REAG

The shift towards add-on acquisitions in private equity, a trend REAG has been tracking closely, is reshaping the M&A landscape.

With a focus on value creation through operational improvements and multiple expansion, PE firms are increasingly building platforms in the lower middle market.

This strategy is particularly effective as aging business owners seek exit opportunities, creating a robust market for strategic acquisitions.

The trend is also fueling growth in private credit, as mature platform companies take on debt to finance these smaller, strategic purchases.
As M&A advisors, we're seeing firsthand how this shift is impacting deal structures and valuations.

Businesses positioning themselves as potential add-ons or planning for exit should reach out to us to learn how REAG can help: https://ecs.page.link/6FyrT




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PE's New Normal: Add-Ons, Roll-Ups and Tuck-ins Add-on acquisitions are reshaping a PE industry slowed by a buyout lull and helping to fuel the private credit boom.

At REAG, we specialize in guiding established businesses in the lower middle market through complex M&A transactions and strategic growth initiatives.

Unlike traditional business brokers, we leverage our deep industry expertise and extensive network to connect you with regional, national, and global buyers — maximizing your company's value and opportunities.

Whether you're seeking capital for growth, planning an ownership transition, or exploring strategic acquisitions, our tailored approach ensures your business goals are met with precision and care.

Learn more: https://ecs.page.link/x89Ck

M&A isn't just about selling a business — it's about strategically transferring and creating wealth.

While many focus solely on the headline price, the true art lies in structuring deals that optimize long-term value, considering factors like tax implications, earnouts, and post-sale agreements.

At REAG, we guide owners through this complex journey, often starting years before a sale, to maximize wealth creation opportunities and ensure a smooth transition.

Remember, in M&A, how you sell can be just as important as what you sell.

Learn more: https://ecs.page.link/Vdc5m

Today, we remember and honor those lost on September 11, 2001.

How Does Inflation Affect Business Valuations in Lower Middle Market M&A?

In recent years, lower middle market business owners have faced unprecedented challenges. Among these, sustained inflation has emerged as a critical factor, especially for those considering mergers and acquisitions (M&A). The U.S. Consumer Price Index (CPI) has shown significant inflationary trends, with implications that ripple through the entire M&A landscape.

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What’s the Impact of Inflation on Business Valuation in Lower Middle Market M&A Inflation's impact on Lower Middle Market M&A valuations. Learn how to maximize business value and navigate challenges with REAG's expert guidance.

We believe informed decisions lead to successful exits.

Our experienced M&A brokers help owners and founders understand the full spectrum of exit strategies – from internal transitions to external sales and hybrid approaches.

We work closely with you to:

👉 Analyze your unique situation and goals
👉 Develop multiple viable exit options
👉 Provide accurate business valuations
👉 Leverage our network for optimal outcomes
👉 Guide you through negotiations and complex decisions

Your exit strategy should align with both your personal and business objectives.

https://ecs.page.link/K1o9m

How Do I Exit My Business? Discover various business exit strategies, from family succession to IPOs. Learn how CEPAs guide and customize exit plans for a successful transition.

Exiting a business is a complex, emotional journey, and when the Value Acceleration Methodology is used, it provides a strategic framework to align owners' business, personal, and financial goals during this critical transition.

What is the Value Acceleration Methodology?

This comprehensive approach helps identify value gaps, develop enhancement strategies, and prepare owners for life after the exit.

REAG supports Certified Exit Planning Advisors (CEPAs) with market insights, business valuations, and strategic guidance throughout the process.

By leveraging this methodology and REAG's expertise, advisors can help business owners maximize value, achieve personal fulfillment, and ensure financial security throughout the exit process.

Learn more: https://ecs.page.link/eyqQn

Prepare: Collaborative Steps Between REAG and CEPAs How REAG Supports the CEPA and their clients through M&A

The M&A landscape is shifting dramatically, with billion-dollar funds now competing for deals in the $5-20 million EBITDA range.

