Highlights from Aethlon at FEI’s M&A Dealmakers Panel

Aethlon’s Managing Principal, Sima Griffith, was delighted to be a panelist at the 9th annual FEI (Financial Executives International) Capital Markets and M&A Update on January 26th. Elizabeth Lilly, Chief Investment Officer of The Pohlad Companies, Jodi Johnson, attorney at Moss & Barnett, Nathan Dey, entrepreneur and Managing Partner of Saltspring Capital, and her discussed the M&A market and where it’s headed.

If you missed it, we’ve posted a short “highlights” video of the panel. We hope you find it insightful.

Aethlon Announces the Sale of its Client Navegate, Inc.

Aethlon Capital announced on December 6, 2021 that it successfully advised Navegate, Inc., a technology enabled logistics and supply chain management company headquartered in Mendota Heights, Minn., on the sale of its business to Radiant Logistics, Inc. (NYSE American: RLGT) of Renton, Wash. As part of the transaction, which closed on December 3rd, Radiant acquired all of Navegate’s stock.

“Navegate has a rich and innovative history in the global supply chain industry that has spanned over five decades. The combination with Radiant will build on that legacy and is an exciting new chapter for all involved,” said Nathan Dey, Chief Executive Officer of Navegate. “We’re proud to be a trusted partner to our customers, and the synergies created by this transaction will enable us to better serve them as the demands of the logistics landscape continue to evolve.”

Sima Griffith, Managing Principal of Aethlon Capital, said, “The Aethlon team was pleased to represent Navegate’s owners on the sale of their company to publicly-traded Radiant Logistics, a transportation and supply chain management company with an extensive global network.”

Commenting on the acquisition, Bohn Crain, Founder and Chief Executive Officer of Radiant, said, “We are very excited to have the opportunity to join forces with Navegate. We have been patiently looking for the right next transaction to complement the Radiant network and we found it in Navegate. In addition to solidifying our presence in Shanghai, Navegate also strengthens our international services offering, particularly in the areas of customs brokerage, ocean forwarding and drayage services and brings with it a robust global trade management platform that we will be able to offer back to our broader network of over 100 operating locations across North America.”

About Navegate, Inc.

Navegate, headquartered in Mendota Heights, Minn., is a global supply chain management company providing best-in-class software and logistics management. They combine powerful cloud-based software with 50 years of industry expertise to reduce costs, optimize performance, and mitigate risk for their clients.

About Radiant Logistics, Inc.

Radiant, headquartered in Renton, Wash., is a provider of third-party logistics and multimodal transportation services. Through its comprehensive service offering, Radiant provides domestic and international freight forwarding services, truck and rail brokerage services and other value-added supply chain management services to a diversified account.

About Aethlon Capital, LLC

Aethlon Capital, LLC is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for manufacturing, technology, consumer, and transportation & logistics companies. For more information, visit: www.Aethlon.com.

Lessons Learned — Aethlon Celebrates 25 Years

During the last 25 years at Aethlon Capital, we’ve had the wonderful experience of working with hundreds of entrepreneurs, innovators and builders of great businesses in a variety of industries.

We’ve learned valuable lessons from Aethlon’s many clients and are grateful to them. I will take this opportunity to highlight three that are particularly instructive about building, financing and selling a successful business.


The best investors know your industry and see the need for your technology or product first-hand: Cirrus Aviation


One of our most challenging investment banking projects was raising investment capital for Cirrus Aviation. Today, Cirrus is a global leader in personal aviation and the maker of the best-selling SR Series piston aircraft and the Vision Jet, the world’s first single-engine Personal Jet. The company reported $632.9 million in revenue in 2021. But when brothers Alan and Dale Klapmeier started the company, the big question was “Who would invest millions of dollars in a new airplane company?”

Our answer was investors who understood that the Klapmeier’s new composite plane with a parachute could revolutionize the industry. Entrepreneurs, CEOs and pilots like the late Steve Appleton, the former CEO of chip maker Micron technology; Greg Herrick, CEO of Zeos computers; and Buzz Kaplan, CEO of Owatonna Tool Company. These business leaders loved flying airplanes and saw the huge opportunity this new technology represented for the industry.


