05-25-2023

Business owners frequently ask whether the time is right to sell their business. Timing can make all the difference in getting a premium value for your business. If all signs are positive, more buyers will be interested, investors and lenders will feel that, and deals will go more smoothly. But getting the timing right is tricky and depends on many variables that I will review here.

04-21-2023

Throughout my years in electronics mergers and acquisitions (M&A), I have seen some companies succeed and others fail. A variety of factors determine the success of a company, from great leadership to a strong corporate culture and luck. I define a successful company as one that is profitable and receives attractive offers in the market, whereas a failing company doesn’t generate money, is shunned in the market, and often shutter. So, what exactly do companies need to succeed? Here are seven drivers to consider.

03-14-2023

Over the years, you became an expert at selling products, so much so that it became second nature. Now, it is time to sell the business, and suddenly you are feeling uncomfortable. Many owners become educated by experiencing one or more busted deals. With a little preparation and research, you can help increase the odds of a successful and smooth sale.

01-23-2023

Last year turned out to be a fairly slow year for mergers and acquisitions (M&A) in the North American PCB and EMS sectors. We counted just seven completed or announced deals in the PCB sector last year, compared to 13 in 2021, nine in 2020, and eight in 2019. Firan Technology Group announced two of 2022’s seven deals with a 2023 target for completion for both. On the EMS side, only 13 deals were completed in 2022, down from 24 in 2021, 24 in 2020, and 23 in 2019.

12-20-2022

According to GP Ventures’ database, the number of PCB companies in North America is now down to 170. Just 22 months ago, the number was 199. Frankly, the actual number of active PCB manufacturers in the United States and Canada is probably closer to 150, but it is hard to keep track of the smaller shops. To clarify how we count companies, we are counting only PCB fabricators (excluding pure importers or assembly shops), and each company counts as one (for example, TTM counts as one company, Summit and APCT count as one company, etc.). Although the number of shops is down, the companies at the top of the list continue to grow.

11-01-2022

Many businesses are “in a box,” that is, stuck within a range of revenues and profits. Some boxes can be velvet-lined and comfortable; others are lined with sandpaper. Buyers will usually pay more for companies that are growing, profitable, investing, and are doing something different from the competition. Buyers will pay less for companies that are in a box, then will turn around and sell them for a lot more in a few years after breaking out of that box.

09-20-2022

Mergers and acquisitions in North America in the PCB and EMS sectors during the first eight months of 2022 were down compared to the same period in 2021. In the PCB sector, we counted four deals in 2022 compared to seven during the first eight months of 2021. In the EMS sector, we are aware of 10 completed deals so far in 2022 compared to 13 during the same period in 2021. Activity remains very strong in 2022, so it is possible that deals this year will catch up to the pace of last year.

07-27-2022

Recently, ESG issues have become more prominent in business as well as in M&A deals. ESG stands for environmental, social, and governance. The PCB industry has dealt with environmental issues before, so it’s not really anything new. Water and waste treatment regulations have been in place for many years and the standards continue to increase. Most PCB shops recycle scrap materials, and many have started recycling water and using solar panels. On a related note, conflict materials regulations have been passed down for some time and the industry has learned how to be compliant.

05-26-2022

Many owners like to reward their employees when a business is sold. It is a great way to thank the employees for their years of service and to help keep them around for the buyer. In addition, it is a good idea to pay key employees a bonus during the sale process. Not only will they be doing extra work during the sale, but a key person leaving can derail a deal and/or lower the value of the deal. Key things to consider are who, how much, what, when, and does this also benefit the buyer?

04-18-2022

There are many unwritten laws of sports. For example, when a batter gets a hit in baseball, one of the greatest sins of the game is to flip (throw) the bat. However, when we were kids and we got a hit in whiffle ball, we would throw that bat as high in the sky as we could. In the Major Leagues, the next pitch is going in your back. In whiffle ball, the next kid tries to throw the bat higher. Because every company and individual is different, in M&A it is hard to determine what are laws, unwritten laws, or acceptable behavior.

01-25-2022

M&A activity in the PCB and EMS sectors in North America continues to be strong despite the COVID pandemic. According to our research, there were 23 M&A deals in the EMS sector in 2021 (compared to 24 in 2020) and 13 deals in the PCB sector (compared to nine in 2020).

