<?xml version="1.0" encoding="UTF-8"?><rss version="2.0"
	xmlns:content="http://purl.org/rss/1.0/modules/content/"
	xmlns:wfw="http://wellformedweb.org/CommentAPI/"
	xmlns:dc="http://purl.org/dc/elements/1.1/"
	xmlns:atom="http://www.w3.org/2005/Atom"
	xmlns:sy="http://purl.org/rss/1.0/modules/syndication/"
	xmlns:slash="http://purl.org/rss/1.0/modules/slash/"
	>

<channel>
	<title>GP Ventures | Mergers and Acquisitions</title>
	<atom:link href="https://gp-ventures.com/feed/" rel="self" type="application/rss+xml" />
	<link>https://gp-ventures.com/</link>
	<description>Technology Mergers and Acquisitions</description>
	<lastBuildDate>Wed, 20 Nov 2024 17:02:39 +0000</lastBuildDate>
	<language>en-US</language>
	<sy:updatePeriod>
	hourly	</sy:updatePeriod>
	<sy:updateFrequency>
	1	</sy:updateFrequency>
	<generator>https://wordpress.org/?v=6.7</generator>
	<item>
		<title>Should You Sell Your Company to a Private Equity Firm?</title>
		<link>https://gp-ventures.com/should-you-sell-your-company-to-a-private-equity-firm/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Wed, 20 Nov 2024 17:02:39 +0000</pubDate>
				<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Sell Side]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[pcb]]></category>
		<category><![CDATA[pcba]]></category>
		<category><![CDATA[sell my technology business]]></category>
		<category><![CDATA[sell side]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<guid isPermaLink="false">https://gp-ventures.com/?p=5979</guid>

					<description><![CDATA[<p>I am often asked by owners in the electronics industry about using private equity (PE) firms as potential buyers. It’s true that PE firms have completed a lot of deals in the PCB and EMS industries over the years. In fact, two of the largest U.S. PCB shops—Summit Interconnect and AdvancedPCB—are owned by private equity... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/should-you-sell-your-company-to-a-private-equity-firm/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/should-you-sell-your-company-to-a-private-equity-firm/">Should You Sell Your Company to a Private Equity Firm?</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img fetchpriority="high" decoding="async" class="alignnone wp-image-5983 size-post-thumbnail-size" src="/wp-content/uploads/2024/11/pexels-olly-874242-1-1-750x330.jpg" alt="" width="750" height="330" /></p>
<p><span style="color: #000000;">I am often asked by owners in the electronics industry about using private equity (PE) firms as potential buyers. It’s true that PE firms have completed a lot of deals in the PCB and EMS industries over the years. In fact, two of the largest U.S. PCB shops—Summit Interconnect and AdvancedPCB—are owned by private equity firms, as are EMS companies, including Creation Technologies, SMTC, EmeraldEMS, East West Manufacturing, and others. More than half my deals are with PE firms, either as buyers for our sell-side deals or as clients on acquisition projects. </span></p>
<p><span style="color: #000000;">There are several different types of private equity firms, including those with a dedicated fund, family offices funded primarily by a wealthy family, and fundless sponsors, which are groups or individuals backed by investors or funds. Besides PE firms, many deals are completed by public and private corporations, and by wealthy individuals. In general, PE firms have trillions of dollars under management and are involved in deals in just about every sector in the economy. These firms amass their money by taking a bit of allocation from everyone: pensions, insurance, 401Ks, university endowments, and wealthy individuals. It has added up to an enormous and growing amount of money.</span></p>
<p><span style="color: #000000;">So, should you sell to a PE firm? I believe there are several good reasons. First, they account for approximately half the deals in our sector. Without PE firms, fewer deals would be completed and the deals would be at lower valuations. PE firms are bullish on the PCB/EMS sectors due to the tailwinds for the industry, including reshoring, the expansion of electronics into everything, government support/CHIPS Act, and robust U.S. military budgets. They have cash burning in their pockets and are likely to do deals to grow their portfolio companies.</span></p>
<p><span style="color: #000000;">PE firms generally supply growth capital to help companies expand via acquisitions and CapEx. They can provide ways to improve operations due to their experience in a variety of industries. Professional growth and job training are important strategies for their companies. In general, they have extensive networks that can help open doors to new customers and markets. In my experience with private equity, most of our deals have been successful, and we have many positive stories about PE firms in the industry.</span></p>
<p><span style="color: #000000;">Before selling to a private equity firm, it is important for a company’s owner to understand the strategy and policies of the buyer. That is true with any buyer, however, PE firms typically have the following common strategies:</span></p>
<ol>
<li><span style="color: #000000;">Equity ownership for the founder and top management team. The seller is usually encouraged to keep some “rollover equity” in the company, usually 10–30%. This is to try to keep the incentives aligned for both the seller and buyer.</span></li>
<li><span style="color: #000000;">Growth through acquisitions and sales expansion. PE firms generally do not rest on their laurels.  They want to grow substantially and quickly.</span></li>
<li><span style="color: #000000;">Operational improvements. They may not immediately throw the baby out with the bathwater, but they generally want to improve operations, margins, reporting, and other characteristics of the business. This may involve bringing in outside talent.</span></li>
<li><span style="color: #000000;">Reporting requirements. PE firms expect a lot more data more quickly than most owners are used to. The firms have to report to their investors and they like to use data analysis to find ways to improve businesses. </span></li>
</ol>
<p><span style="color: #000000;">Some owners do not want to sell to private equity firms. As with all stereotypes, there can be some truth in their reasonings, but my experience has generally been for very good outcomes. I have completed deals with all types of buyers, but I’ve also had deals fall apart for several reasons. I have not found a reason, in general, to eliminate any category of buyers based on stereotypes—except those buyers who do not have any money, and we can, for sure, eliminate those buyers.</span></p>
<p><span style="color: #000000;">However, there are several reasons not to sell to a PE firm. If a business is not prepared it can be a difficult transition. For example, if a company has several family members and is run like a country club, it is probably best to make improvements before selling.</span></p>
<p><span style="color: #000000;">If the owner has not delegated and/or has not developed a management team, it will be tough to move on to new ownership. Also, if the company experiences a lot of ups and downs, for example, a capital equipment manufacturer, it might be difficult to take on too much debt, which is a feature of many private equity deals.</span></p>
<p><span style="color: #000000;">In all cases, it is important to sit down with a buyer and make sure your strategies are aligned. There are thousands of PE firms and many additional thousands of other potential buyers, so the right match should be out there. Even if the business owner is not prepared, they may still sell, but the buyer will reap the benefits of any improvements.</span></p>
<p><span style="color: #000000;">As always, be sure to prepare the business, yourself, and your team for the sale process. This will increase the odds of a successful deal and make things go more smoothly, no matter who the buyer is.</span></p>
<p><span style="color: #000000;"><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through, StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></span></p>
<p>The post <a href="https://gp-ventures.com/should-you-sell-your-company-to-a-private-equity-firm/">Should You Sell Your Company to a Private Equity Firm?</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>What Buyers Are Buying</title>
		<link>https://gp-ventures.com/what-buyers-are-buying/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Tue, 08 Oct 2024 20:49:46 +0000</pubDate>
				<category><![CDATA[General]]></category>
		<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[buyers]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[ems]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[pcb]]></category>
		<category><![CDATA[pcb sector]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<guid isPermaLink="false">https://gp-ventures.com/?p=5976</guid>

					<description><![CDATA[<p>I recently looked at completed deals in the North American PCB and EMS sectors over the past few years and spoke with several buyers who are active in the M&#38;A market. According to my records, there were 31 deals in the North American PCB sector from 2021 through August 2024 (11 in 2021, five in... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/what-buyers-are-buying/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/what-buyers-are-buying/">What Buyers Are Buying</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img decoding="async" class="alignnone wp-image-5632 size-post-thumbnail-size" src="/wp-content/uploads/2018/01/pexels-photo-57007-e1515689891169-750x330.jpeg" alt="" width="750" height="330" /></p>
<p><span style="color: #000000;">I recently looked at completed deals in the North American PCB and EMS sectors over the past few years and spoke with several buyers who are active in the M&amp;A market.</span></p>
<p><span style="color: #000000;">According to my records, there were 31 deals in the North American PCB sector from 2021 through August 2024 (11 in 2021, five in 2022, 13 in 2023, and two to date in 2024). I categorize them as follows:</span></p>
<ul>
<li><span style="color: #000000;">10 deals were add-ons (the buyer kept the seller’s facility open to expand geographically or strategically)</span></li>
