Founders Principals Advise on 9 Transactions in 2015, 7 Companies Sell to Strategic Buyers, Founders Launches Strategic Advisory Practice

This past year, Founders saw strategic companies step up to the plate, competing for deals and in general, willing to pay higher valuations. Principals of Founders advised on nine transactions in 2015, seven of which sold to strategic buyers, with the remaining two sold to private equity groups.

“In these seven deals, the competitive process revealed a strategic buyer as the best fit for our clients. The strategic buyers recognized the synergistic value of these companies, and they were willing to pay up for the opportunities,” said Duane Donner, managing partner for Founders.

Founders’ process created a competitive market for companies, with several of the broad auction processes bringing more than 10 qualified offers. “Our team is extremely pleased with the outcomes that were achieved for our clients during the past year,” remarked Zane Tarence, managing director of the Technology Practice. “It’s always rewarding to witness the value created and synergies realized in these types of transactions, and we’ve been blessed to work with some incredible business owners, buyers and investors.”

Highlights of the transactions are listed below. In some of the transactions, due to competitive sensitivities, the acquirers have requested that some or all of the parties and/or terms of the transactions remain confidential.

• Timco Services Inc. (Timco), a leading provider of tubular running services and rental equipment, was acquired by Frank’s International N.V. (NYSE:FI). Timco is headquartered in Lafayette, La., and provided its services in several key geographic areas, including the Eagle Ford Shale, the Permian Delaware Basin, the Haynesville Shale and the U.S. Gulf Coast. Timco experienced consistent growth over the course of its 38-year history, and accelerated growth in more recent years due to capitalizing on the U.S. shale boom. See The Case Study

• Ministry Brands, a leading provider of software applications to churches, ministries and non-profit organizations, was acquired by Providence Equity. Ministry Brands, based in Knoxville, Tenn., is a fast-growing SaaS company providing cloud-based online and mobile giving platforms, church management software, content management systems, mobile apps and marketing solutions to faith-based organizations. Providence’s investment provided the Ministry Brands’ shareholders some liquidity and enabled the team to continue executing its acquisition strategy.

• Eagle Automation Limited (“Eagle”), a leading automation and measurement services provider, was acquired by Panhandle Oilfield Services Inc. (“Panhandle”), an integrated oilfield services company and portfolio company of Argosy Private Equity. Eagle, based in Corpus Christi, Texas, and focused on the Eagle Ford and Permian basins, is an oilfield services business providing automation and measurement services to onshore drilling and production operations. The acquisition by Panhandle provides a platform to support Eagle’s continued growth while jointly leveraging their mechanical and construction focus and customer base.

• SmarterServices, a leading provider of eLearning applications, was acquired by Main Line Equity Partners. SmarterServices, based in Alabama, offers a suite of eLearning applications that empower 600 educational institutions (K-12 schools, colleges & universities) to organize and analyze relevant data about students, teachers, employers and curriculums. The company’s data-driven solutions include online student readiness assessments, exam proctoring management and faculty recruiting. See The Case Study

• USDiagnostics Inc. (USD), a leading provider of drug-testing devices, was acquired by Alere Inc. (NYSE: ALR). USDiagnostics, headquartered in Huntsville, Ala., is a leading provider of onsite, consumable drug-testing products. The company has exhibited substantial growth historically, expanded its customer base and coverage, and developed meaningful brand recognition in the industry. See The Case Study

• A leading digital publisher of lifestyle content was acquired by 301 Digital Media. 301 Digital Media is a Nashville-based digital media and marketing services company with a vision to bring quality content to the Web. Founders’ client built an impressive following within the vegetarian and vegan communities, and the owner was interested in a partner that could assist in taking the business to the next level. 301 Digital Media provided significant operational support and enabled Founders’ client to focus on content production and maintaining a pulse on the readership.

• An enterprise SaaS-based notification platform primarily serving the K-12 and non-profit markets was acquired by a leading, vertically focused SaaS company. The platform facilitates the distribution of content between constituents and generates robust engagement data. The acquiring company plans to incorporate the technology into its growing family of complementary SaaS-based offerings, which will enable both teams to reach a wider user base in adjacent markets.

• A leading niche job site utilized by professionals in the U.S. and Canada was acquired by one of the largest companies operating in the employee recruitment space. Over the course of more than seven years, the site’s management team built the most visited destination for job-seeking professionals via job listings and a subscription model for employers.  With the site, the acquirer broadens its footprint of professions served and reinforces its top-ranking organic search position.

• The intellectual property of Applied Ultrasonics was acquired by a publicly traded Fortune 100 company. Applied Ultrasonics designs, manufactures and sells equipment for extending the life of metal structures and components. It delivers Ultrasonic Impact Technology, a patented treatment that improves the structure and properties of metals and welded components. The technology is being used around the globe in industries as diverse as energy, defense, manufacturing, oil and gas, transportation and many others. See The Case Study

“We continue to see a healthy M&A market in most sectors, however, we are getting late into the current buyout cycle so we’re advising business owners who were planning to exit in the next two to three years to consider exiting now so they don’t miss the current window,” said Duane Donner. “Otherwise, it may be five or more years before they can exit with the elevated valuations we’ve seen the last couple years,” he added.

In addition to making a market for clients and advising them on a transaction, Founders also launched a new practice group in 2015. Prior to 2015, Founders primarily served companies seeking a transaction within 6 to 18 months. Led by Mike McCraw, the Strategic Advisory group helps companies maximize their equity value prior to a sale no matter their timeline for a transaction.  Starting with an in-depth assessment process, McCraw and his team identify a company’s strengths and weaknesses and apply standard “best practice” financial and operational processes and management to help business owners mitigate risk and increase enterprise value.

“This is an exciting time in the market. We were honored to be able to serve as advisors on these nine transactions, and in the case of the Strategic Advisory Practice, help growing companies build equity value. We really look forward to giving exceptional service to those we represent in 2016,” said Zane Tarence.

About Founders Investment Banking

Founders Investment Banking (Founders) is a merger, acquisition & strategic advisory firm serving middle-market companies. Founders’ focus is on oil and gas, SaaS/software, industrials, internet, digital media and healthcare companies located nationwide, as well as companies based in the Southeast across a variety of industries. Founders’ skilled professionals, proven expertise and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to assist Founders Investment Banking with securities related transactions certain Principals are registered investment banking agents of M&A Securities Group, Inc., member FINRA/SiPC. M&A Securities Group and Founders are not affiliated entities. For more information, visit www.foundersib.com.