This increased competition, driven by a compression in deal activity and a massive pool of uncommitted capital, is forcing all players to reassess their strategies and target markets.

As advisors, we're helping our clients navigate this new reality by focusing on differentiation, speed, and value creation to stand out in an increasingly crowded field.

https://ecs.page.link/C6KiH

Mid-Market PE Firms Face Pressure as Giants Move Downstream Megafunds are encroaching on the mid-market, forcing mid-sized funds to adapt and seek niche opportunities.

M&A isn't just about the headline number — it's about deal structure, risk allocation, and long-term value creation.

As advisors, we help clients look beyond the purchase price to understand the true implications of each offer, ensuring optimal outcomes for all parties involved.

In our latest blog, learn about how REAG supports business owners and founders in navigating the complex M&A process.

https://ecs.page.link/Vdc5m

Transferring Wealth: Building Success in M&A Unlock the secrets of successful M&A. Learn key strategies, avoid common pitfalls, and maximize your business value in this comprehensive guide.

As a business owner, your needs extend far beyond financial considerations.

True success requires a holistic approach that combines strategic guidance, industry insights, and access to the right partners.

At REAG, we specialize in crafting customized strategies that maximize your company's value and position you for long-term success, whether through organic growth, acquisitions, capital restructuring, or ownership transitions.

Learn more: https://ecs.page.link/8PYyr

When it comes to deals, debt is cheaper than equity. Why?

Fundamentally, debt and equity are functions of risk and reward within a capital stack. While both debt and equity represent structured layers of the stack, understanding its architecture defines not only who gets paid, but more importantly, how and when they get paid.

Read the full post here: https://ecs.page.link/WsHZo

Funding a Deal: The Capital Stack Explained THE CAPITAL STACK When it comes to deals, debt is cheaper than equity. Why? Let’s look at the capital stack. The capital stack represents the underlying

The industrial supply chain is evolving rapidly, with AI and data analytics promising transformative potential. However, it's the acquisition of physical assets and services—from warehouses to machinery—that's currently driving M&A activity, as companies seek to diversify suppliers and expand geographically.

While AI-powered solutions are garnering attention, investors must be cautious of hype and focus on proven, adaptable technologies. The future of industrial supply chains lies in balancing cutting-edge digital innovations with strategic physical expansion, particularly in the middle and lower middle markets.

As we navigate this new landscape, success will hinge on our ability to blend technological advancements with tangible assets, creating more resilient and agile supply chains.

https://ecs.page.link/or1Kc

Tech Innovation, Diversifying Sources Drive the Supply Chain Game | Middle Market Growth Supply chain and logistics experts discuss tapping into AI, data analytics, and diverse warehousing and transportation sources

How is digital transformation reshaping M&A in the lower middle market?

Even smaller deals are seeing big changes:

👉Virtual data rooms (VDRs) making document sharing secure and efficient
👉AI-powered tools speeding up due diligence and deal analysis
👉Cybersecurity becoming a key factor in valuations

For lower middle market firms, these technologies level the playing field, allowing them to compete more effectively in complex deal processes.

https://ecs.page.link/WSivz

Technology Is Transforming Dealmaking Due Diligence Discover how technology is revolutionizing due diligence in M&A and strategic financing with digital tools, artificial intelligence (AI) and machine learning.

Is your mature business hitting a plateau? Here's how balance sheet restructuring could reignite your growth:

Balance sheet restructuring can be a game-changer for mature business owners seeking their next phase of growth or transition. By optimizing the mix of debt and equity, owners can unlock trapped value, improve financial flexibility, and potentially attract new investors or buyers.

This process might involve refinancing existing debt, introducing mezzanine financing, or even a partial equity sale - all of which can provide capital for expansion, streamline operations, or prepare for a future exit. For owners of established businesses, a well-executed balance sheet restructuring can be the key to rejuvenating their company's financial position and opening doors to new opportunities.

