Corporate Development Origination Case Study
Alex Karlsen
October 17, 2019
A private equity backed manufacturer of LED lighting components. Already growing fast from internal efforts, the firm was now looking to grow through acquisition.
Case Study: A Captarget Corp Dev Client
A private equity backed manufacturer of LED lighting components. Already growing fast from internal efforts, the firm was now looking to grow through acquisition.
The client was not a professional buyer (like a private equity fund), they were hesitant to pay bankers, or sign any success fee-based “finder” firms. They viewed the cost as simply too high. Additionally, with a fairly small management team and no dedicated internal corp dev executive. Each key executive wore many hats, leaving the acquisition search sporadic.
The Catalyst
Due to the niche focus of the company’s operations, anything less than a very thoughtful, diligent approach to sourcing acquisition targets simply did not create results. Deals presented by bankers commanded high price premiums are were often part of competitive, highly visible auction processes which the client preferred to not participate in.
Considered Solutions
- Dedicate more CXO time to the search initiative knowing that in a rapidly growing business, bandwidth for new initiatives was already limited.
- Retain a buy side M&A firm to handle the search and outreach knowing that the success fee costs could reach into the hundreds of thousands of dollars.
- Outsource the prospecting, outreach and vetting to CAPTARGET.
Adopted Solution?
The client engaged CAPTARGET on a 6-month commitment basis to source acquisition opportunities directly from sellers. This allowed the client to avoid costly auction processes, eliminated the requirement to pay success or finders fees, and ensured an expert party was accountable for their success.
Net Impact
By month 4 the company has issued 3 LOIs, and have had conversations with more than 30 qualified targets.
