Month: July 2020

If you are reading this post, you are looking at the new Normandy Advisors website! We are very excited about the launch of our new site which allows us to share more information about the projects we are working on and highlight what we are seeing on the buy-side. Some of the exciting features of our new website include:

• Data – Within the Data section of our website, you will find information on projects we have worked on as well as some of the data we collected through our research. If you would like to learn more about any of our past projects, feel free to reach out.
• Branding – Things look much different now. At Normandy, we pride ourselves on our ability to utilize technology and software tools (both proprietary and non-proprietary) to enhance the quality of work we provide for our clients. Our new website and logo speak to the uniqueness of our process and the innovative mindset of our team.
• Insights, Active Projects, and Transactions – Going forward, we will be sharing more information on what we’re seeing in the market, what types of projects we’re working on, and what deals our clients are closing. All of this information can be accessed from the News sections on our website.

We want to think the teams at Thomas Digital and 2.0heads for helping us with our website development and branding!

If you would like to stay updated on what’s happening at Normandy, send us a message and we’ll keep you in the loop.

In July 2020, we asked nearly 200 professionals in the private equity industry to tell us about their experiences with buy-side advisory firms. More than 85% of the respondents work with buy-side firms either on a retained or contingent basis. We received a strong number of responses to our survey, and this feedback will help us improve the quality of service we provide to our current and existing clients.

The Q&A below highlights a few of the questions we asked:

Question: Does your team plan on retaining any new buy-side firms at some point in the next six months?

Answer: Over 50% of respondents indicated they will likely hire one or more new buy-side firms in the next six months. While we’ve witnessed a slowdown in middle market M&A due to Covid-19, these responses indicate that investors anticipate pursuing acquisitions with second half of 2020.

Question: Overall, how would you describe your team’s experience with buy-side firms?

Answer: We received mixed responses to this question, with 32% indicating they have had “very positive experiences” with buy-side firms, 36% indicating there is “room for improvement,” and 26% indicating they have had “some negative experiences.”

Question: What are some issues or “pain points” you have experienced when working with buy-side firms?

Answer: More than 75% of respondents indicated that the number of strong opportunities presented to them by the buy-side firm was an issue. Other common responses to this question include comments related to the communication between the advisor and the client, the quality of the summaries / overviews on potential opportunities, and the strength of the prospect list.

Question: If your team retains a buy-side firm, for how long do you typically work with the firm?

Answer: 70% of firms we reached out to informed us they typically work with a buy-side advisor for more than 6 months. This is line with what we expected to see – many of the searches we work on extend beyond six months, especially when our clients are looking to make multiple acquisitions.

Question: Aside from using Email, do you think sharing documents between your team and a buy-side firm would be improved by using any of the tools listed below?

• DropBox
• Box
• Asana
• SharePoint
• Microsoft Teams
• Slack
• No, email works best

Answer: A majority of respondents feel that utilizing a cloud-storage platform (mainly DropBox) could improve the communication between their team and the advisor. However, about 30% indicated they prefer to use email as their primary communication method. We are happy to utilize whatever tools work best with our clients, and we are always looking to improve communication through software.

Question: Does your team allow buy-side firms to invest a portion of their success fee into a transaction?

In Conclusion….

We conducted this survey to hear about firms’ experiences with buy-side advisors. We at Normandy Advisors are constantly looking for new ways to provide a better service to our clients, and we greatly appreciate the feedback and responses we received from everyone that took the time to complete this survey!

The unprecedented increase in capital in the private equity sector is forcing private equity firms to differentiate themselves to remain competitive. Private markets are at historical highs with a staggering $2.6 trillion allocated to private equity groups in the last ten years, according to Pitchbook. As median deal size and EBITDA multiples continue to climb, owners of private businesses are looking for more than just a large multiple to sell. The lower middle market is filled with passionate executives that have either founded their companies or are leading businesses that have been in their family for generations.

As median deal size and EBITDA multiples continue to climb, owners of private businesses are looking for more than just a large multiple to sell. The lower middle market is filled with passionate executives that have either founded their companies or are leading businesses that have been in their family for generations. PE firms must adapt to this hyper-competitive market where owners are receiving several offers from a wide range of interested buyers.

PE firms can distinguish themselves through an executive-led buy-and-build strategy. An experienced industry executive will attract prospects that otherwise may not have considered answering the phone. Today, more than ever, owners are aware of the surplus and diversity of their options due to the growing number of potential buyers with adequate capital eager to purchase their businesses.

Sellers still require a valuation deserving of their business, but with several options available, they will place substantial weight on overall fit, potential synergies, and – most importantly – continued care of their employees and culture post-transaction. Many of these owners have personally built customer relationships and strong reputations that they would like to see continued long after they’ve exited the business.

By partnering with accomplished executives, private equity firms are more likely to win deals in a competitive market and quickly gain the attention of relevant add-on acquisition targets.

Please contact us to learn more about how we can help you work with executives on acquisition searches.

With a current sourcing project in commercial product distribution, we reviewed consolidation trends in the industry. Examining Pitchbook data from the past three years on acquisitions of distributors by U.S.-based private equity firms, we found that transactions within the sector have steadily increased, especially in the past year and a half. Meanwhile, total transactions in other industries such as healthcare and logistics have decreased or remained flat in the same period. More importantly, add-ons represent a higher portion of private equity-backed acquisitions in distribution–more than

With a current sourcing project in commercial product distribution, we reviewed consolidation trends in the industry. Examining Pitchbook data from the past three years on acquisitions of distributors by U.S.-based private equity firms, we found that transactions within the sector have steadily increased, especially in the past year and a half. Meanwhile, total transactions in other industries such as healthcare and logistics have decreased or remained flat in the same period. More importantly, add-ons represent a higher portion of private equity-backed acquisitions in distribution–more than

With a current sourcing project in commercial product distribution, we reviewed consolidation trends in the industry. Examining Pitchbook data from the past three years on acquisitions of distributors by U.S.-based private equity firms, we found that transactions within the sector have steadily increased, especially in the past year and a half. Meanwhile, total transactions in other industries such as healthcare and logistics have decreased or remained flat in the same period. More importantly, add-ons represent a higher portion of private equity-backed acquisitions in distribution–more than

As valuations continue to increase in the market, deal volume is predicted to decline. In Pitchbook’s most recent M&A report for 2Q 2017, they predict that the United States is “on pace for 18.5% and 23.6% year-over-year decreases [in total deal volume and value], respectively” from 2016 to 2017. While high multiples are deterring strategic buyers from making acquisitions, PE and other sponsor-backed buyers must continue to strengthen their portfolios.

Pitchbook reported “sponsor-backed acquisitions have grown steadily from 24.7% of all transactions in 1Q 2016 to 29.8% in 2Q 2017”, up more than five percentage points in a little over a year. A primary driver of this growth is strengthening add-on acquisition activity which continues to increase in share of deal flow—now at 57% of all deals, continuing a seven-year increase (see chart below).

More and more PE buyers are holding onto and growing their current investments instead of pursuing new platforms. As a result, we’ve seen our clients are focusing more on add-on acquisitions for their existing portfolio companies versus new platform investments.

We see a lot of opportunity to build stronger platforms through add-on acquisitions, but it requires a different approach. At Normandy, with our knowledge and resources, we can successfully research and contact strong target companies to grow your portfolio companies in this increasingly competitive market.