What Happens When Opportunity Knocks—But You Aren’t Looking to Sell?
In the world of family enterprise, offers to buy your business often come when you least expect them. Sometimes the timing feels wrong, and yet the approach sparks a deeper reflection: are we prepared for an unsolicited offer? How do we measure the value of continuing versus cashing out? These are the kinds of questions my uncle, Tom Jackoboice, and I faced in early 2007 when Bucher Industries—a sixth-generation, family-controlled conglomerate—reached out with an offer to purchase our family business, Monarch Hydraulics, Inc.
A Thriving Business with No Intention to Sell
At the time, Monarch, a fifth generation, privately owned business, had been thriving. We were expanding internationally, with new operations in Europe and China, and were the dominant North American manufacturer of mobile hydraulic power packs for industries ranging from wheelchair lifts to snowplows. With so much momentum, the last thing on our minds was selling.
From Friendly Inquiry to Serious Negotiations
But Bucher’s inquiry changed the conversation. What started as a cordial meeting in Chicago to express our disinterest soon evolved into something much more serious. When a buyer this determined—and this aligned with your business—comes knocking, do you stand your ground or explore the opportunity? And if you do decide to move forward, what comes next?
Weighing the Pros and Cons of a Sale
As a family business owner, you are also a fiduciary to your shareholders. Tom and I outlined the pros and cons of selling the business. After receiving Bucher’s initial offer, I consulted with my business mentor, John Wing, father of Wingspan founder, Christina Wing. I worked for John at the Wing Group from 1993 to 1998. John recommended increasing the EBITDA valuation multiple by 2x and he was a key resource for our counteroffer. He provided valuable advice and insights regarding our negotiating stance with Bucher. We also spoke with our board advisor and longtime tax accountant about the ramifications of the sale to the shareholders. Our board advisor recommended that a sale be considered based on the favorable tax situation at the time.
It is advisable to concentrate on the pros and the cons before providing a counteroffer or simply walking away from the deal. Tom and I looked at the strengths of our business:
- Consistent revenue growth with good margins
- Unique manufacturing approach providing our customers with customized power pack applications for their products
- Strong management team with loyal employees
- “Gain Share” incentive system valuing productivity improvements
- Excellent balance sheet with a small amount of debt
Challenges of Future Growth and Generational Shifts
The relative weakness of the business was that it would be difficult for Monarch to enter new markets without significant capital investments. Also, G4 was getting older and only two G5 family members were active in the business. My father, who died in 1999, envisioned that Monarch would be purchased by a large U.S. hydraulics conglomerate such as Parker-Hannifen in the future. Based on the lifecycle of the business, we felt it may be the appropriate time to sell.
In real estate terms, we felt Monarch was the best house on the best block and it was not for sale. Any buyer would have to pay an above market price. Based on an analysis of the pros and cons, Tom made a counteroffer and Bucher accepted. Quite frankly, Tom and I were surprised as we thought Bucher would walk away. The board comprised of Tom, my uncle, John, and me decided it was in the best interest of the shareholders to accept the offer and begin the due diligence process.
Navigating the Due Diligence Process
During the diligence phase, only a small number of family members and the management team were aware of the proposed deal. There was genuine concern about how the acquiring company would treat our employees. We had several face-to-face meetings during the diligence process, and we felt confident that Bucher would be a good steward of our family’s legacy.
The diligence process was led by our accountants, legal team, Monarch’s president and me. Our accounting and legal teams worked with Monarch for over 60 years; their familiarity with the company made the due diligence process more seamless and productive. As a manufacturing business, some of the key issues that came up were financials, inventory, assets, systems, and most importantly environmental issues. Working with a Swiss business on due diligence is a very detailed process. Monarch set up a data room and provided all the requested information and answered in any additional questions.
Negotiating the Purchase Agreement
As we transitioned to the purchase agreement negotiations, Bucher’s lawyers made several changes that were not in alignment with the agreed upon framework. We told the lawyers to find a solution because we were willing to walk away. There is negotiating leverage for a family business that does not need to sell. Eventually, all the issues were worked out and a deal was signed in December 2007.
The Emotional Impact of Letting Go
One of the more difficult aspects of selling the family business is realizing you are no longer part of a company in which you were raised. The professional relationships made over the years will be altered. The day-to-day interaction with your team is over. The friendships and respect with the employees remain, but you move on to the unknowable next phase of your personal and business life.
Monarch had two main facilities in 2007. Tom made the company sale announcement at the headquarters, and I made the announcement at the other location. We explained the rationale of the sale to Bucher, but the employees were rightfully concerned about their future. Announcing the sale was an emotional experience for all involved.
A Legacy Sustained Through the Right Partner
The timing was right to sell the business in 2007. Since then, Bucher has significantly grown the Monarch Hydraulics business and has treated the employees and customers with respect. Bucher’s financial strength and product portfolio allowed the company to enter new markets. Bucher retained the management team, employees and added new personnel. Tom and I remained in contact with our former management team and kept track of the success of the business. At the end of the day, it was the right deal with the right company at the right time.
Key Takeaways for Family Business Owners
The sale of Monarch Hydraulics offers several valuable lessons for family business owners. First, it’s crucial to remain open to opportunities, even when selling isn’t part of the plan—preparedness allows you to evaluate offers on your terms. Second, clear-eyed analysis of your company’s strengths and limitations provides critical leverage in negotiations, especially when the business is not actively for sale. Lastly, balancing emotional attachment with fiduciary responsibility is essential. Selling a family business can be bittersweet, but success lies in choosing the right partner, ensuring alignment with your values, and staying engaged with the legacy you leave behind. Monarch’s story underscores that the right sale, at the right time, can propel a business forward while preserving its essence and honoring its people.
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