Learn more: https://ecs.page.link/xEXpA

Understanding Balance Sheet Restructuring: Its Significance and Impact in M&A Optimize your assets and reduce your liabilities to improve your business's financial health, increase its valuation, and drive sustainable growth.

As the industrial M&A landscape evolves in 2024, dealmakers are navigating a complex environment of challenges and opportunities. While manufacturing activity has contracted and transaction volumes dipped in 2023, there are encouraging signs of a rebound. Strategic buyers are leading the charge, with private equity firms adapting to the "new normal" of interest rates. Key subsectors like automotive, paper and packaging, and specialty chemicals are presenting unique growth prospects.

The market is being shaped by multiple factors, including geopolitical uncertainties, supply chain improvements, and significant government investments through the Inflation Reduction Act and CHIPS Act. Companies that can navigate antitrust concerns and leverage the normalizing economic conditions are likely to gain a competitive edge. As we move into the latter half of 2024, both strategic and financial buyers should be prepared for increased activity, particularly in the middle market where regulatory scrutiny may be less intense.

https://ecs.page.link/knHhq

Strategics and PE Buyers Ready for an Industrials Dealmaking Shuffle | Middle Market Growth Amid market headwinds and antitrust concerns, industrials acquirers are having to rethink their M&A strategies

At REAG, we understand that M&A is no longer just about transactions—it's about transformation. We help growth-stage entrepreneurs navigate the complex landscape of mergers and acquisitions with a mindset that embraces uncertainty as an opportunity.

Our agile approach goes beyond traditional playbooks, enabling our clients to not only grow their businesses but also to reshape industries and change lives in the process.

https://ecs.page.link/Z3GuH

M&A Should Be Transformational — Not Transactional M&A deals have traditionally been transactional in nature, pursued for economies of scale and to consolidate costs. But that approach has more limited success in today’s volatile business landscape and won’t provide the transformational results that companies need today. To unlock the growth pot...

How can savvy dealmakers leverage indemnification clauses to mitigate risk in today's evolving M&A landscape?

Indemnification clauses have emerged as a pivotal element in transaction structuring. As deal activity experiences a resurgence, these provisions serve as sophisticated risk allocation mechanisms, offering buyers safeguards against latent liabilities while sellers strategically maneuver to constrain their post-closing exposure.

Crafting effective indemnification provisions necessitates a nuanced approach, incorporating precisely delineated notice requirements, pragmatic strategies for representation and warranty insurance (RWI), and innovative mechanisms to mitigate litigation risk. Astute buyers are increasingly advocating for fee-shifting provisions and robust fraud protection, while sellers countervail with proposals for abbreviated survival periods and judicious liability caps.

REAG leverages its extensive expertise to deftly navigate these intricate negotiations. Our bespoke approach to structuring indemnification clauses aligns meticulously with each client's risk profile and strategic imperatives, whether advocating for buy-side or sell-side interests. This tailored methodology ensures our clients maintain a competitive edge in the current, highly sophisticated M&A ecosystem.

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7 Indemnification Provision Considerations Buyers Need to Know Understanding the limitations of RWI policies and trying to avoid litigation battles are among the things buyers need to address.

The expansion of AI infrastructure into various sectors opens up significant opportunities for lower middle market M&A deals.

As larger firms focus on core AI technologies and major infrastructure, there's likely to be a proliferation of niche players and specialized service providers in AI-adjacent areas, which could become attractive acquisition targets for middle market buyers.

This trend could lead to increased deal flow in sectors traditionally not associated with AI, such as specialized data services, AI-focused cybersecurity, or even energy solutions tailored for AI applications, creating new avenues for value creation in the lower middle market.

https://ecs.page.link/dPWat

M&A Girding for M&A Growth in AI — Mergers & Acquisitions Dealflow is increasing for companies that support the infrastructure needed to scale AI-related projects.

Investment Bank vs. Business Broker: Which Is Right for Your Business?

Mature companies require more than just transactional support — they need strategic partners who can navigate intricate market dynamics.

