How a Smart Buyer Won the Acquisition Against the Competition

Competition for quality manufacturing companies is at an all-time high.

That was recently evidenced by twelve offers submitted on one aerospace-related listing, which closed in August. The deal took only four months from launch to closing, which speaks volumes about the level of buyer interest and competition.

As you might imagine, several potential acquirers were very disappointed.

I’m writing this for those who were disappointed — and to share how one very smart buyer won the acquisition against significant competition.

The Company Being Acquired

My client manufactured patented and trademarked lock washers designed to prevent nuts and bolts from vibrating loose in challenging environments.

Their products completely eliminated the need for safety wire, lowering both the cost and weight of military aircraft.

Although the products had applications across additional military and commercial aircraft platforms, the owners were approaching retirement and had not sought to fully exploit the products’ broader potential.

This was a first-generation, family-owned business. The husband-and-wife ownership team ran the business remotely, while their son-in-law managed the day-to-day operation in another state.

The decision to sell the company was ultimately initiated by the son-in-law’s desire to retire.

The Buyer

The buyer is a privately held company and a leading provider of aircraft parts manufacturing, aircraft component repair and overhaul, rotables management and related engineering services to the aviation industry worldwide.

The company has more than 1,000 FAA-approved parts, four approved production facilities and six MRO Centers of Excellence.

On paper, it was already a strong strategic fit.

But experience alone wasn’t what won the deal.

The Challenges That Had to Be Solved

This transaction came with several important challenges:

• The Seller was designated on Lockheed Martin drawings. This meant the transaction had to be structured as a stock sale.
• The company was located in a very rural area. To facilitate future growth, the operation would ultimately need to move into a much larger facility.
• The client was AS9100 certified, so an acquirer needed to hold the same certification to avoid potential issues with the largest customer.
• There was significant customer concentration. The buyer needed enough aerospace experience and credibility to be welcomed by Lockheed Martin.
• Although the sale was sparked by the son-in-law’s desire to retire, he still wanted to work for at least one full year after the acquisition.
• The owners lived in another state and did not want an extended transition period because they were already semi-retired. We therefore needed a buyer who wouldn’t require extensive hand-holding.
• The Seller knew the product had much broader applications and wanted a buyer with the experience and resources to get it onto additional platforms and truly grow the brand.

With twelve offers on the table, buyers needed to do more than simply offer a good price.

What the Winning Buyer Did Differently

Their experience alone was enough to make them a serious contender, but they did several other things exceptionally well.

They Found a Creative Way to Meet the Seller’s Transaction Requirements

The Seller got the desired stock sale through a creative F-reorganization that also satisfied the buyer’s transaction needs.

Just as importantly, the buyer patiently explained the structure to the family in a way that allowed them to understand both the need for it and the benefits.

Customer Concentration Didn’t Scare Them

The buyer wasn’t concerned about the customer concentration because they were already doing business with the major companies throughout the aerospace industry and were very well known.

What might have represented substantial risk to another acquirer was much less concerning to this buyer.

They Already Had the Infrastructure for Growth

The buyer had multiple facilities capable of absorbing the operation.

They also already held AS9100 and other important certifications, eliminating what could have been a significant transition problem for another buyer.

They Took Care of the Seller’s Son-in-Law

The son-in-law was extremely important to the Seller, and the buyer understood that.

They agreed to compensate him for a full year, even if the business moved within only a few months.

This wasn’t simply an employment issue. It demonstrated that the buyer had listened closely enough to understand what mattered to the family.

They Didn’t Require a Long Transition

With a strong team of engineers already on staff, the buyer did not need the owners to remain heavily involved after closing.

That fit perfectly with the Sellers’ desire to move fully into retirement.

They Started Thinking About Growth Before Closing

Even before the transaction closed, leaders within the acquiring company were already working on ways to expand the product’s visibility.

That showed the Sellers they weren’t simply buying what existed today. They understood the potential of what the business could become.

They Treated the Sellers With Respect

Selling a company is always emotional, particularly when the Seller is the founder.

Even though the buyer was a much larger company, they were respectful and patient at every turn.

Perhaps most importantly, this buyer was the only one who listened closely enough to understand how important the son-in-law was to the Sellers’ decision-making process.

They Offered an All-Cash Deal and a Fast Closing

Finally, the buyer offered an all-cash transaction with a fast closing.

There were no bank underwriters to satisfy and no financing contingencies slowing down the process.

In a highly competitive transaction, certainty matters.

Winning an Acquisition Takes More Than the Highest Offer

This transaction is a good example of why the buyer offering the most money doesn’t automatically win a competitive manufacturing acquisition.

The strongest buyer understood the business, the customers, the Seller’s priorities and the growth opportunity.

They solved the transaction challenges rather than asking the Sellers to accept them.

And they listened.

A Great Outcome for the Seller — and the Buyer

The Accelerated Manufacturing Brokers team achieved everything this client asked us to accomplish.

We’ll enjoy watching the buyer further develop the product, expand its applications and get it onto additional aircraft platforms.

We wish our client a very happy retirement.

And best wishes to the very smart buyer who won the acquisition against the competition!

‍