<li><span style="color: #000000;">Nine deals were consolidations (the buyer closed the seller’s facility and moved the business into their facility)</span></li>
<li><span style="color: #000000;">Seven deals were by foreign buyers (facilities were kept open)</span></li>
<li><span style="color: #000000;">Three were platform deals (private equity buyers who acquired a new platform company)</span></li>
<li><span style="color: #000000;">Two deals were made to expand the buyer’s technical capabilities (for example, adding design services, etc.)</span></li>
</ul>
<p><span style="color: #000000;">Over the same period in the EMS sector, there were 64 deals in North America (22 in 2021, 13 in 2022, 18 in 2023, and 11 to date in 2024).  Here is the breakdown:</span></p>
<ul>
<li><span style="color: #000000;">29 add-on deals</span></li>
<li><span style="color: #000000;">16 platform deals</span></li>
<li><span style="color: #000000;">11 deals involving foreign buyers</span></li>
<li><span style="color: #000000;">Six were completed to help the buyer add capabilities</span></li>
<li><span style="color: #000000;">Two were consolidations</span></li>
</ul>
<p><span style="color: #000000;">Private equity (PE) firms have been very active in both the PCB and EMS sectors. Not only were most of the platform deals completed by PE firms, but PE-owned companies also made most of the add-ons. The strong presence of private equity firms and foreign buyers is at least somewhat due to the tailwinds of reshoring and the U.S. government’s support for these sectors. Strong military budgets have continued to increase the use of electronics in everything, and a relatively strong U.S. economy is also a contributing factor.</span></p>
<p><span style="color: #000000;">Conversely, private companies looking to add revenue and customers completed most of the consolidations, but they already have enough production capacity. For add-ons, many buyers, especially in the EMS sector where customers want their suppliers to be close by, sought to expand geographically.</span></p>
<p><span style="color: #000000;">In speaking with recent and current buyers, the main features they are looking for include reasonable growth in sales and profits (too much growth or falling sales make it hard to value), good management teams, good customers (but not too much concentration), good equipment, and good quality and systems. Contrary to a common opinion, most buyers are not looking for distressed sellers. Of course, many buyers are looking for a relative ”bargain,”, however, most are willing to pay a reasonable valuation for a company that is a good performer rather than looking for a fixer upper. Due to the ups and downs of the market over the past few years, some buyers are willing to somewhat ignore the effects of the COVID-19 pandemic and focus on the current trends of the business.</span></p>
<p><span style="color: #000000;">It always takes two to tango, so sellers’ needs are important too. Most are looking for the highest value possible, of course, but many other factors are important, too. Many sellers want the buyer to keep the facility and employees in place and will even accept significantly lower deals in some cases. Many business owners also own the building, and they may want to sell them together or insist that the buyer enter a long-term lease. Sellers often want as much cash at closing as possible but are willing to accept some level of escrow, earn-out, rollover equity (stock in the buyer and/or their fund), and other forms of deferred payment.</span></p>
<p><span style="color: #000000;">Some of the current main issues in the M&amp;A markets are:</span></p>
<ul>
<li><span style="color: #000000;">Uncertain forecasts</span></li>
<li><span style="color: #000000;">Customer order pushouts</span></li>
<li><span style="color: #000000;">High inventory levels (both raw materials/components and finished goods)</span></li>
<li><span style="color: #000000;">The upcoming U.S. presidential election/effect on tax rates</span></li>
<li><span style="color: #000000;">Uncertainty over the direction of the U.S. economy</span></li>
<li><span style="color: #000000;">Sellers&#8217; high expectations of value vs. cautious buyers</span></li>
</ul>
<p><span style="color: #000000;">In the PCB sector, the falling number of shops means that there are fewer choices, making it harder to find good matches for buyers’ criteria.</span></p>
<p><span style="color: #000000;">Buyers are currently flush with cash and looking to acquisitions for growth, which should keep the M&amp;A markets rolling. The recent drop in interest rates should help encourage more deals. Many companies that we talk to are having a down year in 2024, but they remain optimistic that they will see an increase in Q4 and/or in 2025. As always, it is important to be prepared. This is a good time to fix a few things before going to market.</span></p>
<p><span style="color: #000000;"><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through, StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></span></p>
<p>The post <a href="https://gp-ventures.com/what-buyers-are-buying/">What Buyers Are Buying</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>North America PCB, EMS M&#038;A Review: The First Six Months of 2024</title>
		<link>https://gp-ventures.com/north-america-pcb-ems-ma-review-the-first-six-months-of-2024/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Thu, 22 Aug 2024 20:01:08 +0000</pubDate>
				<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[Business]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[ems]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[pcb]]></category>
		<category><![CDATA[pcb deals]]></category>
		<category><![CDATA[pcb sector]]></category>
		<category><![CDATA[printed circuit boards]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<guid isPermaLink="false">https://gp-ventures.com/?p=5973</guid>

					<description><![CDATA[<p>M&#38;A deal discussions were fairly strong in the North American EMS and PCB sectors in the first half of 2024, but for various reasons, the number of actual closed deals was lower than in the first half of 2023. For example, there were just two PCB deals that closed in the first six months of... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/north-america-pcb-ems-ma-review-the-first-six-months-of-2024/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/north-america-pcb-ems-ma-review-the-first-six-months-of-2024/">North America PCB, EMS M&#038;A Review: The First Six Months of 2024</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img decoding="async" class="alignnone wp-image-5757 size-post-slider-side" src="/wp-content/uploads/2020/03/chart-close-up-data-desk-590022-750x330.jpg" alt="" width="750" height="330" /></p>
<p>M&amp;A deal discussions were fairly strong in the North American EMS and PCB sectors in the first half of 2024, but for various reasons, the number of actual closed deals was lower than in the first half of 2023. For example, there were just two PCB deals that closed in the first six months of 2024, both of which were consolidations that were not announced publicly—compared with seven PCB deals completed in the same period in 2023. On the EMS side, eight North American M&amp;A deals were closed through June, compared with eight deals in the first six months of 2024.</p>
<p>The low number of closed deals in the PCB sector is because of several factors. Revenues in 2024 are down or flat for many PCB shops. According to IPC, PCB sales were up just 1% in June from the previous year and the book-to-bill ratio was just 0.95. We have heard from many shops that orders picked up in the past few months, so perhaps M&amp;A deals will follow once confidence is fully restored. Interest rates in the U.S. remain relatively high, which does not help the deal environment. The pending U.S. presidential election and potential trade conflict with China create some uncertainty. On the other hand, deal activity is high, meaning that a lot of the smaller North American shops are looking to do something strategically. This is mostly because of demographics. Owners are generally looking toward retirement. There is a lot of private equity money invested in the sector and an increasing amount of interest from overseas PCB manufacturers, so eventually, the deals will start closing.</p>
<p>On the EMS side, there are plenty of deal discussions too, as well as a good number of deal closings.  Here are the announced deal closings for the first half of 2024:</p>
<ul>
<li>Kaynes Technology (India) acquired Digicom Electronics (CA) for $2.5 million in January</li>
<li>Hartwood Point (PE) acquired Accutronics (MA) in January</li>
<li>Tide Rock Holdings (CA) acquired Cablenet Aerospace (CO)  in April</li>
<li>kSARIA (MA, owned by Behrman Capital) acquired Charles E Gillman Inc. in April</li>
<li>(Note: kSARIA itself was subsequently sold to ITT in August 2024)</li>
<li>OneMonroe (MI) acquired GMA Manufacturing (AZ) in April 2024</li>
<li>EmeraldEMS (Crestview) acquired Optimum Design Associates (CA) in May 2024</li>
<li>Flex (public) acquired FreeFlow (TX) in May2024</li>
<li>ACDI acquired QinetiQ (VA) in May 2024</li>
</ul>
<p>Although not an M&amp;A deal, Aimtron Electronics held its IPO in India in June</p>
<p>For the rest of 2024–largely because of demographics in the PCB and EMS industries–the number of deals should continue to be strong due to owners retiring. PE firms have plenty of liquidity, which should keep deals rolling. The effects of re-shoring, government incentives, and the continued increased percentage of electronics in everything should keep investors interested in the sector. North American IPOs in the sector do not seem to be making a comeback at all, but larger companies can merge or go private via deals with PE firms, so that should keep investments coming into the industry.</p>
<p>Aside from Jabil’s three acquisitions in 2023 and Flex’s purchase of FreeFlow in May, larger public companies have not been very active in the PCB and EMS sectors for several years. Until recently, public companies were more concerned about weathering the storm than doing deals. Now that the component shortage has eased somewhat and inventories are more under control, one would think that a few big deals would occur.</p>