Experienced leadership with industry expertise is the biggest determinant of a company’s success: Cerasis


Cerasis founders Steve Ludvigson and Steve Norall, veterans of the logistics industry, developed a transportation management system to help customers gain shipping efficiencies. When they decided to sell Cerasis, their proprietary technology, used by hundreds of customers, ignited the interest of multiple strategic buyers. Companies with the greatest chance of success are led by industry experts who develop an innovative technology or service that fills a void in the marketplace.


It’s never too late to start a new venture: MSP Corporation


After retiring as a Regents Professor from the University of Minnesota, Dr. Benjamin Liu founded MSP Corporation at the age of 62! The company’s innovative products include aerosol sampling and measuring instruments, devices for testing medical inhalers, and semiconductor and contamination control products. MSP has around 140 U.S. and foreign patents.

MSP was eventually acquired by TSI, a global leader in precision instrumentation, at a premium price.


It’s been an enriching and exciting 25 years, and we’re grateful to have worked alongside these bold entrepreneurs. They, and many others, have taught us about building great businesses and the many rewards that come with entrepreneurship. We look forward to many more years of guiding business owners to the successful sale of their companies.

 

Aethlon Capital is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for manufacturing, technology, consumer, and transportation & logistics companies. 

Our professionals would enjoy the opportunity to discuss your company’s growth plan or exit strategy.  To find out how Aethlon’s investment banking services can help you, call Sima Griffith at 612.338.6065 or email sgriffith@aethlon.com.

Aethlon Announces the Sale of a Majority Interest in its Client Jasper Engineering.

Aethlon Capital announced today that it successfully advised Jasper Engineering & Equipment Company, headquartered in Hibbing, Minn., on the sale of a majority interest in its business to Pathfinder Companies of Minnetonka, Minn. As part of the transaction, which closed on June 21, Jasper’s owners maintained a stake in the company.

“We are delighted to have advised Jasper Engineering’s three owners on the sale of their company to Pathfinder Companies. Aethlon reached out to a broad group of potential investment partners, resulting in a great outcome for our client,” remarked Sima Griffith, Managing Principal of Aethlon Capital.

Commenting on the transaction, Joe Helms, Partner at Pathfinder Companies, said, “We are thrilled to partner with owners Jeff Jamar and Jason Janisch in recapitalizing Jasper. They have done an incredible job building Jasper into the Midwest’s leading provider of process instrumentation and mechanical process equipment.” He added, “We are grateful to Aethlon for the opportunity to pursue a transaction with Jasper and for their expert counsel to all constituents along the way.”

About Jasper Engineering & Equipment Co.

Jasper is a leading industrial distributor, manufacturer’s representative, and service provider in the Upper Midwest, specializing in the sale of process-related equipment & instrumentation, spare parts, and value-added engineering services. Throughout its history, the company has supplied a growing number of products and services to the mining, energy production, biofuels, water, dairy, sugar, food processing, pharmaceuticals, and manufacturing industries. Jasper’s products and services are critical to their customers’ operations.

About Pathfinder Companies

As a family investment firm, Pathfinder strives to be a value-added partner and a source of long-term capital to privately held family and entrepreneurial businesses.

About Aethlon Capital, LLC

Aethlon Capital, LLC is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for manufacturing, technology, consumer, and transportation & logistics companies. For more information, visit: www.Aethlon.com.

Timing is Everything – A Case Study

In 2019, the owners of a third-party logistics company decided to sell their business. However, the sale process, particularly finding the right buyer, takes time, and by March 2020, the global economy had fallen precipitously as a result of the COVID-19 pandemic. Did the sale close?

The partners interviewed several investment banks throughout March 2019. They knew a properly run sale process can take anywhere from 6 to 12 months, so they were hiring a bank to work with them for many months to come. They chose Aethlon in April.

Telling the story

There’s a saying in the deal business that “time is not your friend.” When an owner is ready to sell, we don’t want to waste time. It’s important to move the process expeditiously forward. Once Aethlon was hired, we immediately started interviewing the owners, collecting data on the business and writing the Confidential Information Memorandum (CIM).

