Need To Meet… Eric Malchow, Managing Director, Lincoln International

With strategic buyers sitting on more than $1 trillion of buying power, it’s crucial for today’s return-hungry buyout firms to have as many corporate buyers attend their auctions as possible.

In the last 30 days, Lincoln International has sold five companies, all to strategic buyers. In one of the deals, the investment bank represented mid-market buyout shop Pfingsten Partners in its June 1 sale of Technical Services for Electronics, an Arlington, Minn.-based manufacturer of products used in medical devices. The buyer: AMETEK Inc., the publicly traded electrical components maker. Strategics have the advantage today because they can edge out buyout shops that are dependent on debt financing.

“Leverage levels today are more modest and discerning than back in ’07, when private equity groups could out-bid strategics,” Eric Malchow a managing director who co-founded the Chicago-based investment bank, told Buyouts. That means it is imperative for buyout firms to get their companies’ documents on the desks of as many CEOs as possible.

For large buyout shops, assembling an international menu of potential strategic buyers is relatively easy: Any of the bulge-bracket banks can leverage their global presence to create a long and varied list of potential suitors. But for mid-market shops wishing to sell a company they have nurtured to the point they are ready to market it to much larger buyers—potentially to an international buyer—their options are narrower.

Generally, about 50 percent to 60 percent of the investment bank’s deals involve marketing sponsor-backed companies (that estimate varies, depending on market conditions) to both strategics and to other sponsors. The advisory shop caters to mid-market buyout firms—its deals are typically in the $50 million to $300 million range—but offers an international network that can greatly broaden a firm’s field of potential buyers. Lincoln International has 150 bankers at its disposal, with offices in Amsterdam, Frankfurt, London, Madrid, Paris, Tokyo, and Vienna, as well as in New York, Los Angeles and its home base in Chicago. The firm’s professionals specialize in deals in the business services, consumer, food, health care and industrial sectors.

Though strategics may have the upper hand right now, Malchow and his colleagues have plenty of experience with sponsor-to-sponsor deals, add-on acquisitions, and recapitalizations. In May, for example, the firm represented NORMA Group, a German engineering company owned by the publicly traded British investment firm 3i Group plc, in the acquisition of R.G. Ray Corp., a Buffalo Grove, Ill.-based company with an additional facility in Mexico. And in April, Lincoln International represented Attends Healthcare Inc., a company owned by KPS Capital Partners that makes adult incontinence products, in a $98 million dividend recapitalization.

Contact Info:

Phone: 312-580-8337