The Bootstrap Difference

“We are owner-operators who honor the legacies of bootstrapping entrepreneurs by unlocking the potential of the companies they built.”

Investment Approach

  • We are experienced, successful entrepreneurs
  • We have a long-term horizon
  • We provide day-to-day leadership
  • We will partner with entrepreneurs seeking growth capital or to implement a succession plan

Investment Approach

Size:

  • Revenue from $5 to $20 million
  • EBITDA from $1 to $2.5 million

Ownership:

  • Control Preferred

Sector:

  • Business services, logistics and distribution
  • Defensible, measurable differentiation or niche market position

Stage:

  • Commercialization and growth stages

Location:

  • Illinois, Wisconsin, Indiana and Michigan

Even Buyers Get Value from the Broker

By admin
March 29, 2017 7:33 am

Even Buyers Get Value from the Broker

Small business buyers, and even many sellers, love to complain about brokers and investment bankers. In the midst of a contentious deal, we have heard some epic rants and may have even indulged from time to time ourselves. But the truth is that these advisors bring significant value to the deal process that benefits both buyers and sellers.

How do Brokers Add Value?

Accelerator:  Brokers add credibility to business owners’ processes which causes buyers to act with a sense of urgency and the deals to move more quickly.  Similarly, a broker’s involvement signals to buyers that owners are committed to selling their companies and that they have reasonable valuation (and other) expectations.  Through these signals and by formalizing the sale process, brokers reduce the number of broken deals and make the deal processes more efficient.

Auctioneer:  Brokers are able to bring many potential buyers into a process and have the resources to keep the process moving with several of them at a time, especially early in a process prior to the execution of a letter of intent.  While buyers would prefer not to have to compete for deals, the resulting increase in price may be a fair trade-off for the deal process efficiencies brokers provide.

Diplomat:  It may be counterintuitive that an aggressive broker can keep the peace.  By leading the negotiations, however, a broker can preserve the seller’s role as “good cop” and protect the relationship between the buyer and seller, who frequently must work together following deals in the lower middle market.

Detective:  The smaller the deal the more likely a seller’s advisor will be aware of, and may have relationships with, more potential buyers than the business owners previously knew.  But even in larger deals, it is rare that an M&A advisor cannot materially expand the list of serious buyer candidates.  It is their job to understand the acquisition strategies of as many buyers as possible.  The good ones do this well and help both buyers and sellers find each other.

Recommendations

Despite our endless search for the unshopped deal, we do recommend that all business owners who intend to sell their companies should retain an M&A advisor or a broker. We reluctantly admit that, while the sellers reap the most benefit from a broker’s involvement, we buyers also benefit. It is important, though, that business owners run a fulsome evaluation process so that they identify and ultimately retain the advisor who is most qualified and experienced in selling businesses similar to theirs. An unqualified or inexperienced broker can destroy as much value as a good one can create.

Bootstrap Capital

If you are aware of business owners who would like to sell their companies, please consider introducing them to Bootstrap Capital. We are keenly in tune with the issues business leaders face when they decide to sell their companies, as well as many other nuances of transacting in the lower middle market. Bootstrap Capital is a patient counterparty and can be a constructive partner in helping sellers through the sale process. We also understand the roles that brokers play in sale process and appreciate each and every deal they bring to our attention.​

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