Developing the prospective buyer list

While we’re writing the CIM, we’re also finalizing a prospective buyer list. Our industry connections are expansive and detailed, allowing us to target the right buyers and avoid wasting time sharing the opportunity with buyers who aren’t relevant or unlikely to do anything more than look. In this case, we generated a list of more than 200 prospective buyers for the company.


This is part of Aethlon’s proprietary process–an industry-specific, comprehensive database with detailed information on buyers.


Hitting on all cylinders

In July, we started contacting buyers. While the company’s owners didn’t have a date by which they wanted to sell (oftentimes this can be calendar year-end for tax purposes), Aethlon set a rigid timetable and targeted closing date of December 31, 2019.

Key strategic decision – streamlining the process

Aethlon decided to skip the Indication-of-Interest (IOI) stage of the sale process. We asked all buyers to submit Letters of Intent (LOI) on September 19th. This was strategic  on our part;  the longer the time given to buyers, the higher the possibility something will derail the sale process. The business was also well-run, relatively easy to understand, and we provided buyers with a wealth of information about the company in the CIM. Given our knowledge of the lower middle market (deals between $10 million and $100 million in enterprise value) and how buyers behave in this segment, we believed it wouldn’t create much trouble to skip the IOI stage.

The majority of interested parties complied with our shortened timeline. There were a few who didn’t feel comfortable with the skipped IOI stage, but that was more driven by their limited experience with the industry and the opportunity. For those who were well-versed (and most interested), they had enough data and submitted very strong offers.

The buyer we selected, backed by a private equity firm, had also made a dozen acquisitions over the last few years, which allowed them to submit a competitive, detailed LOI. They, along with several others, were invited to meet with the owners in October 2019. In November, the owners decided to move forward and enter into exclusive due diligence with the ultimate buyer. The target close was December 31, 2019.

What did we learn?

This was an aggressive target given the holiday season. Both sides worked expeditiously and efficiently to meet this deadline. Nevertheless, the deal didn’t close on December 31st. It had to be pushed back two weeks to finalize the purchase agreement, conduct a few last-minute customer calls, and finalize the owner transition agreements. But the point is, it closed, and we obtained a higher price than the buyer expected.

Had there been any significant delays along the way, the inclusion of an IOI stage, or any trepidation from the partners about selling, this deal might not have closed. When the Aethlon team looks back on those first few months of the COVID pandemic and the many industries that effectively shut down, we are reminded that timing is everything.

 

Aethlon Capital is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for manufacturing, technology, consumer, and transportation & logistics companies. 

Our professionals would enjoy the opportunity to discuss your company’s growth plan or exit strategy.  To find out how Aethlon’s investment banking services can help you, call Sima Griffith at 612.338.6065 or email sgriffith@aethlon.com.

Aethlon Capital Advises Cerasis on its Sale to GlobalTranz

Aethlon Capital announced today that it successfully advised Cerasis, Inc., headquartered in Eagan, Minn., on the sale of its business to GlobalTranz Enterprises Inc. of Phoenix. As part of the transaction, which closed on January 15, GlobalTranz acquired all of Cerasis’s stock.

“Since founding our business in 1997, Cerasis has helped customers understand fragmented shipping data to manage costs and make logistics a strategic weapon,” said Steve Ludvigson, President of Cerasis. “Combining with GlobalTranz allows us to continue this history while providing our customers with increased service offerings and access to capacity. I am excited to write the next chapters of the Cerasis story with GlobalTranz.”

Sima Griffith, Managing Principal of Aethlon Capital, said, “Aethlon conducted a broad marketing process to both strategic and financial buyers that resulted in a great outcome for our client. We are very pleased to have successfully advised Cerasis’s three owners on the sale of their company.”

Commenting on the acquisition, Renee Krug, Chief Executive Officer of GlobalTranz, said, “Cerasis has a strong history of providing its customers with solutions that help create competitive and operative advantages. Cerasis will help expand GlobalTranz’s growing managed transportation capabilities. The talented Cerasis team combined with the talented team of agents and employees at GlobalTranz will drive increased differentiation and accelerate growth of our solutions in the marketplace.”

About Cerasis, Inc.

