The way Bill Morgan sees it, he’s an operator, not an M&A guy. But the truth is, he’s both.

After a successful five-year run buying and turning around a distressed St. Louis manufacturer, Morgan switched gears and joined Compass Group Equity Partners as an operating partner. He managed the M&A process and provided post-acquisition operating support.

“And then I decided that I'm a better operator than I am an M&A guy,” he says. “So I identified an industry that I was interested in that I had some familiarity with. It's a fragmented industry that I serve right now and started identifying targets and started acquiring them and I'm trying to roll them all up into one bigger piece.”

As owner and managing member of Process Control Solutions LLC, Morgan is working to grow the business through acquisitions as well as operational excellence.

“Essentially, Process Control Solutions is a compilation of four businesses I've acquired over the last couple of years and I'm in the process of integrating them all together and operating them full-time,” he says.

While Morgan had some understanding of M&A throughout his operating years, he was able to participate in many more transactions as part of Compass and, consequently, learn a lot.

“I knew that was not going to be a lifelong career path for me, but it served me well knowing full well that what I was going to do is go either acquire a businesses or go acquire multiple businesses and roll them together,” he says.

Smart Business Dealmakers spoke with Morgan about his buying process, and the value an M&A education can have for business owners operating in the lower middle market.


The businesses Morgan helped buy through Compass were on the larger side and they had established management teams. Compass’ goal was to provide operational direction for those companies it acquired. Today, his targets are often owner operated — folks who have been in business for 30-35 years and are more or less coasting without much consideration for an exit plan.

“There are a lot of off-market opportunities within our space, which is really what I like,” he says. “I just will absolutely not participate in an auction process because we’re a lower-middle-market business. There's a lot of PE money floating around out there and we’re just not going to win those deals. Our best opportunity is to make connections and find off-market opportunities and work those transactions.”

In those situations, Morgan is most often dealing with people who have never done a transaction before. In some cases, the owners have prepared their businesses appropriately. Other times, not so much.

“In a lot of cases you have to educate them on what the process is,” he says, “but in the end it is a better transaction for both, as I have found, typically by doing it that way.”

Deal education

Morgan leads the deal process with help from outside accounting and legal counsel. But that’s about all the help he needs because he says he’s been through enough transactions over the course of his life that he knows what needs to be done and how to move the process along. That helps, because most of his transaction involve families or people who have focused entirely on operating the business for years and years.

“In some cases, they operate a nice business, but they are completely unfamiliar with the transaction process and they don't have resources that can help guide them along,” Morgan says. “So what I have found is not only am I negotiating a transaction, but I'm also educating either the family or the owner of the business on what the transaction process looks like — all the variables, all the different ways it can play out, all the different ways you can structure a transaction, what working capital means and earn outs versus cash payments. There's just a variety of different things that these owners are just not educated about. I find that I spend as much time educating these guys as I do negotiating the deal.”

He says in many cases these owners are thinking about an exit but they don't know where to start. And they don’t have a professional network that has been through the M&A process to guide them.

“Some resources and education can help this process a lot,” Morgan says. “I've actually had a lot more success with an owner that's been through a potential transaction before I get involved with them because at least they understand everything to a degree. But it doesn't always work out that way.

“But at a certain age, most of these business owners are starting to contemplate, ‘How am I going to get out?’ but they just don't know where to start and so they just can't get out of the starting gate.”

Understanding M&A and the process can help businesses beyond just being deal savvy or reaching a liquidity event. It can help them operate as lean as possible and better scrutinize where they're spending their money — is it on what's really necessary?

“It causes you to look at the business a lot differently than you would otherwise.”