Mergers & Acquisitions

Will U.S. set one or two records?

The mergers-and-acquisition business should hit a record in 2017, at least in terms of the number of transactions.

Deals through October, nationally, had already exceeded last year’s total of 9,950 M&A transactions, according to Thomson Financial.

It was unclear, however, if transaction value in 2017 will beat the $1.6 trillion posted in 2016. This year may end with fewer huge deals.

The number of transactions involving a Minnesota buyer or seller also will likely be a record this year.

CEO Andy Kocemba of Edina-based Calhoun Cos., a small-business brokerage, said the long, slow recovery from the 2008-2009 recession has increased confidence of business owners and boosted the value of small-company acquisitions.

“Their businesses are doing well and many people who put off retiring now believe they can sell their company for a fair price,” Kocemba said. “It also helps that there are qualified buyers eager to purchase businesses that can demonstrate strong cash flow and have solid managements in place.”

Calhoun sold 11 businesses in the third quarter alone, averaging about $1.7 million per transaction.

Overall, Calhoun has sold businesses this year at an average price of slightly more than $1 million, an increase from the average price last year of slightly less than $1 million.

The BizBuySell Insight Report recently found that Minnesota transactions were up 24 percent during the first nine months 2017, compared to 2016.

And business sentiment has been rising.

The recent Wells Fargo/Gallup Small Business Index found that 71 percent of small business owners believe their financial situation is at least pretty good, a post-recovery high.

Kocemba said small business-owner confidence, ample profitability and available financing indicates that 2018 also should be a good year for the M&A trade.

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Retail

Chuck & Don’s expands with Edina outlet

Chuck & Don’s, the pet-supplies store, is adding a 40th store in January, at 50th and France Avenue in Edina.

Chuck & Don’s is adding a small shop of 2,300 square feet, which includes a pet-grooming studio, its third.

The store also will sell a limited selection of pet food and other products.

“We’re thrilled to join the [Edina] business community in 2018,” said CEO Bob Hartzell. “We jumped at the opportunity to lease the available space for our 29th retail location [in Minnesota] and are excited to expand by welcoming the [Edina-store] grooming duo to the Chuck & Don’s team.”

Chuck & Don’s operates 10 locations in Colorado, 28 stores in Minnesota and one in Wisconsin.

Chief Financial Officer Thomas Murphy said Chuck & Don’s opened four Minnesota stores this year and that the company expects revenue this year to grow to “in excess of $70 Million.”

Hartzell, 64, and co-owner Chuck Anderson, 76, of the 27-year-old company, are in the fourth year of selling their stake to an Employee Stock Ownership Plan that is funded out of the employee portion of pretax profits.

“ESOP” proponents say that they are a great way for employees to gain ownership and wealth from a growing business. That is, if the owners are willing to “get rich slowly,” through a staged, conservative buyout. Hartzell said this fall that he and Anderson chose the ESOP route over higher cash-out transactions to a competitor or financial buyer, such as a private equity shop.

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small business

Local companies receive Wells Fargo grants

Wells Fargo, in partnership with Rebuilding Together, has recognized four Minneapolis small-business owners through its nationwide commercial-renovation competition: Wells Fargo Works for Small Business.

The “Neighborhood Renovation Program” small business contest netted three local finalists who received $10,000 toward facility renovation.

The winner is Hope and Healing Counseling Services, which received $25,000. The local firms in the running were:

• Wendy’s House of Soul, a deli and catering company that operates on W. Broadway Avenue in north Minneapolis. Owner Wendy Puckett, known for her “soul on a roll” specialty sandwich, will get a freshly painted exterior, new cooking equipment and counters.

• Marques Armstrong, a veteran mental health practitioner and his Hope and Healing Counseling Services of Minneapolis. Hope serves inner-city communities of color. Armstrong’s two-office practice will expand into three new therapy rooms, thanks to the Wells Fargo grant.

• Muridi Warfa and his Ibrahim Restaurant on E. Lake Street will get new chairs and kitchen equipment for a restaurant that serves healthy food and is a community gathering space.

• Ian Silver-Ramp, who studied agriculture at the University of Minnesota, operates Mississippi Mushrooms, on the river in north Minneapolis.

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