<p>Although there is some talk about greenfields in North America, the net number of PCB and EMS shops continues to decline. Our database is at around 150 PCB shops and 900 EMS shops (not counting companies that focus on wire harness/cable assembly). It has been a long time since we “discovered” a new PCB shop that we did not previously know, but we still hear about ”new” (to us) EMS companies from time to time. I expect that the number of companies in these sectors will continue to decline by about five to 10 PCB shops and 15–20 EMS shops per year as larger shops acquire the smaller ones. This trend should be good for the industry, as the larger shops will be better equipped to invest in the newest machinery, technology, systems, and training.</p>
<p>As always, owners who are thinking of selling in the next few years should start to prepare, because you never know when the next wave of M&amp;A may come.</p>
<p><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through, StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></p>
<p>The post <a href="https://gp-ventures.com/north-america-pcb-ems-ma-review-the-first-six-months-of-2024/">North America PCB, EMS M&#038;A Review: The First Six Months of 2024</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>Breaking Down Legal Preparations for M&#038;A</title>
		<link>https://gp-ventures.com/breaking-down-legal-preparations-for-ma/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Tue, 11 Jun 2024 22:05:50 +0000</pubDate>
				<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Sell Side]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[sell my technology business]]></category>
		<category><![CDATA[sell side]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<guid isPermaLink="false">https://gp-ventures.com/?p=5968</guid>

					<description><![CDATA[<p>When owners prepare for to sell, the only legal advice I ever give is for them to get a good M&#38;A lawyer, but here are some general things owners should consider. First, get a good M&#38;A lawyer. If your long-term corporate law firm has a strong M&#38;A team, that’s perfect. Be sure they aren’t too... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/breaking-down-legal-preparations-for-ma/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/breaking-down-legal-preparations-for-ma/">Breaking Down Legal Preparations for M&#038;A</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img loading="lazy" decoding="async" class="alignnone wp-image-5727 size-post-thumbnail-size" src="/wp-content/uploads/2019/09/books-document-education-357514-750x330.jpg" alt="" width="750" height="330" /></p>
<p><span style="color: #000000;">When owners prepare for to sell, the only legal advice I ever give is for them to get a good M&amp;A lawyer, but here are some general things owners should consider.</span></p>
<p><span style="color: #000000;">First, get a good M&amp;A lawyer. If your long-term corporate law firm has a strong M&amp;A team, that’s perfect. Be sure they aren’t too busy and know how to focus on companies of your size. Also, be sure their staff is large enough to handle all the paperwork. The firm should have a backup attorney if your main attorney gets too busy, sick, or decides to retire before you sell.</span></p>
<p><span style="color: #000000;">The worst-case scenario is a one-person firm divorce attorney (or other non-M&amp;A specialist ) trying to do an M&amp;A deal. I liken it to a podiatrist doing brain surgery—they’re doctors but with their own specialty. You can still have your favorite attorney work on the deal, but you will need to bring in another firm that has M&amp;A experts. The firm should have both M&amp;A experience and internal or external resources in the fields of taxes, estate planning, real estate, HR, environment (especially for PCB shops), and other relevant areas.</span></p>
<p><span style="color: #000000;">An M&amp;A attorney with extensive experience can help an owner prepare for a sale. Some of the main issues to consider:</span></p>
<p><span style="color: #000000;"><strong>Operating agreement:</strong> It is critical to keep the operating agreement up-to-date, especially if a company has several owners. An owner must show they have the authority to make decisions. It is a good idea to update this agreement every time there is a change in the company, so put it on the annual checklist.</span></p>
<p><span style="color: #000000;"><strong>Stock certificates:</strong> Make sure this is current. There is nothing like finding out in due diligence that some certificates are missing or old partners are still listed as stockholders. A buyer wants to know that no one will show up later and claim ownership.</span></p>
<p><span style="color: #000000;"><strong>Non-competes/employment agreements: </strong>The U.S. Fair Trade Commission (FTC) recently released a ruling that makes most non-competes invalid. Some of the exceptions are for owners and highly paid executives. The ruling has been challenged, so things may change. Nevertheless, your attorney should review all employee-related agreements. Also, if the owner has promised verbally to share any of the proceeds with key employees, it should be documented in writing.</span></p>
<p><span style="color: #000000;"><strong>Supplier/customer agreements:</strong> Many owners allow these agreements to become dated. Having strong business agreements can increase the value of the company. Your attorney can check whether there are changes in control clauses and help you update all agreements.</span></p>
<p><span style="color: #000000;"><strong>Leases:</strong> Even if the business owners own the building in a separate entity, an updated lease is important.  If the landlord is unrelated to the business, the lease should be checked for change of control or other clauses. The timing of when to discuss a sale with the landlord is tricky and depends on the relationship.  Landlord consents can be difficult to obtain quickly. The last thing you want is for the landlord to hold up a deal.</span></p>
<p><span style="color: #000000;"><strong>UCCs:</strong> Almost every company has open UCC forms that should have been terminated long ago. Taking care of these in advance can help due diligence go more smoothly.</span></p>
<p><span style="color: #000000;"><strong>I-9s:</strong> Buyers are looking at these forms more seriously. Be sure that all your employees are documented.</span></p>
<p><span style="color: #000000;"><strong>Licenses/permits:</strong> Some permits can transfer with the business, others do not, and yet others have conditions based on the location of the business.</span></p>
<p><span style="color: #000000;"><strong>Legal issues or lawsuits:</strong> If there are any current or pending legal or other issues, be sure to document them and keep buyers updated. Any issues may cause buyers to think twice or to add more to escrow.</span></p>
<p><span style="color: #000000;"><strong>Education:</strong> An owner should become familiar with the types of documents that are needed to complete a deal, such as Indications of Interest, Letters of Intent, Asset Purchase Agreements, and the other agreements. It seems to go on and on, but if an owner is familiar with the agreements in advance, it becomes less of a shock. Also, become familiar with the main subjects of the Purchase Agreement.  Getting educated on the various documents and major terms can pay off big in reducing expenses and stress down the road. Owners can also choose to have their attorneys educate them at $500+ per hour.</span></p>
<p><span style="color: #000000;"><strong>Due diligence preparation: </strong>Your attorney or M&amp;A advisory firm can give you a checklist to work on to prepare for due diligence. It is ideal to start working on this list years in advance. It is also good corporate policy to get these ready as a course of business and to keep them updated. (I also wish I were 20 pounds lighter and could hit my drives 300 yards.) Any preparation is good preparation.</span></p>
<p><span style="color: #000000;">From selecting the right M&amp;A attorney to updating agreements and being prepared, the more an owner spends time in advance on legal matters, the smoother the deal will become and the more everyone will be able to focus on the goal of closing.</span></p>
<p><span style="color: #000000;"><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></span></p>
<p>The post <a href="https://gp-ventures.com/breaking-down-legal-preparations-for-ma/">Breaking Down Legal Preparations for M&#038;A</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>Breaking Out of the Valuation Box</title>
		<link>https://gp-ventures.com/breaking-valuation-box/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Thu, 09 May 2024 21:23:57 +0000</pubDate>
				<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Sell Side]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[sell side]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<guid isPermaLink="false">http://gp-ventures.com/?p=5959</guid>

					<description><![CDATA[<p>Many manufacturing companies are in a “valuation box.” That is, the value of the company, based on a market multiple, is not equal to the value of the assets. Or worse, once debt is paid off, the net proceeds would actually be negative. Here are some tips for getting out of the box. Now, how... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/breaking-valuation-box/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/breaking-valuation-box/">Breaking Out of the Valuation Box</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img loading="lazy" decoding="async" class="alignnone wp-image-5960 size-post-thumbnail-size" src="/wp-content/uploads/2024/05/pexels-karolina-grabowska-4506261-e1715289799497-750x330.jpg" alt="pexels-karolina-grabowska-4506261" width="750" height="330" /></p>
<p><span style="color: #000000;">Many manufacturing companies are in a “valuation box.” That is, the value of the company, based on a market multiple, is not equal to the value of the assets. Or worse, once debt is paid off, the net proceeds would actually be negative. Here are some tips for getting out of the box.</span></p>
<p><span style="color: #000000;">Now, how can the value of the company be less than the assets? It typically happens when:</span></p>
<ul>
<li><span style="color: #000000;">Net operating income and/or adjusted EBITDA is less than 10% of sales</span></li>
