Ty Clutterbuck saw dealmaking as an opportunity to expand his knowledge of the different industries that both comprise and drive the business ecosystem.
“I enjoy the opportunity to work more closely with teams to enhance the value of a company, versus just trying to create a sale,” says Clutterbuck, a partner at Peninsula Capital Partners. “Each company has a different need. One might be expanding the sales force. Another may be going international. And another might be pursuing an acquisition growth strategy.”
Clutterbuck arrived at Peninsula from W.Y. Campbell & Co., a boutique investment bank where he focused on advising companies on divestitures and related valuation issues. His clients included middle-market and large companies, leading private equity firms, and privately owned and publicly traded companies.
These days, he focuses on smaller transactions in the middle market.
In this Dealmakers feature, we revisit our earlier conversation with Clutterbuck to learn more about the value of dealmaking readiness and how to find your way to a good deal.
Boost your sensibility
Peninsula tends to invest in companies that are not as sophisticated in certain areas of their organization, Clutterbuck says.
“We work with the management teams to help enhance that sophistication, bring them to the 21st century and create value for the company and the shareholders, including ourselves, but also the management team and other shareholders,” he says.
This infusion of knowledge typically includes dealmaking acumen — but not always.
“We buy and sell companies for a living,” Clutterbuck says. “If you’re the owner of a private company, what you need to know depends upon your exit strategy. If you’re going to maintain the business forever and pass it on to future generations, dealmaking and exit strategy perspective aren’t terribly important.”
If your future is less defined, it might behoove you to have a working familiarity with the mechanics of dealmaking.
“Acquisition might not be in your business plan, but it might pop up one day as an opportunity,” Clutterbuck says. “Even if you’re not terribly acquisitive, having a general knowledge of how deals get done is pretty important, because you never know when a unique opportunity is going to cross your path where it just makes too much sense not to do a deal.”
Take the road less traveled
Companies looking to make a deal should know that, for the most part, in today’s market, it’s better to be a seller.
“Multiples are high, and there’s still a lot of capital out there chasing deals,” Clutterbuck says. “When valuations are high, it’s a seller's market. It’s no different than the real estate market. So it’s much easier right now to be a seller than a buyer.”
If you are a buyer looking for action, proprietary deals are often the way to go. These are deals that aren’t necessarily on the market being actively pitched to potential buyers. The key is digging into the company and assessing if there’s a fit.
“It’s about finding that opportunity whereby you can be fairly certain that you’re going to be able to extract the synergies,” Clutterbuck says. “When people talk about synergies, they often talk about cutting heads or getting rid of HR and administrative functions. I’m talking about synergies that that can help benefit both companies. It’s finding that company where maybe they have a sales force in a different community of customers that you don't currently have. Maybe it’s geographical. Maybe it’s industry. That’s where you can really get that cross-pollination or cross-selling of both companies’ products.”
If you can identify these synergies, which Clutterbuck stresses are not about achieving cost reductions but rather, creating growth potential, it may be worth your while.
“That’s what you’ve got to look for,” he says. “And if you get lucky enough to find that company that’s not being marketed and maybe the seller just wants to find a good home for the company, then you’ve really hit a home run. But rarely do those two add up. Sometimes you have to pay a little bit more, but you can because you see the opportunity to benefit both companies.”
Related: Peninsula Capital's Ty Clutterbuck