Since last month, Mike Vinje, co-founder of management consultant Trissential, has had time for some outdoor work.
“A few friends and neighbors and I went through four chain saws,” he reported from his summer home in Crow Wing County. “The big storm was July 12. Had about 100 downed trees, including at my place.”
Vinje and Trissential co-founder Keith Korsi sold the Wayzata firm for $30.7 million to Germany’s SQS Software Quality Systems AG, which was in the hunt for a U.S. beachhead.
They made the deal in the strongest transactions market in Minnesota and the nation since before the global downturn in 2008.
There were 213 deals in the first half of the year involving a Minnesota buyer or seller. The deals amounted to $43.5 billion in value, according to Dealogic. That’s less than the $62.5 billion in value that changed hands in the first half of 2014, when one deal alone, Medtronic’s acquisition of Irish surgical-supplier Covidien, totaled nearly $50 billion.
Minnesota’s two most valuable companies, UnitedHealth Group and 3M, have been made big deals this year. UnitedHealth just last week closed on its $12.8 billion purchase of Catamaran Corp., a manager of pharmacy benefits. And 3M is moving forward with its biggest deal ever, the $2.5 purchase of Bloomington-based Capital Safety, a maker of safety equipment for the construction, drilling and mining industries.
Meanwhile, Austin-based Hormel Foods announced in the second quarter that it’s buying Applegate Farms, a leading organic and natural meat maker, for about $775 million.
“Valuations are high, and the market is very favorable for sellers,” said Bruce Engler, a veteran deal lawyer and head of the M&A practice at Faegre Baker Daniels. “Corporate buyers have lots of cash, ready access to cheap debt, increasing confidence in the economy, and a concern that they need to supplement organic growth or risk falling behind their competition.”
Sean Kearney, co-chairman of the M&A and private equity practice at Fredrikson & Byron, said the environment is as good as he’s ever seen in more than 20 years of helping companies make deals. “Lenders and equity participants have a lot of money available,” he said.
Case in point, Twin Cities-based Abra Auto Body & Glass has made several acquisitions this year to become a national firm. It is one of several regional auto body chains making the same play.
“There have been more acquisition opportunities lately,” Chief Executive Duane Rouse said last week. “Valuations have gotten higher for good businesses. If the owners are not going to pass the business on to sons or daughters, it’s a good time to exit.”
Rouse, 54, a 19-year Abra executive, became CEO in 2011. He has tripled the size of the company to 311 shops in 22 states and annual revenue of about $900 million. The company, which is owned by a San Francisco private equity firm, may be a candidate in the future for its own sale, or it could go public.
“We’ve focused on acquisitions but also our operating model and keeping high customer satisfaction,” Rouse said. “We think we’re getting good at it, but were not naive. We just want to keep taking care of customers and fixing vehicles. The exit will come when the time is right. It’s been a fun ride so far.”
For consultants Vinje and Korsi, the deal to sell Trissential represented the climax of work that began in 2002.
Korsi agreed to stay on as president of the U.S. operation, which has three offices, 175 people and revenue last year of about $33 million.
Vinje, 53, and Korsi, 45, started the technology-and business-improvement firm with their own money, went without a paycheck for a year, and drove on the weekends to client engagements instead of flying in the early years. They had a growth plan for the company, which has revenue of about $30 million and 175 employees and contractors.
“But to get to $100 million we were going to have to invest ahead of the growth,” Vinje said, which would force them to spend time raising outside capital. “We didn’t have that in our DNA.”
Instead, the partners hired investment banker Corporate Finance Associates to find a buyer. “SQS looked at Trissential’s customers and said, ‘We can do a lot of business with them, we just need you to help us call them,’ ” said John Hammett, managing director of Corporate Finance and former small-business owner himself.