After five years in the mergers and acquisitions business, Karen Rehn has found her niche. Rehn is founder and partner in Acquisition Business Advisors LLC, a Brookfield-based M&A firm. The firm has evolved from a sole practice in 2003 to a firm with three M&A specialists and two support staff that specializes in small to mid-market transactions.
“There are three layers to our industry – the investment bankers, ABA (Acquisition Business Advisors) and the business brokers,” Rehn said. “We’re the cream in the middle. We’ve found our niche, and we’re good at it. We sell 80 percent of what we list.”
Acquisition Business Advisors has grown into a boutique M&A shop focused on manufacturing firms because of Rehn’s background. Her first business sale was in 1993, when she sold a manufacturing company that started in her home and grew into a 14-person operation. She later sold her father’s electrical contracting firm.
Rehn later worked for Remedy Staffing Service, a Milwaukee-area staffing company, where she routinely placed workers in manufacturing companies.
“The base of owning a business and working in staffing gave me the perfect mix of knowledge to go into (M&A),” she said.
In 2003, Rehn purchased a business brokerage business in Hartland. In the first two years, she routinely sold businesses with asking prices of $250,000 to $800,000.
“It was not uncommon to have 60 listings,” Rehn said. “We’d close 18 to 22 deals a year, but they were small ones. We did anything from little coffee shops to little distributors.”
By 2006, Rehn’s firm, known as Rehn Business Brokers at the time, saw some larger deals come its way.
“We got a $6 million company that sold quickly,” she said. “And once we got that one under our belt the rest came.”
In 2006, Rehn formed Acquisition Business Advisors with Chris Kapenga, a certified public accountant and certified business intermediary. Rehn sold Kapenga’s business, Integrity Motor Sports, before he became a partner in Acquisition Business Advisors.
Kapenga worked previously with Arthur Anderson, where he dealt with mergers and acquisitions. He was also in his mid-30s.
“I was looking for both a CPA and an exit strategy for myself,” Rehn said. “I needed to bring in more dimensions to make the firm more advisory.”
In early January, the pair hired Jerry Hegy, former owner of Remedy Staffing Service, as an M&A specialist, who has helped the firm develop a niche in the staffing industry.
“He joined us this January after we sold his business,” Rehn said. “Jerry has been chief financial officer of several companies who have bought and sold businesses. His background is really conducive to this. Running a company and selling it is a perfect foundation for M&A work. And he’s very well known in the area.”
Although Hegy has only been working with the firm for a few months, he’s already had an impact. Since his hire, Acquisition Business Advisors has sold four staffing companies.
“People I knew were looking to buy and were looking to expand through acquisition,” he said. “There are a lot of mid-sized firms, regional ones, that want to expand in the (staffing) industry.”
Acquisition Business Advisors now handles about one-third of the deal volume that Rehn Business Brokers did, Rehn said. However, the companies it works with are worth more.
“One million to $10 million is our sweet spot,” Rehn said. “We have a lot of listings in the $3 million range. And we now carry 15 to 20 listings and we don’t take the smaller stuff.”
Acquisition Business Advisors is considering spinning off a marketing division that would work with small to mid-market companies, Rehn said, largely because many of those companies need help in that area.
“We’re in the formative stages,” she said. “But we’re seeing an aging work force that has not kept up with the technology out there. A lot of (owners) are selling them, because they’ve outgrown them. I think there’s a lot more a boutique firm like this could offer.”
Acquisition Business Advisors is finding a significant amount of work with buyers looking for acquisition targets, Rehn said, largely because of the still active appetite for small to middle market companies.
“Buyers understand that it’s a seller’s market and they want to be ahead of the game,” she said. “It takes a lot of time to find businesses.”
While the firm has a few private equity groups for clients, most buy-side clients are strategic buyers. Most strategic buyers are local, but the firm is working with one out of state client looking to buy a Wisconsin company.
“Almost all of them want manufacturing,” she said. “And some are very specific.”