Growing out of a Business Consulting and Valuations, and later a Main Street Business Brokerage firm that began in 2002, Veld Mergers & Acquisitions has become a beacon of light within its industry. Here we learn more from its Director, Michael Wildeveld, as the business wins its title in the M&A Awards 2023.
To begin, Michael Wildeveld gives us further insight into Veld Mergers & Acquisitions’ background, with his words speaking volumes in terms of the reasons for its success: “Rather than beginning as dealmakers in private equity or with Wall Street type of investment banks, we began with the smaller, more challenging deals that tend to have a lot more moving parts and clients with varying levels of financial sophistication.”
He continues, “Believe it or not, the more ‘upmarket’ a company is, the easier preparing it and its owner to go to market tends to be. Larger businesses have a far greater buyer pool, and access to talent and capital are no longer an issue. A transaction becomes a bit more academic – it essentially boils down to valuation and deal structure. The stakeholders tend to be dispassionate, so they are far more rational and predictable. When working with founders and their businesses in the lower middle market or even on Main Street, you can sometimes throw logic out the window. Companies in these markets are the owners’ babies, and all parties better be prepared to treat them as such if they want to transact.”
Veld Mergers & Acquisitions’ client base isn’t comprised of buttoned-up blue-chip businesses. It’s made up of founder or family operated companies that have persevered for decades to achieve a remarkable level of success despite their humble beginnings and substantial market forces working against them.
Demonstrating the variety of sell-side engagements Veld Mergers & Acquisitions takes on, Michael informs us, “This month, I’ve been focused on keeping three very different deals moving towards the
finish line. The first is a 45-year-old retail furnishings chain located in four states in the mid-Atlantic region. Despite the challenges retail has faced in large urban areas, we’ve managed to attract a variety of competing private equity bidders. Each buy-side team has been led by partners that are the chain’s longstanding clients. Rather than focusing on the bottom-line, the seller chose to work with the buyer that most reminded her of herself, as she felt they would maintain the family-like culture she’s created.
“In a second instance, we are entertaining offers on a global beauty care brand. The two founders left corporate America (one hailed from Big 5 Accounting while the other came from Big Beauty). These partners felt they could better service their luxury-oriented skincare customers with a unique model and disruptive sales channel. They used their nimble size to their advantage against the majors with coveted retail shelf space. They now out-compete them in their niche and have generated over $70 million in revenues annually on three continents.”
The last example involves a specialty contractor that Veld Mergers & Acquisitions has an established relationship with, as Veld sold him a ‘trophy’ business a decade ago, and has since sold it for him. This client left high school in the 10th grade to drive dump trucks and operate tractors for his father. As a specialty operator, he became an industry celebrity due to his well-honed skill set and ability to size up the most efficient way to complete a job. After working for the industry majors, he went out on his own with a vision to capitalize on his experience to tackle a broader market segment than competitors could. It turned out that literally spending his formative years “in the trenches” allowed him to recognize opportunities that publicly traded competitors miss, since their leaders were never operators. The company is set to surpass $50 million in revenue this year with an incredible margin at twice the industry average.
While Veld Mergers & Acquisitions is already in discussions with industry leaders, including his former employer, this client was just awarded a $250M government contract over five years. To fully capitalize on this, they now need growth capital more than ever. Despite being in the midst of negotiations, their market position and valuation has dramatically changed so all parties will adapt accordingly.
“These stories differ but also remain the same,” Michael says. “Each is a Cinderella story about founders with vision and the necessary grit to realize it. None of them are MBAs and none of these are glamorous tech start-ups. Each made it without access to capital, or guidance from their board of directors, let alone private equity partners. We are honored to be entrusted to see the results of their decades of toil through to their next chapter. In these instances, it feels like we are managing their legacy as much as we are their transaction.”
Fullscreen ModeExit On Your Terms Discovery Program
To help owners gain clarity on their transition options and to better prepare them and their companies to potentially transact, Veld Mergers & Acquisitions launched “Exit On Your Terms” in 2023. The comprehensive course touches on business valuation, personal readiness, business planning, tax strategy, value maximization, and legacy planning. It is geared towards owners who are 1-5 years away from going to market, but want to approach a merger, sale, or even an internal transition prepared and well-informed.
