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December 28, 2021 Biz Spotlight

Woodbridge-based M&A firm’s marketing-based approach finds global buyers for local companies

image | adobe stock.com
By Matthew Broderick

This past June, after 20 years of ownership, Jack and Linda Casey, founders of New Hartford-based Northeast Work & Safety Boats LLC put their company up for sale.

Despite growing the company — which provided safety boat services for inland waterway projects including bridge construction and maintenance — to 31 boats with work in 11 states, Jack Casey said taking the company to the next level required additional capital that he felt a larger player in the market would be better positioned to fund.

“It was a very emotional [experience],” Casey said. “But we were able to find a company that kept all our employees and continues to work with our same customer base.”

The sale of mid-market businesses like Casey’s, which was sold for an undisclosed sum to Ontario-based Capital Infrastructure Group Inc., is becoming more common in a mergers-and-acquisitions market that saw an uptick in the latter half of 2021, as company valuations rebound from a pandemic-fueled slowdown in 2020.

According to Pitchbook, deal activity in the third quarter of 2021 increased by 23.5 percent, or 2,714 deals, vs. the second quarter, while the total value of those transactions increased 23.5 percent to $361.1 billion.

That’s a positive trend for M&A firms like Woodbridge International LLC, which helped Casey sell his company. The firm has grown substantially since its founding in 1993 fueled by the internet and a proprietary marketing-based approach to the M&A industry.

“We specialize in selling businesses and [our value proposition] is how we can create a market for our clients that makes them feel the market [for their business] has been truly tested and they’re selling to the right party,” said Don Krier, senior managing director/partner of Woodbridge.

He said unlike many firms that look for local or regional buyers, his company has invested in building a database of more than 5,000 private equity groups and family funds and a listing of more 420,000 C-suite executive emails.

“We’re using tools to research buyers around the country and the globe,” Krier said.

Don Krier

It’s a formula that’s been working for Woodbridge and its client base. This year, Krier said, Woodbridge clients saw an average of 22 bids per company, compared to an estimated industry average of five or six bids. Those numbers have helped grow Woodbridge’s client base steadily over the past 15 years, he said.

Larry Reinharz, a partner at Woodbridge who joined the firm in 2005, said the number of annual deals the firm is handling has increased from four or five to an estimated 30 deals the company expected to complete in 2021.

Part of the firm’s growth is owed to trends in the market it focuses on.

“We sell businesses in the $5 million to $150 million range,” Reinharz said. “And we specialize in companies that are doing well and performing; we don’t deal with distressed companies.”

According to Pitchbook, the majority of M&A deals (67.8 percent) completed in 2020 were under $100 million. At the same time, buyers looking to acquire profitable companies since the pandemic are making premium offers, according to market research by Prairie Capital Markets LLC.

Interactive experience

Woodbridge has also strategically expanded its staff from a handful of employees in the early years to more than 75 today, with segmented functions, including full-time book writers, a research team (to build the database of potential buyers), financial analysts, outbound marketing professionals and sales closers.

“M&A is a very project-based business and it can take up to six months to sell a client’s business,” said Reinharz. “By segmenting, each team can focus [on their role] and not get distracted.”

That’s particularly important for Krier and Reinharz, who are working the pipeline of new prospects — a time-consuming process of qualifying the right type of leads. Krier estimates his firm speaks with roughly 3,000 prospective clients annually to screen, with 600 to 700 meeting the firm’s minimum profitability requirement and looking to sell a controlling interest in the company.

“Of that number, we might have 150 [companies] that are properly valued,” Krier said, “and we might [secure] 10 to 20 percent of those as clients.”

To educate potential clients, Woodbridge annually sends thousands of books it produces to its target market. Books cover topics from how to drive a higher sale price to understanding what buyers want.

“We research and identify who our [prospective] client is, and our direct marketing helps tremendously,” Krier said.

The biggest competition, Krier said, is often from business owners trying to sell their business themselves.

“They often find one potential buyer, but we always tell prospects, ‘If you have one buyer, you have none,’ ” Krier said. “We help create competition and a sense of urgency for buyers.”

He said many owner-led deals fall through because the negotiating process takes too long, or the buyer isn’t capitalized enough to complete the purchase.

Larry Reinharz

As part of preparing clients to sell their businesses, Woodbridge offers a two-day workshop that helps them understand how to best position their company and talk to potential buyers. Woodbridge also creates brief videos about each company they represent, which are shared with a handful of top buyer prospects.

It’s a level of support that Jack Casey said he did not receive from the first broker he approached to sell his boat business.

“My first experience wasn’t as interactive,” Casey said. “We didn’t get a chance to see potential buyers [to the level as Woodbridge].”

Typically, Krier estimates, his firm spends an average of 45 days helping prepare clients to sell their business, although the entire process, including research, screening buyers and closing deals typically takes 180 days.

The privately-held Woodbridge did not disclose its annual revenue, which is generated as a percentage of each sale. Reinharz did say the value of the firm’s annual client liquidations has increased from between $20 million to $40 million 15 years ago, to nearly $450 million in 2021. And nearly 20 percent of Woodbridge’s buyers come from foreign countries, led by Canada.

Both Krier and Reinharz said they remain bullish on the M&A market and their firm’s future.

“In any given year there are tens of thousands of people who want to sell their business whether they want to retire or can’t handle the growth themselves and finance it,” Krier said. “The market opportunity is huge.”

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