12-15-2021

The end of the year is a great time for an owner to step back and take a bird’s eye view of the business. Whether you are thinking of selling in 2022 or 2030, taking the time to get prepared and organized will help save time and effort in the future. Here are some items that every business owner should review on an annual basis. e year-end is a good time to remind your CPA to clean up income statement and balance sheet items that are no longer relevant. If the company has only internal financials, have the CPA do a compilation.

11-03-2021

In the past few years, the investment by private equity (PE) firms into the PCB and EMS sectors has been increasing rapidly. Just in the past few months, APCT and Summit Interconnect have changed PE owners, American Standard Circuits was acquired by a PE firm, and Lenthor Engineering was acquired by a PE-backed firm. According to our firm’s data base, out of the top 10 independent PCB manufacturers in North America, two are public (TTM and FTG) and five are owned by PE firms. In addition, in the past few weeks, Tempo/Advanced Circuits/Whizz Systems announced an IPO via a SPAC, which shows further confidence in the direction of the PCB market. In addition to investments in the PCB market, as of today, at least 15 North American EMS firms are owned by private equity.

09-20-2021

M&A activity is at a very high level in the PCB and EMS sectors, as well as in most sectors of the economy. We recently talked with a wide variety of buyers and sellers and scribbled down some of their insights (names not given due to confidentiality).

08-04-2021

M&A activity is booming in the U.S. as the nation emerges from the COVID pandemic. Thanks to video conferencing and adjustments in procedures, M&A was also pretty busy in 2020. Now that the economy has opened and everyone is traveling, more deals are being discussed.

06-30-2021

It sounds very simple, but work is much easier with a sharp saw. Abraham Lincoln may have said, "Give me six hours to cut down a tree and I’ll use four hours to sharpen the ax." Chainsaws are much much quicker, but the concept still applies. Tom Kastner explains how this relates to your business.

05-26-2021

It is a very busy time in the M&A world. Many owners in the electronics industry, especially in the PCB and EMS sectors, are of retirement age. Meanwhile, there is a lot of interest from both competitors and private equity firms in making acquisitions in the space. Because there are a lot of deals happening, it is important to know how to stand out compared to other sellers.

04-27-2021

The first quarter of 2021 was the busiest opening quarter ever for global M&A (since records started being kept in 1980), according to financial data company Refinitiv. The total global deal value was $1.3 trillion, which is a 94% increase over the same quarter in 2020, which was feeling the effects of the pandemic. But don't pop open the champagne quite yet.

03-31-2021

We hear a lot of owners say, ‘if I were 20 years younger, I would…’, meaning they would make major investments or strategic changes if they had the time to realize the return on investment. Other reasons for not making investments are the lack of funds, lack of energy, etc. However, we feel that the return on investments does not always take as much time, money, and energy as owners think.

02-15-2021

The common stigma surrounding M&A is that 80% of deals do not reach expectations. Still, deals grab headlines, and many companies use M&A as their primary growth strategy. Is there a disconnect between reality and the headlines, or is the stigma of M&A failure not really true?

01-12-2021

Almost all business owners have a “dream exit”: a well-financed buyer flies in, offers up a suitcase full of cash with no strings over a steak and lobster dinner, and the next day the owner is sitting on a beach with a mai tai. These kinds of dream exits do occur, but they are extremely rare. Tom Kastner explains.

12-21-2020

According to our count, there have been 19 EMS deals and 7 PCB (bareboard) deals in North America so far in 2020. There are several deals that we heard of that are in the works and there are probably many small deals that we have not heard of. Given the general economic climate in 2020 and the virtual prohibition on overseas deals, the number of completed deals so far is impressive.

11-24-2020

Owners of companies in the PCB and PCBA industries are used to ups and downs, but yeesh, 2020 has been tough. The good news is most owners have survived all kinds of stressful situations in the past, and hopefully, better days are ahead. Meanwhile, when an owner is faced with constant, elevated levels of stress, it is easy to feel burnt out. Tom Kastner details ways to deal with burnout at work.

10-14-2020

Although U.S. PCB companies have been waving the flag for years, the COVID-19 crisis has shined a spotlight on the U.S. dependency on overseas suppliers for many electronics products. Tom Kastner lists five ways production will come back to the U.S.

09-15-2020

There is a lot of drama involved in selling a business. According to Wikipedia, the movie series “Die Hard” is about “a police detective who continually finds himself in the middle of violent crises and intrigues where he is the only hope against disaster.” Tom Kastner explains how if you use the “strong or powerful” definition of “violent,” that pretty much describes many M&A deals.

