M&A for SMB VARs

Witness the soft-launch this week of the M&A Forum, a new Web site and Internet service designed to bring together buyers and sellers of solution provider businesses.

"Think of Match.com for IT sector companies," said Patricia Wegner, president and chief operating officer of the new service, a subsidiary of Martin Wolf Associates, a consulting firm on larger investment banking-type deals for solution providers.

Sellers enter information into a profile questionnaire. Potential buyers can then search the database according to the type of acquisition they are seeking.

The company built the service for deals of under $50 million, and most deals are expected to be in the range of $5 million to $20 million, Wegner said.

And if early registrations are any indication, the interest in mergers and acquisitions among small and midsize businesses is high. In its first few days of operation, the site had attracted between 50 and 100 seller companies.

"2006 and the first half of 2007 showed record activity for solution providers," Wegner said. "A lot of the transactions that got talked about in the press were larger deals. But there are scores of smaller companies that are looking for help in the M&A area. They are looking for education, representation, handholding and a way to find other partners to do deals with. The market is so broad and fragmented it's difficult for companies to find their match, so we are leveraging the power of the Web to help do that."

Wegner said she believes deal volume for the SMB segment is driven by strategy rather than finance. For example, a solution provider might buy another solution provider with a security specialty in order to add that specialization to what the acquiring company can offer customers. Solution providers may also look to acquisitions in order to expand geographically.

"There are lots of companies headed up by strong management teams that see their best opportunity as partnering with a larger company," Wegner said.

The M&A Forum, in San Ramon, Calif., announced the service to its own database of clients and contacts early this week, and also to the attendees at the Ingram Micro partner event in Las Vegas.

In addition to the matchmaking service, the organization offers educational information for SMBs on mergers and acquisitions, such as how to approach mergers and acquisitions from a seller's perspective and what needs to be done to get ready to sell a business, Wegner said.

Martin Wolf ran a similar service for SMBs starting in the late 1990s in the form of NDA (nondisclosure agreement)-protected day-long meet-ups among companies looking to do deals. But the dot-com bust and the events of September 11, 2001, caused attendance to dwindle.

Now that deals are again on the rise, Martin Wolf had received multiple requests to start up such a service again, Wegner said. The organization launched the online forum this week and is looking at offering the day-long meetings again as well. For more information, visit M&A Forum.

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