<li><span style="color: #000000;">A/R plus Inventory less A/P is 50% of sales or higher</span></li>
<li><span style="color: #000000;">The market multiple for the business is in the 4–6X range</span></li>
</ul>
<p><span style="color: #000000;">For example, for a $10 million revenue business, if adjusted EBITDA is about 10% of sales or $1 million, a 5X multiple would be around 50%, or $5 million. This valuation would include all assets and accounts payable, but not include cash or debt. If A/R is about 20% of sales, inventory (including WIP) is 30%, and A/P is 10%, net assets would be around $4 million. If equipment is worth $500,000 to $1 million, an owner would rightly wonder why sell it at all. Plus, if debt is deducted from closing proceeds, or if terms are 80% cash, the owner is left with less than the theoretical liquidation value of the company.</span></p>
<p><span style="color: #000000;">Of course, liquidating assets would not net nearly full value, however, it still feels wrong in the mind of the owner.  No one wants to sell their company and be left with nothing but a “bucket of chicken” after closing. This is just a simple example. If EBITDA percentage is higher, the calculation is better for the seller. If lower, the calculation is less favorable.</span></p>
<p><span style="color: #000000;">In those cases, what should an owner do? There are several main choices:</span></p>
<p><span style="color: #000000;"><strong>Do Nothing and Keep Milking the Business for All It’s Worth</strong></span></p>
<p><span style="color: #000000;">Why not? The owner’s making a million bucks a year. The equation may get better in the future, or if the owner keeps running it for a few years, the cumulative proceeds (including profits for a few years) will be higher than the net asset value of the company.</span></p>
<p><span style="color: #000000;"><strong>Settle for the Current Market Rate</strong></span></p>
<p><span style="color: #000000;">If the owner is really ready to retire, there are no successors, and a management buyout or ESOP are not options, an owner can settle for today’s valuation. It might not be a champagne-popping moment, but it is better than liquidating or just simply shutting the doors. It is also much better than waiting too long and having the market unexpectedly turn down or the owner suffering a major health issue.</span></p>
<p><span style="color: #000000;"><strong>Invest in the Company and Break Out of the Valuation Box</strong></span></p>
<p><span style="color: #000000;">This takes guts and time, but there are many ways to break out of the box. Simply put, a company must increase margins, increase productivity, and/or become more efficient. For example:</span></p>
<ul>
<li><span style="color: #000000;"><strong>Invest in sales and marketing:</strong> Many companies that are “in the box” have not invested in sales and marketing. Maybe when the company was young, the owner and the team ran around talking to customers, but somehow that was abandoned like an old VW van on the side of the road. A lot of companies have also tried hiring salespeople or outside reps but did not get enough value out of them and cut that out during the last recession (maybe 2008). I am not sure how to run a sales organization, but I see companies that are growing by having sales teams, attending trade shows, great marketing materials, and are actually answering the phone when you call. Go after new, cutting-edge orders, which should be at higher profit margins than legacy projects.</span></li>
<li><span style="color: #000000;"><strong>Improve equipment and facilities:</strong> If the employee of the month is the maintenance guy six months in a row, you might have a problem. Customers, employees, and buyers know when there is a CapEx deficit in the company, which will be subtracted one way or another from the valuation. Improving the company’s equipment by one or two pieces a year will not break the bank and often will pay for themselves. Nicer facilities will attract better talent.</span></li>
<li><span style="color: #000000;"><strong>Update systems:</strong> Customers and buyers are asking for more data every day, which makes it harder to keep up. Updating software systems is expensive and time-consuming, as is making sure all cybersecurity is up-to-date. Tracking performance is a great way to identify issues and improve profitability.</span></li>
<li><span style="color: #000000;"><strong>Hire great talent/delegate: </strong>Yes, it is hard to find any talent these days. It is especially hard if the owner has not been investing in the company.</span></li>
<li><span style="color: #000000;"><strong>Focus on competitive advantages: </strong>Not only will this improve margins, but it can increase the attractiveness of the company and get higher multiples. Whether it is medical devices, defense systems, or high-density substrates, a company needs to have one or two specialties to stand out and attract better multiples.</span></li>
<li><span style="color: #000000;"><strong>Seek out government subsidies: </strong>Due to the CHIPS Act, reshoring, and other programs/trends, there is a lot of government money available for companies in the electronics industry. Your local politicians would love to get a photo op with you and your shiny new facility that is helping to secure our nation’s security.</span></li>
<li><span style="color: #000000;"><strong>Make acquisitions:</strong> Many of the top companies in electronics have grown substantially through acquisitions. It is not just the acquisitions, though; it is also necessary to make investments. Smart acquisitions are a great way to grow quickly.</span></li>
</ul>
<p><span style="color: #000000;">The valuation box can be like a nice, comfy chair, whereas investing in the company is like getting up at 5 a.m. to go to the gym. If an owner would like to create a better legacy and reap the profits in the future, taking a few aspirins and getting out of the chair is the way to go. </span></p>
<p><span style="color: #000000;"><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></span></p>
<p>The post <a href="https://gp-ventures.com/breaking-valuation-box/">Breaking Out of the Valuation Box</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>The New Industry: Will the Growth Continue?</title>
		<link>https://gp-ventures.com/new-industry-will-growth-continue/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Thu, 25 Apr 2024 16:46:18 +0000</pubDate>
				<category><![CDATA[Uncategorized]]></category>
		<guid isPermaLink="false">http://gp-ventures.com/?p=5955</guid>

					<description><![CDATA[<p>Feature Interview by the I-Connect007 Editorial Team How sustainable are the primary financial models in the United States regarding PCB fabrication shops? In this interview with IPC Chief Economist Shawn DuBravac and M&#38;A expert Tom Kastner, we explore what’s happening with U.S. printed circuit board shops in today’s market, how consolidation affects the industry, and... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/new-industry-will-growth-continue/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/new-industry-will-growth-continue/">The New Industry: Will the Growth Continue?</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><strong>Feature Interview by the I-Connect007 Editorial Team</strong></p>
<p>How sustainable are the primary financial models in the United States regarding PCB fabrication shops? In this interview with IPC Chief Economist Shawn DuBravac and M&amp;A expert Tom Kastner, we explore what’s happening with U.S. printed circuit board shops in today’s market, how consolidation affects the industry, and what can be done.</p>
<p><em><strong>Marcy LaRont: Shawn and Tom, thank you for joining us today. Tom, in another recent interview, you estimated there are 100 to 120 circuit board shops left in the U.S.</strong> </em></p>
<p><em>Tom Kastner:</em> Yes, and my number tends to be lower than IPC’s, but I have a different definition of a printed circuit board “shop” because there are so many that are not making boards anymore. It’s difficult to track anyone under $5 million.</p>
<p>Statistically, the number of board shops doesn’t really matter because roughly 90% of production is done by something like the top 50 printed circuit board manufacturers. We see that the bigger shops are getting bigger, for example, the ones like APCT and Summit. There is some organic growth, but much of the growth is due to the acquisition of smaller shops. The bigger shops are more likely to have better equipment and technology to compete with Asia. Overall, that’s good for the industry in the United States.</p>
<p><em><strong>Nolan Johnson: Tom, if some of those estimated 120 U.S. PCB shops aren’t making boards anymore, what are they doing? </strong></em></p>
<p><em>Kastner:</em> They are brokering, for example. Any business that has survived for 25 to 30 years under tough conditions can make much more money brokering because they don’t have the headaches of CapEx or environmental regulations. They are brokering domestically as well as importing boards, and many of them have gotten into assemblies as well.</p>
<p><em><strong>LaRont: You’ve said there’s more activity on the assembly side rather than PCB fabrication, but the profit margins can be very thin, so why is that attractive? </strong></em></p>
<p><em>Kastner:</em> Several factors keep the number of EMS companies high. I don’t know the exact number, but I think there are between 700 and 900 companies in North America. One key thing is that customers like their EMS shops to be local. Ninety percent of that business is within 100 or 200 miles of the customer for lower-volume manufacturing. Higher volume, especially more commodity products, are still made overseas and imported. Customers like to be able to see their products, especially if there is an issue in production.</p>
<p>Also, OEMs like the final touches to be done nearby in case there are any changes to the firmware, anything outside the box, whatever it might be. That is more easily done when it’s nearby. There’s also a much lower barrier to opening an EMS shop compared to a PCB fabrication shop. While it’s still highly technical, you don’t have the “black magic” of chemicals and the “dirtiness” factor with all the environmental regulations. That is a major factor. Finally, air freighting a box build final assembly is getting more expensive; it’s almost prohibitive.</p>
