A Primer on M&A With Tom Kastner

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Tom Kastner of GP Ventures is a busy man these days. He’s been involved in several M&A deals, including a recent acquisition by Summit Interconnect. Tom spent some time with Dan Beaulieu, who often consults with PCB and PCBA companies, about what it looks like when a company is thinking of buying or selling—and how a consultant like Tom helps negotiate the best deal.  

Dan Beaulieu: Tom, thanks for talking with me. I know you are very busy with your focus on PCB and PCBA-related companies. How did you get involved in this area of your business? 

Tom Kastner: I started in the industry with Hakuto, a Japanese company which makes cut-sheet laminators for PCB manufacturing. They also distribute components and semiconductor equipment. I started with connectors, followed by RF/microwave components, then I got into corporate investments and PCB equipment. I’ve been in M&A since 1996.

Beaulieu: You have completed several company sales in the past. Please share some of your recent examples of your successes.

Kastner: The most recent was Royal Circuits and Advanced Assembly to Summit Interconnect. Overall, I have been involved in more than 20 deals in the PCB and EMS sectors.

Beaulieu: Tom, if someone wants to sell a business and they want to hire you, what does that look like?  

Kastner: First, we talk about the owner’s goals and expectations. If they are looking to sell soon, we focus on the process of selling. If they are looking to get ready to sell in three to five years, we can talk more about long-term preparations.

Beaulieu: I assume all your dealings are in the strictest confidence?

Kastner: Yes, my business is dealing with very sensitive subjects, so confidentiality is key for me and my clients.

Beaulieu: Tell me about the process. 

Kastner: In the beginning, I’ll talk with the owner about the potential value of the company and the possible terms such as cash at closing, earnouts, etc. I’ll also visit the company and get to know them better. Once we are signed up, we put together a professional executive summary and confidential presentation. We reach out to potential buyers which are screened in advance by the client. We’ll answer questions and, after a certain period, ask for initial offers (IOIs). The top bidders get invited to Zoom calls and in-person meetings, then we ask for letters of intent (LOIs). We sign one LOI, then go into due diligence. Once due diligence is completed and we negotiate the purchase agreement and other closing documents, we close the deal.

Beaulieu: Tom, let’s get a little more specific about your fees. I know that you customarily charge a monthly retainer. What is that for? 

Kastner: With my team, we spend an incredible amount of time on each deal, so we feel we should be compensated in part for our time. Usually, 90–95% of the total fee is based upon success, so the retainer is a small part of the deal.

Beaulieu: That makes a lot of sense. Now let’s talk about what your team provides with that retainer. 

Kastner: It includes all the services described earlier, from developing the materials to closing the deal.

To read this entire conversation, which appeared in the July 2022 issue of PCB007 Magazine, click here.


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