As an investment bank specializing in the lower middle market, we leverage deep industry knowledge and extensive networks to unlock opportunities for sustainable growth.

Our expertise allows us to maximize value and position established companies for success in an ever-evolving economic environment.

The REAG advantage: https://ecs.page.link/x89Ck

Why consider M&A? It's not just about merging businesses – it's a catalyst for transformative growth.

M&A empowers companies to rapidly expand their customer base, enter untapped markets, and diversify their product offerings. It provides a fast track to operational scale, cutting-edge technologies, and strengthened market positions. Through strategic combinations, businesses can optimize costs and boost profitability.

While major deals may have slowed, the lower middle market remains vibrant. For businesses seeking growth, the current M&A landscape offers abundant opportunities.

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Council Post: Demystifying Mergers & Acquisitions To Make The Most Of A Transformative Process To gain some perspective on the process and know when to pursue these opportunities, let's examine some of the complexities and common pitfalls of M&As.

For Baby Boomer Business Owners, Quality Still Commands a Premium

The M&A markets can seem volatile, but one constant remains - quality businesses are still in high demand, especially in the active lower middle market.

At REAG, our investment banking expertise allows us to guide you through exploring strategic options beyond a full sale. Options like raising growth capital for acquisitions, refinancing debt, or doing a dividend recap enable you to cash out some value while maintaining control.

These tailored solutions strengthen your business and position you for a bigger payoff when you're ultimately ready to exit on your terms.

Unlike business brokers, REAG provides a sophisticated level of service for complex, high-value transactions. Our deep capital markets knowledge and financial modeling capabilities help secure optimal deal terms and pricing.

The M&A landscape is evolving, with increasing owner sophistication around exit planning. We've witnessed this firsthand over 20+ years, along with an influx of younger entrepreneurs joining retirement-minded Baby Boomers in the lower middle market.

Want to learn more about how REAG can maximize your outcome?

Start a conversation: https://ecs.page.link/6FyrT



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While the current geopolitical environment has stressed supply chains, industry consolidation and nearshoring may see an uptick in lower middle market M&A activity in the aerospace and defense (A&D) sector. Factors such as supply chain fragmentation, demand for new technologies, focus on engineered products, growth in the space sector, and increased defense spending are driving this trend.

Private equity firms are well-positioned to provide the necessary capital and expertise to help lower middle market companies in the A&D sector capitalize on these opportunities and become attractive M&A targets.

https://ecs.page.link/ivfUx

M&A Specialized Manufacturing Spurs Mid-Market M&A — Mergers & Acquisitions Middle-market M&A benefits as Boeing problems place emphasis on quality and the Pentagon increases its budget.

Why do business owners hesitate to engage investment bankers for ownership transitions?

As a business owner, the thought of transitioning ownership can be both exciting and daunting. You've poured your heart and soul into building your company, and now it's time to consider the next chapter. However, many entrepreneurs struggle with the idea of reaching out to investment bankers when it comes time to sell or transfer ownership.

What does REAG know that you might not?

Maximizing value: Investment bankers have the expertise to help you maximize the value of your business. They understand how to position your company in the market, identify strategic buyers, and negotiate the best possible deal terms. Without their guidance, you may be leaving money on the table.

Navigating complexity: Ownership transitions can be incredibly complex, involving intricate financial analyses, legal considerations, and emotional challenges. Investment bankers have the experience and knowledge to guide you through this process, ensuring that no stone is left unturned and that your interests are protected.

Saving time and effort: Selling a business can be a full-time job in itself. By engaging an investment banker, you can focus on running your company while they handle the time-consuming details of the transaction. This can help ensure a smooth transition and minimize disruption to your operations.

Accessing a broader network: Investment bankers have extensive networks of potential buyers, including private equity firms, strategic acquirers, and high-net-worth individuals. By tapping into these networks, you can increase the likelihood of finding the right buyer for your business and achieving a successful outcome.

The next step is easy. Start a conversation and discover your options: https://ecs.page.link/6FyrT

What Does REAG Do as an Investment Bank?

