Abe Garver's  Instablog

Palm Beach, FL (January 21, 2013) - BG Strategic Advisors, the leading M&A firm for the supply chain sector and advisor on premium sell side deals, announced that Abe Garver has been named Managing Director of Global E-Commerce Advisory.

In addition to being an M&A advisor, Mr. Garver is a Bloomberg TV Commentator, Forbes Contributor, Seeking Alpha Contributor, Internet Retail Conference Speaker, and news source to top journalists at TechCrunch, Internet Retailer, MultiChannel Merchant, M&A Magazine, Seeking Alpha, The Los Angeles Times and MarketWatch - WSJ.

"Abe recently published an article, TIME's Person Of The Year: Your UPS Driver, in which he called attention to the breakneck speed of growth in the Global E-Commerce Supply Chain," said Ben Gordon, Founder and Managing Partner of BG Strategic Advisors. "Abe's expertise in this issue, BGSA's leading role in the supply chain, and our combined strengths, should all provide great value to our clients," said Ben Gordon.

Before joining BGSA, Mr. Garver worked for Focus LLC, Ernst & Young Financial Advisory Services, and Merrill Lynch's M&A Technology Group. Mr. Garver holds a Bachelor of Science in Business Administration from the University of Southern California, Marshall School of Business and a Masters in Finance, from the Manderson Graduate School.

About BG Strategic Advisors

BGSA is the leading M&A advisory firm focused on the logistics and supply chain industry. The firm specializes in providing CEOs in the logistics and supply chain industry with the tools to maximize their company's value. BGSA has completed several well-known supply chain deals, including the sales of NESA to Liquidity Services, Access Computer Products to Waste Management, Inc., Converge to Arrow Electronics Inc., Dixie Warehouse Services and Wilpak Inc. to Jacobson Companies, Churchill to BirdDog, Raytrans to Echo Global, Unicity to PBB, Air-Road to Reliant Equity, and many others. For more information, visit www.BGSA.com or email Abe Garver at Abe@BGSA.com

99-Year History

Founded in 1913, Storage Battery Systems, Inc. (SBS) has nearly a century of experience providing critical and reserve power solutions that address a range of customer applications across many industries. Supply Chain Equity Partners (SCEP), a Cleveland, Ohio based private equity firm, recently invested alongside SBS' management to help accelerate growth of an already successful growing business.

SBS' diverse customer base ranges from a "who's who" list of Fortune 2000 companies to a wide variety of small and medium-sized companies, both public as well as privately held. A majority of the Company's revenue comes from customers it has done business with for more than 10 years.

Trying To Sell To Family Members

Several years back when their sister wanted to sell shares in the company for financial planning purposes, the three brothers were able to structure a transaction to cash her out. However it became clear that they wouldn't be able to do it again when the next sibling retired.

Compelling Event: Financial Planning

With the buyout of their sister's shares complete, and their own retirement nearing, the brothers and family members contemplated a plethora of transition scenarios.

Each of the brothers had spent roughly 40 years working in almost every facet of the business, which their father had invested in nearly 50 years ago.

Given the "family" nature of business, pursuing an outright sale just didn't feel right.

Letting Go

"When you work side-by-side with the type of people we have for 20 to 30 years, you can't help but want the best for them. Without their commitment to our business, we would have a much different company today or perhaps no company at all," said Scott Rubenzer, CEO.

"You reach a point, retirement aside, that you realize: hey, we might have grown this as far as we can and perhaps it's time for someone from the outside to help take the business to the next level," said Bill Rubenzer, VP of Marketing.

So, after many sleepless nights, mostly out of concern for what would happen to their almost 100 employees who are regarded as extended family, the brothers agreed that the best path would be to find a partner that would not only protect jobs, but also bring resources to grow the company.

Types Of Buyers / Investors

Acquirers of middle market companies tend to fall into one of two categories. The first are referred to as "Strategics" and are either direct or indirect competitors. The second are "Financial" buyers often referred to as Private Equity Groups or PEGs.

