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Investment Banking firm Exit Partners ramps up for another banner year


James Frye, former owner of Texas-based 5J Oil Field Services, LLC and 5J Trucking, LLC, hired lower middle market M&A advisor Mike Stengle to sell his drilling rig relocation and heavy haul oil services businesses in 2012. The timing in 2012 ended up being terrible with natural gas touching multi-decade lows that year. The interested buyers lowered the price and broke the deal.

Six years later, Frye reconnected with Stengle to give it another go.

“I talked with two or three different advisors between 2012 and 2018, but I ended up sticking with Mike because we have a good relationship and I trusted him,” said Frye about Mike Stengle. Mike is a managing partner and co-founder of Exit Partners, LLC, an M&A investment banking firm in Plano, Texas.

In February 2020, Mike and James successfully executed the sale of Frye’s two entities to SMG Industries, Inc., an oilfield services company based in Houston. Stengle re-prepared the business for this transaction, confidentially uploaded the deal materials to Axial, and began inviting buyers to explore the deal. SMG came forward as part of that process and ultimately won the deal. “Axial drives buyers that are not known to us,” Stengle said. “It’s why we use the platform. It helps ensure we drive great outcomes for our clients.”

Exit Partners, with Stengle and his co-managing partners Jon Mueller and Mark Travis at the helm, has quietly made a name for itself — particularly in Texas — since the firm’s launch in 2016. The trio provide sell-side, buy-side and strategic advisory services to lower middle market companies spanning numerous industries, including energy and technology. The managing partners spend 95% of their time advising sellers with $10 million to $200 million in annual revenue, and most of the firm’s business comes from referrals, Stengle said. 

“Unsurprisingly, what we find is that once we close a deal in a certain industry, we have people calling us, asking if we can sell their company,” he  noted.

Exit Partners’ Deal History

Over the past six years Exit Partners has done about a dozen deals, including four in 2022. Last year the firm advised RSK Transport, LLC, on its sale to Hazel’s Expedited Freight; Lake Trucking Inc., on its sale to Certified Crane & Rigging Inc.; MIROC, a provider of telecom components and accessories, to Power-Utility Products Co. (PUPCO), owned by investment firm WJ Partners; and digital training and services company Linkage Design on its sale to Mechdyne Corp. (The deal closed on December 31, 2021 but was funded in on January 2, 2022.) 

In 2021, Exit Partners advised Crimson Steel Supply, LLC, a rebar fabricator, on its sale to Argonaut Private Equity, both based in Tulsa, Okla., and helped big data consultancy Venture Development Center of Ramsey, N.J.,  sell to multi-channel marketing company Stirista, which was backed by investment firm Wavecrest Growth Partners.

Being immersed in numerous industries makes the managing partners’ jobs more difficult, due to the amount of research needed to learn various industry terminology, Stengle acknowledged. “But if clients’ revenues and profits are adequate, and they are not overburdened by customer concentration and lawsuits, we quickly get up to speed and go for it. That’s actually an area where Axial can be particularly helpful to us given the platform’s buyer reach. It lets us pursue transactions outside our core buyer universe.”

Stengle’s Career Path into M&A

Stengle grew up in Texas, attending the University of Texas at Austin. He spent his first 15 professional years in the financial planning sector, started a few businesses of his own and helped an owner sell his company. At that point, Stengle said, he realized he enjoyed M&A more than operating businesses. So in 2000, he began his M&A advisory career with Capital Alliance, where he met Mueller. He originally met Travis at his golf club and recruited him to work at Capital Alliance. Sixteen years later, Stengle, Travis and Mueller formed their own investment banking firm.

Exit Partners does not take on too many assignments, which can set the firm apart from other investment banks, Stengle noted. “We like to keep it small enough where we can adequately service each client’s  needs and not feel too stretched from one client to the next.”

In addition, the firm’s managing partners oversee every transaction, and don’t put a time stamp on when the deal will close. “Once we accept you as a client, we’re going to take care of it all the way to the finish line,” Stengle added. Exit Partners also takes on clients with or without a retainer, he noted.

Strong Reviews

Two years ago, Exit Partners was recognized as one of the top 20 lower middle market investment banks because of the firm’s client quality and deal process effectiveness. But the partners’ success started long before they launched the firm. Collectively, the managing partners had worked on dozens of transactions before joining together to form Exit Partners. 

Top 20 Investment Banks [Q1, 2021]

Fellow Texan and cashed-out entrepreneur Hank Reeves, former owner of J4 Fluids Services, calls Stengle a “rock star” for what he did for him and his former company. In 2014 while Stengle was still at Capital Alliance, he helped Reeves sell his company to U.S. Shale Solutions for a healthy $36 million. 

“Mike brought a parade of people through here, at least six to seven potential buyers,” Reeves said. “He’s amazing with people, doesn’t get upset, doesn’t get angry. He makes everyone relax.” Reeves was also impressed with Stengle’s willingness to go to somewhat dangerous job sites, wearing a hard hat, safety glasses and steel-toe boots. “The sale would not have happened without Mike,” he stated.

Reeves is now co-owner of a Texas-based alcohol distillery, Limited Spirits, LLC, and is exploring the sale of that business within a year, with Mike Stengle again as his advisor, he said.

Reeves will have to get in line. The year 2023 looks to be another banner year for Exit Partners, with two deals currently under letter of intent and a couple more about to go under LOI, according to Stengle.

None of this surprises Jimmy Frye, who based on his experience suggests sellers work with a trustworthy advisor to value their company properly and negotiate a deal. 

“They are good guys and super trustworthy — and just real straightforward and straight up,” he said about the Exit Partners team. “You need to know what the lay of the land is and they do a good job of telling you that.”

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