Financial
- Enterprise value of $8 million – $60 million
- Revenues of at least $8 million
- Adjusted EBIT of $1.5 million – $8 million, with EBIT margins of at least 10%
- Gross Margins over 25%, indicating strong market position & differentiated products
- Modest capital expenditure and working capital requirements; high return on invested capital
- Scalable operating models and R&D models; ideally, standard-products and/or modular systems
- We will consider any size companies below our minimum hurdles for add-on/tuck-in acquisitions
Industries of Interest
Sectors where intellectual property, proprietary processes, trade-secrets, engineering, brands, and formulations create unique competitive advantages, including:
- Manufacturing of proprietary products and engineered products
- Manufacturing of industrial technology enabled products and equipment
- Manufacturing of capital and industrial equipment and engineered systems
- Value-added assembly (controls own IP/brand but outsources most production)
- Niche branded consumer products
- Niche software focused on non-consumer end-markets
- Selectively, niche industrial and commercial services providers
Transaction Structure and Sale Rationale
- Majority-ownership oriented buyouts & recapitalizations of 65%-100%; always flexible structuring to meet the unique goals of each specific seller
- Open to and experienced with a broad variety of sale motivations, including:
- Full or partial ownership liquidity and owner “de-risking” whereby founders and/or owner-operators sell a portion of their business, diversify their net-worth, retain operational control and leadership autonomy, and gain the support and expertise of a resourceful and proven financial and business partner. In addition, management continues to hold a meaningful ownership stake in the business, enabling significant participation in the future upside of the company.
- Cashing out inactive shareholders or shareholder consolidation
- Management buyouts
- Family business/generational transfer
- Owner/operator retirement and succession planning
- Growth capital to fuel internal expansion initiatives and/or finance add-on acquisitions
- Public and larger private companies seeking to divest or spin out/carve out a division, subsidiary, product line, or non-core operating asset
- Private investment firms seeking portfolio company realizations
- Management teams retain and/or earn meaningful and ongoing ownership via re-investment and/or incentive equity plans; Hanover Partners has a strong desire for ownership oriented management partners
- Modest and prudent use of third-party debt; moreover, we can often provide all of the junior capital (equity & mezzanine)
- Typically, all-cash deals and closing within 60-75 days of a signed Letter of Intent
- Long-term investment horizon of five-to-seven years, and often longer
Geography
- New Platform/Standalone Investments: United States and Canada
- Add-On Acquisitions: Worldwide
