Making Deals Outside the Box

October 18, 2010 Peter Giacalone

Mergers and acquisitions are always hot topics. I enjoy discussing this subject and especially take pleasure in being involved in such transactions. I thought this would be a good topic to bring up on the heels of the Henry Bros. Electronics’ announcement that it is selling to defense contractor Kratos Defense & Security Solutions.

I don’t want to hash out the details of the transaction; I simply want to use it as an ideal example of how great transactions sometimes take place. In an interview with SSI, Henry Bros. CEO and President Jim Henry simply stated that his company was NOT on the block for sale. Instead, Henry explained he was approached by the widely respected investment banker group Imperial Capital, unsolicited, to consider the concept.

This is what I want to bring across: The essence of seeking, understanding and executing a process or transaction that may have never taken place through traditional thinking. Not to say that Henry Bros. didn’t think outside the box. I know that they do. I know this company well and it is a great company with some great thinkers. But it didn’t matter how much they contemplated or quite frankly how deep their suitor, Kratos, contemplated. It took the suggestion by a third party to solicit the players and make this happen.

I am not saying this deal may have never happened without a third party, but the chances are that a strategic acquisition such as this one required a third party with creditability to get the players to consider it.

Many transactions that I have personally been involved with and other deals that I have read about have a similar story. Many of these deals include company’s that were not for sale, buyers who were not looking to buy or both. Never say never from either side of the table. The industry is getting more interesting than ever before. I believe everybody can survive and prosper better than before as long as they keep their ear to the ground and allow themselves to adapt to the times.

This doesn’t just mean selling a different camera or control. This could mean changing the complexion of your business radically, selling your company, acquiring someone or merging. These are just a few of the options, and whether you are very small, midsized or very large, the rules apply to all.

What are your thoughts?

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