Cerasis, Inc., headquartered in Eagan, Minn., is a technology-enabled, third-party logistics company (3PL) that provides logistics services and solutions through its proprietary transportation management system, the Cerasis Rater™. The Company serves more than 700 customers in North America, including leading manufacturers and distributors across multiple vertical industries. Cerasis leverages its extensive data resources alongside its technology to provide logistics solutions that help its customers drive efficiencies, gain visibility and support growth.

About GlobalTranz Enterprises

GlobalTranz, headquartered in Phoenix, is a technology company providing award-winning cloud-based multi-modal Transportation Management System (TMS) products to shippers, carriers, 3PLs and brokers. GlobalTranz is leading the logistics software and services market in innovative technology that optimizes the efficiency of freight movement and matches shipper demand and carrier capacity in real-time. Leveraging its extensive independent agent network, GlobalTranz has emerged as a fast-growing market leader with a customer base of over 1 million product users and 25,000 shippers.

About Aethlon Capital, LLC

Aethlon Capital, LLC is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for manufacturing, technology, consumer, and transportation & logistics companies. For more information, visit: www.Aethlon.com.

M&A Advice from the Faegre Conference

Don’t Be an Idiot, and Other M&A Advice at Faegre Event

Franchise Times

by Beth Ewen

“This weekend I was reading the latest PitchBook report, and it said another $2 trillion year for M&A, fewer transactions but sky high valuations continue,” said Sima Griffith, principal at Aethlon Capital, at the Faegre Baker Daniels M&A Conference in Minneapolis today. 

“I’ll tell you a story that illustrates the frothiness of this market,” she continued, citing a recent deal in which the investment banking firm received nine letters of intent, “and I would argue that in a much weaker market we might have received three or four.”

Glenn Gurtcheff of Harris Williams & Co. agreed that ‘A’ properties are “flying off the shelf. “The interesting thing now, when you start looking at ‘B’ and ‘C’ properties, there’s less stomach for buying inferior companies. I’ve said for a while, there’s only one way for this market to move and it ain’t up.”

Griffith said the No. 1 industry for mergers and acquisitions is TMT, also known as technology, media and telecom. “It saw 29 percent of all M&A activity, followed by consumer.”

She cited a Deloitte survey saying “technology is the No. 1 driver of deals. We’re seeing a lot in artificial intelligence….a good example is McDonald’s paid $300 million for an Israeli artificial intelligence company, which will allow them to customize their menu based on customer preferences.”

Matthew Sznewajs of Piper Jaffray & Co. sees in recent months the rise of strategic buyers, or those who purchase businesses because they fit into or add onto the business model. “For a long time we saw financial buyers vastly outbidding strategic buyers. With the low organic growth rates that we’ve seen…and the amount of cash they have, we see strategic buyers being much more aggressive” on both price offered and speed of transaction. “It’s really happened over the last 12 to 18 years, strategic buyers willing to pay up.”

But Gurtcheff advised all buyers not to take anything for granted when trying to win a deal. “Strategic buyers tend to believe they will have an advantage in every single transaction. I think it’s really easy to dis-advantage yourself,” he said.

“I tell them you can’t win this deal at dinner but you can lose it. Leave the phone in your pocket, focus on the people,” he said. “Not being an idiot seems sort of obvious, but you’d be surprised.”

 

For a full video of the conference, click here. Sima Griffith’s comments can be found at the 43-minute mark.

Sima Griffith Comments on Market Activity at M&A Conference

More money chasing deals in ‘frothy’ M&A market

Finance & Commerce

by William Morris

The best word to summarize the 2019 market for mergers and acquisitions might be “frothy.”

At a Tuesday conference for M&A experts hosted by Faegre Baker Daniels in Minneapolis, panelists described a market flush with cash but struggling to maintain momentum after a decade of uninterrupted economic growth.

“There’s still a tremendous amount of supply of capital,” said Matt Sznewajs, managing director at Piper Jaffray. “It’s out there, both from the private equity world as well as from the lenders. But there’s not enough supply of companies, though. So the [capital] supply is there as the supply of companies isn’t necessarily there.”

2018 was the fourth straight year with more than $2 trillion in deals in North America, according to market data company PitchBook. Through the third quarter of 2019, the market is on track to extend the streak to five, with $1.6 trillion in deals to date. But despite those topline numbers, there’s a feeling of unease among M&A experts as they look to the next few years, said Bruce Engler, conference emcee and head of Faegre Baker Daniels’ mergers and acquisition practice.

