For local manufacturers, buyers with available capital are scouring the market for deals at the same time more owners are getting comfortable with the idea of selling their businesses after having successfully navigated through the recession. But the supply of deals remains limited, adding legs to the seller’s market that owners are are using to their advantage to dictate deal structures.
The imbalance between buyers and sellers has allowed owners to command more creative deal structures than in the past, said John Kerschen, managing director, Charter Capital Partners. Because the supply of deals is limited, buyers are more willing than in recent years to negotiate an earn-out, the sale of a minority interest or specific commitments from the buyer to the company’s employees or its community.
“I think it’s an illustration of the power that sellers have,” Kerschen said. “Where they might have had to choose between selling or keeping their business running … today they can dictate that and there are plenty of buyers that will adapt their structures to meet the sellers’ requirements.” more