<p><em><strong>LaRont: Why would someone buy or sell at this time? Why is this even an attractive investment opportunity? Are private equity owners looking to provide a return on investment for their investors?</strong></em></p>
<p><em>Kastner:</em> The private equity guys see the trend toward reshoring, the government support in dollars, the nice military budgets, and a halfway decent economy for products. The market may not be growing quickly, but it remains robust. There is a lot of private equity money available overall, and they are investing in everything, not just electronics. That is providing a tremendous amount of liquidity for people in our industry.</p>
<p><em>Shawn DuBravac:</em> The cost of cash is a lot higher than it was last year and is likely to stay higher. Investing in something like a lawn care business or consolidating dentists’ offices into a group, for example—when your cost of cash is zero, and you think there are synergies in combining a number of them—doesn’t translate as well today. The math doesn’t work out. There will be a much higher threshold for investors to find higher returns on that cash. Previously, they could immediately make 5%, risk-free, or market yields of 7–8% if they were willing to take some risk. Now, with the cost of cash, to make the investment worthwhile you will need to have deals returning in the 15% range.</p>
<p>So, the consolidation we’ve seen from private equity from many industries will go away. There are modernizations that can take place with larger companies, but not enough to drive the level of return that private equity is looking for. In certain instances, electronics starts to look more attractive when you don’t have cash going to law firms and lawn care businesses. Still, I believe we will see this situation affect electronics.</p>
<p><em>Kastner:</em> It could be, but generally, the deals in electronics have not been very highly leveraged. Everyone recognizes that it is all project-based with no recurring revenue. It’s not a software-as-a-service (SaaS) revenue model, so most have been reasonably leveraged. The valuations could be down a bit, and more investment will be moved into alternative financing, like a seller note or rollover equity.</p>
<p>There are just not that many PCB shops to buy. Big companies must keep buying smaller shops or do something a little bit differently. On the EMS provider side, there are a lot of shops, and the demographics will likely support those deals, so I expect to see a similar number of deals this year. I’m not sure about the total value of those deals because the bigger deals certainly will be affected by higher interest rates.</p>
<p><em><strong>Johnson: With this change in the financial marketplace, does it change one’s growth strategy? Does available funding encourage more internal investment rather than looking for a CapEx partner to sell the assets to? </strong></em></p>
<p><em>Kastner:</em> Obviously, lower interest rates help with CapEx. To grow, the bigger companies must invest more. For example, I don’t think there’s anyone over $20–$25 million who doesn’t have direct imaging. If they want to stay in the game, they must invest in CapEx. The smaller guys will either sell or have an exit strategy. But they’ve existed for 30 years, so there is a lot of ingenuity and intelligence there.</p>
<p><em><strong>Johnson: In this environment, can you build a PCB fabrication business without DoD? </strong></em></p>
<p><em>Kastner:</em> I don’t think so. Most new builds are captive, like GreenSource. Alpha Circuit in Schaumburg, Illinois, is building a new facility and bringing all their shops into one. If you don’t have that business already, it would be incredibly tough. Without the DoD, I do not believe we would have a PCB fabrication industry in the United States.</p>
<p><em><strong>LaRont: Shawn, let’s talk about broader market projections and the regional sustainability of this business. Some say the current U.S. situation is not sustainable. Where will we be in 10 years? </strong></em></p>
<p><em>DuBravac:</em> This is the classic chicken-and-egg problem. If I build my business, will I continue to have enough business? Is it a sustainable investment? This is a big debate everywhere right now. You have government buyers and ITAR that have settled the market in a certain place. Can the market grow outside of where it has naturally settled? On the margin, I think it can.</p>
<p>The next question is, does that new growth get captured by already participating companies as they expand capacity, or does it expand from the existing base? The demographic change in the industry is interesting. You’ve got people who are ready to retire; the next generation doesn’t want to take over the business. So, they’re looking for a liquidity event, and they will take it any way they can. Some of the fuzziness in Tom’s numbers is because some companies will just wind down. The owner will just decide one day, “We’re done,” then turn off the lights and walk away. That could be a long, slow process. It could even be a process that’s ultimately invoked by the next generation when they decide it’s time. So, yes, there is growth in North America happening on the margin, but it’s still a big unknown about how big that grows and where.</p>
<p>Investment into EV infrastructure is a good example of this. There is production going into that. LG just announced a battery factory, and we will see more of those. There’s a big EV investment in the Southeast U.S.—2022 was a record number for Georgia, North Carolina, South Carolina, and Tennessee for in-state investments. Those numbers may have even been eclipsed in 2023. They saw record investments related to EV commitments, and even with the EV market slowing, it is still a growth area. On the margin, that helps.</p>
<p>To Tom’s point, how much needs to be done locally vs. how much can be brought in? Clearly, Mexico is benefiting, and that will continue, if it remains stable and there are workers. There are several forces, though not all of them are moving as fast as they once were. Wages are definitely increasing in Mexico. Those things get added to the balance equation. If they were moving really fast, then you’d see people say the trajectory warrants the gamble of putting in a PCB shop. I don’t know that we’re growing fast enough to make that gamble.</p>
<p><em><strong>Johnson: Do you see any changes in the makeup of those employed in manufacturing as it grows? Is the need for workers being offset by meaningful investment in automation? </strong></em></p>
<p><em>DuBravac:</em> There is definitely investment going into automation and robotics to augment the existing workforce and, in some cases, to fill a need where workers aren’t available. Manufacturers still have a hard time finding people who are willing to work. It’s hard to comprehend that people show up for a job, work for a couple of days, and then just leave without formally quitting. They leave by lunch and never come back. They don’t even show up for their paycheck.</p>
<p>Manufacturers used to compete against other manufacturers for employees. Now, they compete against Starbucks. Manufacturing work has changed; the tastes and preferences of workers have changed. So, they are investing in automation and robotics, which is moving in a very measured way. My guess is that the LG battery factory being built in Texas will be more automated than a battery factory built five years ago. The nature of manufacturing will be more conducive to automation.</p>
<p><em><strong>LaRont: EV is a huge technology driver for markets in Asia and possibly Europe. What about HDI and UHDI? Has growth slowed? </strong></em></p>
<p><em>DuBravac:</em> It’s all relative. We went from a 99% growth rate in EV to around 50% in the U.S. We didn’t double our growth again last year, and everybody is concerned, but we sold over a million units for the first time. There are still a lot of tailwinds in that category. The whole EV infrastructure must grow. Growth will be roughly 30% this year, which is still phenomenal.</p>
<p>As you get to a bigger base, your growth will slow; it’s just arithmetic. The U.S. is still well below the rest of the world when it comes to EV, which suggests there’s some room for growth. We are at about 9% of total EV sales. Europe is at about 18%. There are Nordic countries that have just massive EV penetration compared to what we see in the U.S., so we have a very long way to go. We were gripped by headlines from Ford saying it would delay its investment in battery technology and battery factories. We have had some delays, but not really cancellations. We don’t always comprehend the meaning of a slower growth rate. The law of large numbers means the growth rate will slow, but we will see new entrants into the business. LG wasn’t in EV chargers until they went into South Korea last year, and now in the U.S. this year.</p>
<p>How much is being produced in the U.S. vs. elsewhere? There is a movement toward nearshoring, but it’s slow. What’s the upper boundary? We know it’s not 100%, so where is it? Is it another percentage point, or another 15? How long would it take to get to another 10 percentage points? As I noted in the December 2023 issue, if you just look at the data, Mexico has become a much bigger player. Imports are captured in two different ways in the U.S., which could mean that Mexico is an even larger player than we see with the current data.</p>
<p><em><strong>Johnson: What other investments are happening in PCB fabrication around the globe? </strong></em></p>
<p><em>DuBravac:</em> That is a difficult question. Perhaps it is time to take another, deeper look at regional investment given all the geopolitical shifting. As far as the U.S., the DoD has always been very cognizant of what is being manufactured and the domestic capacity. During the pandemic and subsequent geopolitical tensions, it has become even more sensitive to what is available for domestic PCB production. Outside of DoD, the Commerce Department is now waking up to the greater concern for the U.S. economy and supply chain stability. That does result in movement, but it remains to be seen how much. There is definitely the sense in the U.S. and Europe that they are willing to invest in PCBs. Companies are asking, “Am I willing to put my dollar next to a government dollar and build a facility, and can I make it sustainable in the long term?”</p>