As M&A brokers and investment bankers specializing in the lower middle market, REAG is a results-driven firm dedicated to helping clients achieve their strategic and financial goals through mergers and acquisitions.

We collaborate with business owners and executive management teams to realize their vision, whether it involves transitioning ownership, planning for retirement, or expanding through strategic acquisitions.

Learn more: https://ecs.page.link/Hvw3V

Mastering the Art of M&A to Make it Your Superpower: Insights from 20+ Years Insights from REAG's 20-year M&A mastery in the lower middle market to maximize company value for business owners.

Despite decreased activity around mega deals, the lower middle market is still very active.

Business owners have several strategic pathways and transaction types they can consider to maximize value now, even if they want to delay an ultimate exit.

Alternate options like seeking growth financing, refinancing existing debt, or a dividend recapitalization can fine-tune a business while the M&A market is less than ideal, potentially boosting valuation and bringing long-range benefits.

https://ecs.page.link/KR127

What Business Owners Should Do When They Can’t Sell Business owners are wise to weigh alternative deal structures to boost value on the M&A rebound.

As millions of baby boomers retire each year, many are choosing to sell their businesses. REAG’s approach focuses on understanding the unique needs of owner-founders to ensure personalized and effective transition solutions.

One method that is gaining attention—and often carries tax benefits—is selling the business to the employees through an Employee Stock Ownership Plan (ESOP).

Are you an owner-founder considering selling your business?

Reach out to us to understand your transition options: https://ecs.page.link/6FyrT

As the lower middle market continues to evolve and become more competitive, continuation vehicles will likely play an increasingly crucial role in M&A transactions.

They offer a flexible and attractive alternative to traditional exit strategies, enabling private equity firms to capitalize on the long-term growth potential of their high-performing assets while also providing liquidity to investors.

Moreover, continuation vehicles can help lower middle market companies navigate the challenges posed by economic uncertainty, market volatility, and disruptive technologies. By providing access to additional capital, expertise, and resources, these vehicles enable companies to adapt to changing circumstances, seize new opportunities, and build resilience over the long term.

Continuation vehicles are likely to become an increasingly essential tool for private equity firms looking to create value and generate returns in the highly competitive lower middle market space.

https://ecs.page.link/43yjT

Continuation Vehicles’ Rise Outstrips Dry Powder An increasing number of PE firms are hanging on to their trophy assets for longer.

How does REAG support the CEPA and their clients through M&A?

At REAG, we understand the crucial role Certified Exit Planning Advisors (CEPAs) play in the business ecosystem, especially when it comes to facilitating smooth and profitable business transitions.

REAG supports CEPAs with essential expertise to clarify strategies, ensure informed decision-making and deliver successful outcomes throughout the exit planning process.

Learn more: https://ecs.page.link/Ehbci

How REAG Supports the CEPA and Their Clients Through M&A Discover how REAG, a preferred partner, supports CEPAs through M&A. Unlock value with early market insights, strategic planning, and comprehensive support.

This Memorial Day, we honor the fallen heroes who made the ultimate sacrifice to defend our freedoms.

Through our on-going partnership with A Soldier's Child Foundation, we are devoted to providing support and hope to children and their families whose loved ones paid the ultimate price. .

At REAG, we hold a deep understanding of the significance of social responsibility, actively nurturing a steadfast commitment to contributing positively to communities within our communities and across the nation.

Learn more: https://ecs.page.link/qZnpf

How can balance sheet restructuring help entrepreneurs realize their professional and financial goals?

As a critical strategy for businesses seeking financial health and strategic realignment, balance sheet restructuring can optimize a company's assets, liabilities, and equity to bolster long-term success and resilience.

Read the full post: https://ecs.page.link/xEXpA

Understanding Balance Sheet Restructuring: Its Significance and Impact in M&A Optimize your assets and reduce your liabilities to improve your business's financial health, increase its valuation, and drive sustainable growth.