory services to middle market companies, including sell-side and buy-side advisory services, the private placement of debt & equity capital, and general advisory services. MelCap focuses on middle market transactions between $10 million and $250 million. View Profile

	Pioneer Metal Finishing, LLC Corporation Pioneer Metal Finishing’s mission is to create value for their customers, associates, and shareholders by providing the highest quality products and services in the metal finishing industry. Nothing is more important to the Pioneer team than these relationships based on trust, respect, and a commitment to protecting the environment. View Profile