<p><em><strong>Johnson: What about the margins of new technology? Is now the time to consider growth by pivoting to something like substrates? </strong></em></p>
<p><em>Kastner:</em> There is a lot of interest in advanced packaging and microelectronics, and those are sectors that either didn’t exist 20 years ago or were completely blown out and moved to Asia in the late ’90s and early 2000s. Now we are scrambling to recover some of those capabilities, but it doesn’t really mean you should build a new plant. But there will be more investment in clean rooms, wire bonders, advanced 3D inspection equipment, and so on.</p>
<p><em>DuBravac:</em> The history of manufacturing is the history of innovation. You must constantly reinvent yourself. That means moving into adjacent categories to where the market is. Pre-pandemic, a lot of the market in the U.S. was in rapid prototyping, short runs, and small batches. It shifted a bit during the pandemic. The people who have survived these past 30 years have always paid attention and listened to their customers. Like all good consultants or manufacturers, they respond, “Sure, we can do that. We’ll figure out how to do that.”</p>
<p>A couple of things are happening. Companies are always looking at how to move the value stack and increase the margin stack. It is the classic innovator’s dilemma: finding new things to do that are of value to the customer and have higher margins.</p>
<p><em><strong>LaRont: This is the constant struggle for business: reinvention, relevancy, and translating value into profitability.</strong></em></p>
<p><em><strong>Johnson: We’ve recently spoken to wellknown industry leaders working to shift PCB fab startup costs down dramatically to just barely eight figures. Is this a game changer in terms of potential investment into new PCB shops in the United States?</strong> </em></p>
<p><em>Kastner:</em> I think there’s been a fair amount of talk, but you really haven’t seen existing fabs do that. Instead, they have chosen to invest in their facilities. It sounds good, but I do not know whether that would translate to new facilities being built in the United States.</p>
<p><em>DuBravac:</em> It goes back to the conversation we had in the beginning: the constraint is not about cost as much as it is demand. Not having clear demand is the bigger concern. As Tom mentioned, it seems that the companies that are investing typically are tied to a DoD contract or some other type of commitment.</p>
<p><em><strong>Johnson: It does seem like the growth for brand-new facilities in North America has been captive. </strong></em></p>
<p><em>Kastner:</em> That’s right, and believe me, I would love to see new plants go up here. That would be fantastic. In my view, the economics are just not there.</p>
<p><em><strong>LaRont: Shawn, do you foresee significant changes or shifts globally? </strong></em></p>
<p><em>DuBravac:</em> Well, China has its own headwinds, and it’s massive. It’s not going away. China pre-announced its economic growth recently, and it was the lowest reported in decades. It’s not really growing. Outside of China, there’s growth in Malaysia and Vietnam, for example. There is opportunity here in the U.S., but it’s not clear what that is. If the opportunities were clear, people would come. That’s the beauty of America. If somebody sees an opportunity, they will 100% go after it. Tom and I agree that several things must line up for it all to make sense. But we will certainly keep an eye on it and look forward to reporting on what we see.</p>
<p><em><strong>Johnson: As always, it’s interesting and educational talking with you both. Any parting thoughts? </strong></em></p>
<p><em>DuBravac:</em> The main thing to walk away with is that everything hinges on demand. If demand is there, everything else gets in line. If demand is there, everybody comes out of the woodwork and says, “Yeah, I’ll put money behind that.” If demand is there, everything else will take care of itself.</p>
<p><em>Kastner:</em> Investors are committed to growing, but for how long? These are smart investors. I don’t foresee anybody going IPO on either side—boards or assemblies—but there is measured investor support out there. It’s not crazy, over-the-top support, but it’s there.</p>
<p><em><strong>LaRont: Tom and Shawn, thank you both for your time and insights. </strong></em></p>
<p><strong>PCB007</strong></p>
<p><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></p>
<p>The post <a href="https://gp-ventures.com/new-industry-will-growth-continue/">The New Industry: Will the Growth Continue?</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>Acquiring a PCB/EMS Shop: Brownfield vs. Greenfield</title>
		<link>https://gp-ventures.com/acquiring-pcbems-shop-brownfield-vs-greenfield/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Wed, 27 Mar 2024 21:36:56 +0000</pubDate>
				<category><![CDATA[Buy Side]]></category>
		<category><![CDATA[General]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[buy side]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[ems]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[pcb]]></category>
		<category><![CDATA[pcb deals]]></category>
		<category><![CDATA[pcb sector]]></category>
		<category><![CDATA[pcba]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<guid isPermaLink="false">http://gp-ventures.com/?p=5951</guid>

					<description><![CDATA[<p>We often get asked about establishing a new company (greenfield) rather than buying an existing PCB or EMS shop (brownfield). There are many criteria to consider. Many buyers want to grow through M&#38;A, but they cannot find acquisition targets that fit their criteria. Perhaps they can find the right shop, or at least one that... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/acquiring-pcbems-shop-brownfield-vs-greenfield/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/acquiring-pcbems-shop-brownfield-vs-greenfield/">Acquiring a PCB/EMS Shop: Brownfield vs. Greenfield</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img loading="lazy" decoding="async" class="alignnone wp-image-5952 size-post-thumbnail-size" src="/wp-content/uploads/2024/03/pexels-artem-podrez-5716027-750x330.jpg" alt="pexels-artem-podrez-5716027" width="750" height="330" /></p>
<p>We often get asked about establishing a new company (greenfield) rather than buying an existing PCB or EMS shop (brownfield). There are many criteria to consider. Many buyers want to grow through M&amp;A, but they cannot find acquisition targets that fit their criteria. Perhaps they can find the right shop, or at least one that fits five out of 10 criteria, but they encounter obstacles, such as owners who do not want to sell, price expectations that are too high, or negotiations that are too difficult. Despite the interest in building new facilities, since 2000, few companies have gone the greenfield route. Here is a look at the pros and cons of buying vs. building.</p>
<p><strong>Buying an Existing Shop</strong><br />
This has many advantages over building a new one:</p>
<ul>
<li><strong>Speed:</strong> Acquiring an existing company is usually much quicker than building a new facility.  Once the deal is closed, the buyer can immediately start working on improving things, cross-selling, or whatever the buyer wants to do.</li>
<li><strong>Customers:</strong> An existing shop has customers that may expand the buyer’s target markets.</li>
<li><strong>Permits: </strong>In the PCB sector, it is very slow to obtain new permits. Building permits may also be a long and difficult process.</li>
<li><strong>Equipment/facilities:</strong> Existing shops have running equipment and workable facilities.</li>
<li><strong>Employees:</strong> Especially these days, with sub-5% unemployment rates, it is very hard to find trained employees. Buying a business gives you an instant workforce.</li>
<li><strong>Technology/know-how:</strong> As hard as it is to find any employee, finding one who knows the PCB/EMS sector is increasingly difficult as many industry veterans are retiring.</li>
<li><strong>Known entity:</strong> An established company has a reputation with customers and suppliers, the value of which is substantial.</li>
<li>There can be many negatives to buying a company, aside from the purchase price, negotiations, and deal drama. For many acquirers, they experience cultural and integration issues, legacy problems, unmet expectations, and a variety of other issues.</li>
</ul>
<p><strong>Building a New Shop</strong><br />
A greenfield facility has many advantages:</p>
<ul>
<li><strong>Build to suit: </strong>Many PCB and EMS facilities are old and were not designed to optimize production workflow.</li>
<li><strong>Customization: </strong>Rather than buying a company that meets five out of 10 criteria and making investments to get to 10, a greenfield can meet 10 out of 10 criteria right away.</li>
<li><strong>Brand-spanking new:</strong> There is nothing like the smell of a brand-new facility. It looks great and has no legacy issues.</li>
<li><strong>Environmental: </strong>Especially in the PCB sector, not having to worry about inheriting environmental issues is a big plus.</li>
<li><strong>Attractiveness/image:</strong> Particularly for higher-tech markets, the image of a brand-new facility will gain points with customers and employees.</li>
<li><strong>State-of-the-art:</strong> It can be easier to fill a new facility with state-of-the-art equipment than to retrofit an old building.</li>
<li><strong>Control (training): </strong>Greenfields allow the company to control the employee training process.</li>
</ul>
<p><strong>Negatives:</strong> The main cons of greenfields are the cost—not just building expenses, but the ramp-up to profitability can be substantial—and the time it takes to do so. The required permits may take quite some time, and finding employees may be difficult. Even then, it is uncertain whether the market demand will justify the time and expense of establishing a new facility.</p>
<p>There are a few recent examples of greenfield PCB shops. GreenSource in New Hampshire (parent company Whelan Engineering) and Schweitzer Engineering Laboratories in Moscow, Idaho, were both established in recent years. It is believed that both were established as captive shops by their parent companies. GreenSource is currently selling to outside customers. According to recent announcements concerning expansions, both TTM Technologies and Calumet Electronics plan to invest in new facilities that will produce advanced substrates.</p>