Rather than being academic in nature, a participant (which isn’t necessarily a Veld Mergers & Acquisitions client) can take the course at their own pace. They can participate publicly and leverage the experience of other participants, or they can opt to not share their identity. In fact, there are “Do It Yourself”, “Done With You” (most popular) and even “Done For You” options available. In Michael’s words, the course was created “to reach a larger number of comparably sized business owners earlier in their decision process.”
He elaborates, “We’ve incorporated the lessons we’ve learned in orchestrating over 1,000 transactions in 20+ years so that owners who are contemplating a transition – whether that be a sale, recapitalization, succession event, or sometimes to achieve growth prior to selling – can not only learn from our experiences, but also from the course contributors from the financial, wealth, insurance, tax, legal, estate planning and other advisory industries.
“We are able to provide owners a broad overview of business valuation, exit planning, and mergers and acquisitions concepts in a non-charged atmosphere. Neither ourselves nor the vetted industry professionals that contribute are placing our participants into their own sales funnels. It’s a ‘protected’ environment designed to help owners to figure out their options and to gain resources, without obligating them to a particular tract or to work with any specific advisor.”
Owners leave the course with an understanding of how they can:
- Bolster their firm’s valuation (via traditional methods + “hacks”)
- Explore the transition paths available (there are more than 4!)
- Evaluate a variety of deal structures (and assess pros/cons of each)
- Understand buyer groups and how valuations differ for each
- Employ tax-mitigation strategies, to retain more sale proceeds
- Craft a plan to achieve their ‘life after transition” goals
“What’s nice is that the course is independent from our practice and is comprised of a group of exit planning professionals who are genuinely interested delivering value to those who need it most,” Michael comments. “As a result, participants feel they are collaboratively evaluating their options alongside their peers – sharing their identity or company is voluntary.
“Participants can leverage the ecosystem to their advantage to share ideas or even potentially collaborate with others in a number of ways. They are able to obtain broad, unbiased insights from a greater variety of industry professionals than they would likely be able to otherwise come across, without ever feeling they are being led down a particular path.”
Throughout its years of operation, Veld Mergers & Acquisitions has learned that owners often feel they are pigeonholed to pursue a particular strategy based on their primary advisor’s area of expertise, licensing, or firm focus. For example, if the advisor is a sales intermediary, the solution for every owner may be a third-party sale; whereas if they are an ESOP (Employee Stock Ownership Plan) specialist, this will invariably become their go-to one-size-fits-all solution.
Michael goes on to share, “A famous Pricewaterhousecooper’s satisfaction survey surprisingly revealed that 75% of owners regret their sale one year after a transaction. The regret is not because they didn’t receive enough for their business, but rather, they weren’t satisfied with their transition choices, tax mitigation strategies (or lack thereof), and most importantly, they didn’t consider or incorporate their post-transition goals into their transaction.
“Our course takes a holistic approach to address each of these key topics and far more in a safe, collaborative environment where several, often very different options may be explored with the costs and benefits of each weighed. Although there is no obligation to work with any of the presenters, most of them offer participants favorable rates should they choose to do so. What’s more, participants have the unique opportunity to pursue parallel exit or potential transition tracks until the best solution becomes clear.”
Michael shares that while Veld Mergers & Acquisitions has an 82% success rate when taking clients to market, the industry average is only 30%. He attributes this to many factors, including clients choosing the wrong representatives, or ones that are inappropriately qualified for their company’s industry or size, and owners being unprepared for the sale process and what ‘life after sale’ is going to look like. This is in addition to, surprisingly, owners not having a clear understanding of the variety of transition options and tax mitigation strategies available well enough in advance in order to pursue these opportunities – let alone several exit paths at once.
He states that advance planning is the most critical factor in achieving the most successful outcome possible, but without knowing what they don’t know, owners often set themselves up for failure by approaching an exit planning or M&A Advisory firm when they are only 12 months out from their intended transition.
Overall, we wish the Veld Mergers & Acquisitions team and the Exit On Your Terms course staffers all the best as they continue to help business owners to “arrive at a light bulb moment” when they can confidently choose the best path forward for themselves, their company and their legacy!