Deals surge for small and middle-market companies – Crain's Detroit Business

Samuel Spencer became president and CEO of Madison Heights-based vehicle telematics supplier Guidepoint Systems last month, following the close of a transition that lasted about four years and resulted in the retirement of the company’s founder, Rand Mueller.

Despite uncertainty from the pandemic, the fundamentals of the deal more than withstood any challenges, according to Spencer.

“This deal was four years in the making,” Spencer said in an interview with Crain’s.

“So the potential growth in the market share, the demand for Guidepoint’s product and services, the ever-increasing reliance and importance of mobility: that compelling investment thesis still prevailed,” he said. “We’re looking at a three-to-five-year horizon. Long-term investors are doing the same. That’s why you still saw deals get done in the first half of last year … and a surge in the second half.”

Among those who recently completed a deal to sell their business was Dr. Scott Plaehn, who in January completed a sale of East Lansing-based health care practice Michigan Gastroenterology Institute to a Boston-based private equity group, HIG Growth Partners. MGI’s affiliate, Capitol Colorectal Surgery Partners, was also sold in the deal.

Plaehn, MGI’s president, told Crain’s that the impetus for the sale, terms of which were not disclosed, was a desire to streamline the back-office business functions of the organization while allowing the practice to better identify future acquisition opportunities.

“We just felt like we had a lot of good ideas, but we could not really enact them and go to the next level and take the next steps,” Plaehn said. “Obviously, we’re clinicians and we were spending more and more of our time on nonclinical aspects of our practice to the point we were becoming concerned that we needed expertise.”

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Cascade Partners in Southfield served as the health care practice’s financial adviser on the deal. Kothari noted that the current flurry of deals makes sense given that activity mostly halted early last spring due to the pandemic, but kicked back into high gear once businesses and advisers got acclimated to working remotely.

“Everything took longer,” Kothari said. “You took the whole year and compressed it down to six months and now you’re having things trickle over.”



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