<p>Compared to the small number of greenfields and expansions, there have been between five and 15 M&amp;A deals each year in North America in the PCB sector since 2016.</p>
<p>Since 2000, there have been very few greenfield facilities in the U.S. in the PCB and EMS supplier sectors, so the market has spoken until now. There has not been enough market or technical demand to help outweigh the cons of building a new facility.</p>
<p>Going forward, especially in the sectors of advanced substrates and ultra high density PCBs, more U.S. and overseas companies may go the greenfield route. As the number of existing PCB and EMS shops decreases, the opportunity to acquire an existing shop will decrease, possibly leading to the establishment of some new facilities. Also, with rising government subsidies and an overall trend toward reshoring, the capital and markets will be there to help companies build new shops. For now, most companies will be interested in acquisitions, but the number of greenfields and expansions may increase in the future.</p>
<p><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></p>
<p>The post <a href="https://gp-ventures.com/acquiring-pcbems-shop-brownfield-vs-greenfield/">Acquiring a PCB/EMS Shop: Brownfield vs. Greenfield</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>Catching Up With Industry M&#038;A Expert Tom Kastner of GP Ventures</title>
		<link>https://gp-ventures.com/catching-industry-ma-expert-tom-kastner-gp-ventures/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Thu, 22 Feb 2024 16:15:35 +0000</pubDate>
				<category><![CDATA[General]]></category>
		<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[gp ventures]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<category><![CDATA[tom kastner]]></category>
		<guid isPermaLink="false">http://gp-ventures.com/?p=5947</guid>

					<description><![CDATA[<p>Dan Beaulieu, D.B. Management Group Every year or so, I like to chat with my friend, M&#38;A expert Tom Kastner of GP Ventures. I know he has been busy the past few years, so I was anxious to find out more about it. He is the one person I know who really has his finger... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/catching-industry-ma-expert-tom-kastner-gp-ventures/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/catching-industry-ma-expert-tom-kastner-gp-ventures/">Catching Up With Industry M&#038;A Expert Tom Kastner of GP Ventures</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>Dan Beaulieu, D.B. Management Group</p>
<p>Every year or so, I like to chat with my friend, M&amp;A expert Tom Kastner of GP Ventures. I know he has been busy the past few years, so I was anxious to find out more about it. He is the one person I know who really has his finger on the pulse of the industry. Tom has always been a great source of information for me and the industry as a whole.</p>
<p><b>Dan Beaulieu</b>: Tom, good seeing you again. It’s always one of the highlights of my visits to Chicago to have dinner with you. What have you been up to lately?</p>
<p><b>Tom Kastner</b>: Great to see you too, Dan. I’ve been keeping pretty busy, thanks.</p>
<p><b>Beaulieu</b>: I shouldn’t assume that everybody knows you. Talk a little about your background and your company.</p>
<p><b>Kastner</b>: My background is in semiconductor chips and equipment, working for a company called Hakuto, which makes automatic cut-sheet laminators for PCB manufacturing. I’ve been doing M&amp;A for over 25 years, and I started GP Ventures 15 years ago. We are based near Chicago and are focused on M&amp;A advisory services for tech and electronics companies.</p>
<p><b>Beaulieu</b>: How is your business going? What are your most recent deals?</p>
<p><b>Kastner</b>: We’ve been very busy. In 2023, we represented Sunstone Circuits in its sale to American Standard Circuits and helped Electronics Manufacturing Training Holding, which owns EPTAC, acquire fellow IPC training company Blackfox Training Institute.</p>
<p><b>Beaulieu</b>: How is the market in general?</p>
<p><b>Kastner</b>: The overall M&amp;A market was down in 2023; however, the market for PCB and EMS companies in North America was fairly strong. We have seen a lot of activity in both sectors, and the overall climate for M&amp;A is good, so I think 2024 will be very active.</p>
<p><b>Beaulieu</b>: I have heard a great deal of interest from companies in Asia trying to buy a company here in the U.S. Is that true? And why does someone from China want a company in the United States?</p>
<p><b>Kastner</b>: I have seen a lot of interest from both Asia and Europe in making acquisitions in the U.S. The main goal is access to the U.S. market, both for prototypes and small- to medium-run production. With nice tailwinds for the U.S. market, including government support, it is an attractive time to gain access.</p>
<p><b>Beaulieu</b>: You told me once about something called CFIUS? What is that exactly?</p>
<p><b>Kastner</b>: CFIUS (pronounced “see fee us”) is the Committee on Foreign Investment in the United States. The agency reviews investments in the U.S. by foreign companies or their holding companies, whether overseas or in the U.S.</p>
<p><b>Beaulieu</b>: That sounds like it makes it practically impossible for a Chinese company to buy a tech company here. Is that true?</p>
<p><b>Kastner</b>: Given the current political climate, I agree that it may be practically impossible for a mainland Chinese company, or a company with significant mainland Chinese ownership, to acquire a U.S. company in the tech space. Acquirers from other Asian countries, as well as Canada, Mexico, and most European countries, should be able to get deals approved; it might just take a few months.</p>
<p><b>Beaulieu</b>: For anyone who wants to buy a PCB shop here, is there much of an inventory?</p>
<p><b>Kastner</b>: While there is a lot of interest from buyers, especially those that are private equity-backed and/or are investing in the future, there are fewer PCB shops available for acquisition every year.</p>
<p><b>Beaulieu</b>: What are your thoughts on this game of Pacman the past few years? For example, you facilitated the Royal Circuits/Advanced Assembly deal with Summit Interconnect in 2022. Are any more of those deals of that level on the horizon?</p>
<p><b>Kastner</b>: It depends on the definition of “horizon,” but certainly there should be five to 10 similar deals occurring in the next five to 10 years.</p>
<p><b>Beaulieu</b>: Okay, everyone’s favorite question: How many PCB shops are left in the U.S.?</p>
<p><b>Kastner</b>: I estimate around 100 to 125 shops that produce more than 50% of their boards internally. Many smaller shops are moving toward a brokerage model and/or are getting into assemblies. Frankly, it is hard to track the smaller shops under $5 million in revenue, of which there are about 40 to 50. Meanwhile, the larger shops are getting stronger and investing in equipment and systems, which is good for the industry.</p>
<p><b>Beaulieu</b>: You work with PCBA companies as well. How is that market?</p>
<p><b>Kastner</b>: The PCBA sector has many more companies than the PCB sector. My estimate is around 900 shops in the U.S., of which many are private equity-owned shops.</p>
<p><b>Beaulieu</b>: Is there much M&amp;A activity happening with those guys?</p>
<p><b>Kastner</b>: Yes, our records show around 15 to 25 deals per year in the PCBA sector in North America. This is numerically higher than in the PCB sector, however, as a percentage of total companies, it is much smaller. We are seeing a lot of M&amp;A activity in the PCBA sector, so I think 2024 will be very busy.</p>
<p><b>Beaulieu</b>: What other types of companies do you deal with?</p>
<p><b>Kastner</b>: Believe it or not, we actually do deals outside the PCB and PCBA sectors. We are working on deals in IT services, IoT design, semiconductor test equipment, and promotional product distribution (our one non-tech deal at the moment).</p>
<p><b>Beaulieu</b>: What is the process if someone is interested in buying or selling a company and they contact you?</p>
<p><b>Kastner</b>: An owner or a company advisor can contact me confidentially. I am happy to explain the process as well as give them, after signing an NDA and reviewing financials, an estimate of value, terms, and marketability.</p>
<p><b>Beaulieu</b>: Why should someone buy or sell at this time?</p>
<p><b>Kastner</b>: For sellers, I believe most are selling for retirement purposes. For private equity owners, it’s to provide a return for their investors. For buyers, many investors believe there are strong tailwinds for the industry, such as reshoring, robust military budgets, and government support.</p>
<p><b>Beaulieu</b>: Tom, as we wrap this up, what are your thoughts on the North American market vs. the global market concerning PCB and PCBA companies? What do you see in the next five years?</p>
<p><b>Kastner</b>: Based on the investor and government support for the industries, I think the U.S. will gain market share vs. the global market at least for the next five years. I do not see us regaining anywhere near a majority of the market, however, even a 5% gain would be a huge boost to these strategically critical industries.</p>
<p><b>Beaulieu</b>: Thanks for talking and thanks for dinner. It was great.</p>
<p><b>Kastner</b>: Thank you, Dan.</p>
<p><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></p>
<p>The post <a href="https://gp-ventures.com/catching-industry-ma-expert-tom-kastner-gp-ventures/">Catching Up With Industry M&#038;A Expert Tom Kastner of GP Ventures</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>2023 PCB and EMS M&#038;A Review</title>
		<link>https://gp-ventures.com/2023-pcb-ems-ma-review/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Tue, 09 Jan 2024 17:37:57 +0000</pubDate>
				<category><![CDATA[General]]></category>
		<category><![CDATA[PCB M&A]]></category>
		<category><![CDATA[Technology M&A]]></category>
		<category><![CDATA[acquisitions]]></category>
		<category><![CDATA[electronics m&a]]></category>
		<category><![CDATA[m&a]]></category>
		<category><![CDATA[pcb]]></category>
