Episode 24 - Rudy Scarito on Middle Market Industrial M&A and Access to Capital

Industrial Growth Institute

Rudy Scarito on Middle Market Industrial Mergers, Acquisitions and Access to Capital - Industrial Growth Institute Podcast Episode # 24 with Ed Marsh

Summary

Rudy Scarito, an investment banker with extensive experience in mergers and acquisitions, shares insights on the importance of considering acquisitions and exits as part of a business growth strategy.

She discusses the current market trends, including the silver tsunami of baby boomer business owners looking to sell, and the opportunities for growth through acquisitions.

Rudy emphasizes the need for business owners to proactively think about transactions and engage in strategic planning. She also highlights:

• the role of advisory boards, lawyers, and accountants in guiding companies through the transaction process
• the process of buying and selling businesses
• role of investment bankers, and the importance of preparing for a transaction
• need for business owners to have a clear understanding of their goals and to seek the assistance of professionals who specialize in mergers and acquisitions.

Scarito also highlights the importance of vetting investment bankers and selecting the right fit for a company. She discusses the benefits of having a well-structured board of directors and the value that independent directors can bring to a company. Rudy concludes by discussing the current state of private equity and the potential impact of economic and political instability on transactions.

Takeaways

• Acquisitions and exits should be considered as part of a business growth strategy.
• The lower end of the middle market is currently active, with many baby boomer business owners looking to sell.
• Business owners often need a catalyst, such as a medical issue or a desire for a different lifestyle, to prompt them to consider selling.
• Companies should proactively think about transactions and engage in strategic planning, including identifying potential acquisition opportunities and evaluating financing options.
• Business owners should have a clear understanding of their goals when considering buying or selling a business.
• Seek the assistance of professionals who specialize in mergers and acquisitions to navigate the complex process.
• Vet investment bankers and select the right fit for your company by asking questions and seeking recommendations from trusted sources.
• A well-structured board of directors with independent directors can provide valuable insights and guidance.
• Private equity is a viable buyer for middle market industrials and is likely to remain so for the foreseeable future.
• Consider the potential impact of economic and political instability on transactions and plan accordingly.

Takeaway Quotes from Rudy Scarito

• "It's fraught with peril. I would say unless it's a very simple deal, most business owners should seek the assistance of a professional who focuses and specializes in this."
• "I believe that strategy should consider two kinds of transactions routinely."

Check out Rudy's website and a list of her industrial transactions

LinkedIn: Rudy Scarito and Ed Marsh

Twitter: Ed Marsh

Instagram: Ed Marsh

YouTube: @EdMarsh

Show Transcript

Chapters

00:00 Introduction and the Importance of Acquisitions and Exits
05:19 The Active Lower End of the Middle Market
11:43 The Ease of M&A Transactions Compared to Capital Transactions
16:45 The Importance of Cash at Closing
20:20 The Role of Investment Bankers in M&A
25:35 Integration and the Involvement of Sellers After the Deal
32:57 The Challenges of Business Owners and the Role of Advisory Boards
39:11 Access to Capital and the Role of Investment Bankers
40:37 The Process of Buying and Selling Businesses
41:29 Seeking Professional Assistance in Mergers and Acquisitions
42:14 Vetting Investment Bankers: Finding the Right Fit
44:12 The Value of a Well-Structured Board of Directors
48:52 Private Equity in the Middle Market
54:27 The Impact of Economic and Political Instability on Transactions

Manufacturers should consider the Overall Revenue Effectiveness™ Framework for strategic growth

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