“I sense a level of anxiety in the M&A market that I haven’t felt for a few years, to be thinking about all this stuff that’s going on right now,” Engler said. “Total political dysfunction, trade wars, slowing U.S. economy, very slow global economy, an M&A market that’s very long in the tooth; there’s a lot to dislike today and I think a lot to be concerned about.”

Politics is especially on the mind as brokers look ahead to the next 12 months and the 2020 election. Harris Williams managing director Glenn Gurtcheff said that, while the Trump administration has cut taxes and regulations, “the noise around trade and tariffs is generally viewed as very, very unproductive” and the president’s penchant for policy formulation via Twitter creates unwelcome uncertainty for the market. Nor are companies necessarily rooting for his likely electoral opponents.

“On the other hand, the farther the Democratic pool of candidates leans leftward, the more uncertainly you’re going to bring into the equation there too,” he said. “The market really does not like uncertainty, and views the current political environment right now as just introducing risk.”

That uncertainty, which is likely to grow as the election nears, is leading companies to advance or delay their plans for deals, Sznewajs said.

“A lot of the conversations that we’re having with our clients right now, whether it’s institutional clients or just privately held businesses, is the timing of when you go to market if they’re looking at thinking about a sale,” he said, “because nobody wants to get hung up in the time period around the election next year.”

On the other hand, there are factors that continue to push companies to consolidate. Tech, media and telecommunications companies make up the largest share of M&A activity so far this year, followed by consumer goods, Aethlon Capital managing principal Sima Griffith said.

“As long as companies are on this technology treadmill, where they need to own the latest and greatest technology to compete better, and as long as there is billions of dollars in private equity looking to invest, we will continue to have a frothy M&A market,” she said.

Weighing against that, though, are signs of weakness in the national and global economy, such as a decline in the manufacturing-focused Purchasing Managers Index to its lowest level since 2016. Several speakers said it’s a matter of time until a recession arrives, and anyone looking to buy or sell companies needs to be aware of the broader economy.

Faegre Baker Daniels partner Morgan Burns offered a unique description of the economic environment: “People are maybe in a little bit of a race to a finish line that is moving around on us.

For a full video of the conference, click here. Sima Griffith’s comments can be found at the 43-minute mark.

Aethlon Capital Advises Manna Freight Systems on its Sale to Pilot Freight Services

Aethlon Capital announced today that it successfully advised Manna Freight Systems, Inc., headquartered in Mendota Heights, Minnesota, on the sale of its business to Pilot Freight Services of Lima, Pennsylvania. As part of the transaction, which closed on July 16th, Pilot Freight Services acquired all of Manna Freight Systems’ assets, including its “Last Mile” home delivery operations.

“Pilot is a well-run, well-respected name in the freight business with new owners and a fresh new charter: growth,” said Al Meehan, CEO of Manna Freight Services. “The combination of the two companies will produce a formidable force.”

“We are very pleased to have advised Al Meehan on the sale of his company,” said Sima Griffith, managing principal of Aethlon Capital. “The Aethlon team conducted a broad marketing process to both strategic and financial buyers that resulted in a great outcome for our client.”

“Aethlon was engaged as the company’s exclusive sell-side advisor because of our strong industry knowledge, relevant buyer relationships and sell-side advisory expertise,” she said.

About Manna Freight Services, Inc.

Manna Freight Services provides specialized transportation and logistics services for delivering large goods to home consumers. Since its founding 26+ years ago, the company’s single-source integration and white-glove services have made it a “mission critical” business partner for some of the largest consumer brands in the country. For more information, visit: www.Manna.com.

About Pilot Freight Systems

Headquartered in Lima, Pennsylvania, Pilot Freight Systems a full-service global transportation and logistics company with over 75 locations throughout North America, western European operations, and administration offices in the Netherlands and Spain, and a worldwide network of overseas partners. For additional information, visit: www.PilotDelivers.com.

About Aethlon Capital, LLC

Aethlon Capital LLC is a Minneapolis-based investment bank that specializes in mergers and acquisitions and raising capital for manufacturing, technology, consumer, and transportation & logistics companies. For more information, visit: www.Aethlon.com.