		<category><![CDATA[pcb deals]]></category>
		<category><![CDATA[pcb sector]]></category>
		<category><![CDATA[printed circuit boards]]></category>
		<category><![CDATA[technology investment banking]]></category>
		<category><![CDATA[technology m&a]]></category>
		<guid isPermaLink="false">http://gp-ventures.com/?p=5943</guid>

					<description><![CDATA[<p>M&#38;A picked up for both the PCB and EMS sectors in North America in 2023, despite a challenging overall M&#38;A market. Higher interest rates, concerns over the economy, and global crises caused global M&#38;A activity to fall in 2023. However, the technology/electronics sectors fared better than others. In the North American PCB sector, there were... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/2023-pcb-ems-ma-review/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/2023-pcb-ems-ma-review/">2023 PCB and EMS M&#038;A Review</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img loading="lazy" decoding="async" class="alignnone wp-image-5690 size-post-thumbnail-size" src="/wp-content/uploads/2019/02/agreement-arms-business-1081228-750x330.jpg" alt="agreement-arms-business-1081228" width="750" height="330" /></p>
<p>M&amp;A picked up for both the PCB and EMS sectors in North America in 2023, despite a challenging overall M&amp;A market. Higher interest rates, concerns over the economy, and global crises caused global M&amp;A activity to fall in 2023. However, the technology/electronics sectors fared better than others.</p>
<p>In the North American PCB sector, there were 13 deals closed in 2023 vs. five in 2022 and 12 in 2021.  Some of the notable deals in the PCB sector in 2023 were:</p>
<ul>
<li>APCT (Industrial Growth Partners) acquired Advanced Circuits (Compass Diversified) (Feb 2023)</li>
<li>Ampel (IL) acquired Multilayer (TX) (March 2023)</li>
<li>APCT (IGP) Acquired San Diego PCB Design from Milwaukee Electronics (April 2023)</li>
<li>Infinitum (TX) acquired Circuit Connect (NH) (April 2023)</li>
<li>FTG (public, Canada) completed the acquisition of IMI (MA) (announced in Nov 2022, completed April 2023)</li>
<li>FTG (public, Canada) completed the acquisition of Holaday Circuits (MN) (announced in Dec 2022, completed April 2023)</li>
<li>NCAB (Sweden, public) acquired Phase 3 Technologies (CA, distributor) (May 2023)</li>
<li>Technoprobe (Italy) acquired Harbor Electronics (CA) (July 2023)</li>
<li>Sunstone Circuits (OR) acquired by American Standard Circuits (Gemini Investors, IL, July 2023)</li>
<li>ICAPE (Public, France) acquired Nujay Technologies, PCB Solutions, and Ustek Incorporated (Oct 2023)</li>
<li>Epec Engineered Technologies (MA) acquired Precision Technology Inc. (UT) (Nov 2023)</li>
</ul>
<p>For the most part, these were “roll-up” deals in which the buyer is a larger strategic player. Most of the buyers were non-U.S. companies, including FTG (Canada), NCAB, Technoprobe, and ICAPE. At least part of the strategy for those deals was greater access to U.S. markets. Four of the deals were for PCB distributors, one for a PCB design firm, and the rest were for shops that are primarily manufacturers.</p>
<p>In the North American EMS sector, there were 16 closed deals in 2023 vs. 13 in 2022 and 23 in 2021. Some of the notable deals were:</p>
<ul>
<li>Enercon (Maine) acquired by EW Healthcare Partners (May 2023)</li>
<li>Incap (pubco Finland) acquired Pennatronics (PA) (July 2023)</li>
<li>Tide Rock Holdings (PE) acquired Pro-Active Engineering (WI) (August 2023)</li>
<li>Vexos (NY/OH, Centre Lane Partners) acquired ControlTek (OR) (September 2023)</li>
<li>Jabil (Public) acquired Intel’s Silicon Photonics Business (Nov 2023)</li>
<li>Jabil (Public) acquired Procurability (FL) (Nov 2023)</li>
<li>EmeraldEMS (Crestview) acquired Ascentron (OR) (Nov 2023)</li>
<li>LFM Capital acquired SisTech Manufacturing (OR) (Nov 2023)</li>
</ul>
<p>Private equity was very present in 2023, and involved in 10 out of 16 EMS deals. Publicly-traded Jabil made two U.S. acquisitions and one in Scotland (Retronix), all of which appear to expand Jabil’s EMS-related services.</p>
<p>In other industry -related deals: PE firms Tide Rock Holdings acquired Specialized Coating Services (conformal coating, potting, etc.) and Gladiator Capital Group acquired BEST (PCB Repair and Training).</p>
<p>For 2024, largely due to demographics in the PCB and EMS industries, the number of deals should continue to be strong due to owners retiring. PE firms have plenty of liquidity, which should keep deals rolling. The effects of reshoring, government incentives, and the continued increased percentage of electronics in everything should keep investors interested in the sector. IPOs do not seem to be making a comeback at all, but larger companies can merge or exit by sales to larger PE firms, so that should keep investments coming into the industry.</p>
<p>Aside from Jabil’s three deals, larger public companies have not been very active in the PCB and EMS sectors for several years. Now that the component shortage has eased somewhat and other conditions may have stabilized, one would think that a few “mega-mergers” will occur.</p>
<p>One trend that I continue to mention is the decline in the number of North American PCB and EMS companies, which is currently at around 150 and 900, respectively. TTM’s announcement of a new $130 million PCB plant in New York is fantastic news, but about five to 10 small shops per year will most likely be closing. I expect this trend to continue until the number of North American PCB shops gets down to about 50. EMS shops do not appear to be closing as quickly, but the general trend in the number of shops is down. Although the number of shops is declining, most of those PCB and EMS shops that remain will be in a better position to invest, compete, and grow both organically and through acquisitions, which is a good thing for the industry.</p>
<p><em>Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.</em></p>
<p>The post <a href="https://gp-ventures.com/2023-pcb-ems-ma-review/">2023 PCB and EMS M&#038;A Review</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
		<item>
		<title>GP Ventures Advises Electronics Manufacturing Training Holding on Acquisition of Blackfox Training</title>
		<link>https://gp-ventures.com/gp-ventures-advises-electronics-manufacturing-training-holding-acquisition-blackfox-training/</link>
		
		<dc:creator><![CDATA[Tom Kastner]]></dc:creator>
		<pubDate>Mon, 08 Jan 2024 16:15:10 +0000</pubDate>
				<category><![CDATA[General]]></category>
		<category><![CDATA[press release]]></category>
		<guid isPermaLink="false">http://gp-ventures.com/?p=5940</guid>

					<description><![CDATA[<p>GP Ventures is pleased to announce that its client, Electronics Manufacturing Training Holding, has acquired Blackfox Training Institute. Founded in 1996, Blackfox is a leading provider of IPC training and certification services. Electronics Manufacturing Training Holding is also the owner of EPTAC, an internationally recognized leader in IPC training and certification. Financial terms were not... </p>
<div class="clear"></div>
<p><a href="https://gp-ventures.com/gp-ventures-advises-electronics-manufacturing-training-holding-acquisition-blackfox-training/" class="excerpt-read-more">Read More →</a></p>
<p>The post <a href="https://gp-ventures.com/gp-ventures-advises-electronics-manufacturing-training-holding-acquisition-blackfox-training/">GP Ventures Advises Electronics Manufacturing Training Holding on Acquisition of Blackfox Training</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>GP Ventures is pleased to announce that its client, Electronics Manufacturing Training Holding, has acquired Blackfox Training Institute. Founded in 1996, Blackfox is a leading provider of IPC training and certification services. Electronics Manufacturing Training Holding is also the owner of EPTAC, an internationally recognized leader in IPC training and certification. Financial terms were not disclosed.</p>
<p>Combining EPTAC and Blackfox under the same ownership creates one the largest IPC training and certification providers in the U.S., with greater access to in-person and online services to customers around the world.</p>
<p>Burak Gokmen, CEO of Electronics Manufacturing Training Holding, stated “EPTAC is known for its consistency in providing premier training services with the highest-quality instructors in the industry. Blackfox is a natural addition for Electronics Manufacturing Training Holding as we will be able to leverage both companies’ geographical footprints and industry focuses. Al Dill and the exceptional employees at Blackfox have utilized their deep industry knowledge to build an impressive company, and we are very pleased to add their outstanding team members as part of the combined company.”</p>
<p>Al Dill, former CEO of Blackfox, said “We are pleased to have joined forces with EPTAC. Our shared values include focusing on developing better IPC training and certification programs for our customers, making this an easy transition. We look forward to promoting our full program line to the industry.”</p>
<p>Tyler Romrell, Vice President of Salt Creek Capital, added “Burak continues to demonstrate excellence as a leader and executive since partnering with Salt Creek to acquire EPTAC in 2021. We’re excited to continue supporting Burak and his team through the acquisition of Blackfox as well as the Company’s future expansion efforts in the years to come.”</p>
<p>GP Ventures is an investment bank focused on sell-side and buy-side M&amp;A for technology and electronics companies. GP Ventures has offices in Chicago and Tokyo and has completed over 10 deals in both the PCB and EMS sectors. Tom Kastner, President, is a registered representative of and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida member of FINRA and SIPC.</p>
<p>StillPoint Capital is not affiliated with GP Ventures. For more information, please contact us at 847-431-3993 and info@gp-ventures.com.</p>
<p>The post <a href="https://gp-ventures.com/gp-ventures-advises-electronics-manufacturing-training-holding-acquisition-blackfox-training/">GP Ventures Advises Electronics Manufacturing Training Holding on Acquisition of Blackfox Training</a> appeared first on <a href="https://gp-ventures.com">GP Ventures | Mergers and Acquisitions</a>.</p>
]]></content:encoded>
					
		
		
			</item>
	</channel>
</rss>