08-12-2020

Although the due diligence process can be exhausting, Tom Kastner explains how it is important that buyers and sellers keep their eyes on the prize of closing, stay positive, and don't allow emotion to run the deal.

07-20-2020

Everyone loves a bargain. Just like buying an old car or a fixer-upper house, you can get a great deal, or sometimes you get what you pay for. Tom Kastner shares some thoughts on acquiring a distressed or underperforming business.

06-15-2020

Does it seem like there have been a lot of EMS deals in North American in the past 12 months (June 2019 to May 2020)? Tom Kastner highlights some of the major M&A deals, as well as predictions.

05-11-2020

Most successful businesses have pivoted at least 4–5 times during their history. The COVID-19 pandemic has forced many companies to close and many others to find other business models. You might not want to stop making boards and start delivering for Amazon, but Tom Kastner explains how it is good to keep looking for new opportunities.

04-07-2020

Most M&A transactions fall apart several times before closing, even during normal times. When a major crisis occurs—whether internal or external—a deal can truly be stress tested. Tom Kastner shares 12 tips his company has used (and are currently using) to keep deals rolling.

03-23-2020

For the past several years, quality of earnings reports (also called “Q of E” reports) have become more popular in M&A deals. Whether the seller’s financials are audited, reviewed, compiled, in QuickBooks, or on the back of a napkin, a Q of E report helps buyers become more comfortable with the seller’s numbers and identifies risks in the business. Tom Kastner explains.

12-31-2019

Overall, the U.S. economy is strong, and manufacturing has seen a resurgence over the past decade. Still, the overall trend for investors and small company buyers for 20 years has been in asset-light, tech-enabled services businesses, such as Uber, Amazon, Airbnb, etc. Given that background, why should someone buy or invest in a North American manufacturing business such as a PCB or PCBA company? Tom Kastner explains.

11-25-2019

Tom Kastner reached out to several buy-side clients as well as others who have recently made acquisitions in the PCB and PCBA sectors. He shares some common themes and their thoughts on what went right, what went wrong, and what they would do differently next time.

11-04-2019

Trust is critical in M&A transactions. Both parties are naturally suspicious of each other, and tensions run high even in the smoothest of deals, so any small molehill can be magnified into Mt. Everest. To avoid bigger problems, Tom Kastner emphasizes the importance of establishing trust from the beginning and continuing to be trustworthy throughout the process.

10-10-2019

My firm goes to a lot of trade shows—at least one each month—because it is a great way to meet business owners as well as their trusted advisors. Trade shows are also an excellent way to hear industry information that otherwise we would not hear (aka rumors).

09-23-2019

One of the key materials used in the business sale process is the confidential memo or book, which is essential if an owner is considering a sale of the business. Even if you are considering a sale in the future, it is good to have a basic book ready in case an unsolicited buyer comes calling.

08-22-2019

There have been quite a few deals in North America in the PCB and EMS spaces over the past 12 months. I have attempted to track down a fair number of these deals and list them, but many are not publicized. What’s remarkable is that so many of these deals involve private equity. PE firms are certainly a great source of liquidity for owners in these sectors. PE-owned firms tend to make a lot of add-on acquisitions, so we’ll look at these companies to acquire many smaller shops in the coming years. Here are some of the most notable PCB, PCBA, and EMS deals since December 2018.

07-25-2019

Wouldn’t it be a lot easier if we could buy and sell companies online? Owners could avoid a lot of trouble and fees as well as get deals done quicker. Unfortunately, it’s not that easy. Here are seven reasons why a business cannot be sold online and how owners can make the sale process go more smoothly.

06-26-2019

Proper planning can take away many headaches for the seller and buyer as well as increase the value of the company, help obtain better terms, and overall, make it easier to complete a transaction.

05-29-2019

It is good for owners/CEOs to step back a few times a year and think about what they do well, what they like to do, and what others can do better. Delegating simple tasks, like sweeping floors, is easy, but delegating sales management or quality control might be tougher. Although delegating is difficult, almost no business can grow solely on the efforts of the owner.

04-29-2019

To help sell your business to buyers, or to sell your products and services to customers, it is a good idea to find out what is special about your business. It is also important to know how to communicate what's special. Read on to find out how you really compare to the competition, and what concrete metrics and KPIs you can use to judge your own performance.