Decision To Hire M&A Investment Bankers

"For 40 years we focused our energies on becoming experts in the battery business. Figuring out on our own who we should transition the business to was not something we wanted to learn by trial and error…we only had one chance to get this right," said Bob Rubenzer, Vice President.

The Family's Next Move

SBS selected FOCUS Investment Banking, an M&A investment bank with experience in the sector.

The brothers described their ideal outcome to FOCUS, which was for each brother to be able to work for the company until retirement, protect jobs and bring resources to grow the company.

To accomplish the objectives, FOCUS prepared an offering memorandum, confidentiality agreements and a target list of strategic and private equity groups that are active in the sector.

Next, an auction was run that generated multiple options for the family.

Reasons We Partnered With A Private Equity Group

"Ultimately the family was far more comfortable with financial buyers over strategic buyers for two primary reasons," said Scott Rubenzer.

1. The financial buyers weren't proposing to consolidate operations and downsize a large number of employees, and

2. The "right" financial buyer would be focused on growth and the family could retain a substantial percentage of the company so they could have another "bite at the apple" on a future sale.

About SBS' Investor

After an extensive due diligence process, SBS determined that SCEP was the best "partner" for their family, employees and business.

SCEP is a unique private equity group in that it only targets investments in businesses that are focused on value-added distribution and logistics.

With investors and principals coming directly from the distribution, logistics and direct marketing industry, SCEP provided a special fit that resonated with the family.

"We met with a large number of firms, but SCEP was clearly the right fit for us. They are a group of smart, sensible guys that really get our business and shared our Midwestern values of hard work and treating people fairly," said Scott Rubenzer.

"The analyses that SCEP performed throughout the process really impressed us; they repeatedly showed us things about our very own business that we never knew…that type of insight makes you feel like you are selling to someone who will add more value than just plain cash," said Bill Rubenzer.

"All the private equity groups we were introduced to seemed to have cash, but finding the ones that have something special, that's the key," said Scott Rubenzer.

When Selling Isn't Really Selling

All three brothers are planning to stay on with the business for much more than just a simple transition. Rather than sell the whole business, the family opted to only sell a portion of the business and invest alongside SCEP.

Both SCEP and the family are bullish about the growth opportunities they can tackle together with SBS.

"I don't think we will be around with SBS for another 100 years, but based on the way we structured this, perhaps our nephew's great grandchildren will be," said Scott Rubenzer.

Background

A 'Stop Online Ammunitions Sales' (SOAS) proposal has emerged in the wake of the Colorado theater shooting, in which shooting suspect James Holmes allegedly killed 12 and injured 58 when he opened fire in a movie theater during a midnight screening of The Dark Knight Rises.

As ammunition sales are unregulated, Holmes was able to purchase approximately 6,000 rounds of ammunition online (estimated valued between $1,700 and $3,000).

Dr. Lynne Fenton, a psychiatrist who had been treating Holmes, told members of the school's "threat assessment committee" at the University of Colorado about the neuroscience grad student in early June, KMGH-TV in Denver reported. However the Committee never discussed the shooting suspect, however, because he had dropped out of school.

What Does SOAS Aim To Accomplish?

According to Sen. Frank Lautenberg (D-NJ)'s website, he and Rep. Carolyn McCarthy (D-NY4) hope the SOAS Bill is targeted at companiesthat currently sell ammunition online and aims to accomplish four objectives:

1. Require sellers to be licensed dealers

2. Maintain records of ammunition sales

3. Require reporting sales of more than 1,000 rounds within five days (estimated value between $280 and $500)

4. Require buyers to present photo ID at the time of purchase

Under current law businesses such as Gander Mountain, Cabela's (CAB), and Wal-Mart (WMT) currently sell ammunition online. Although also permitted to, Amazon (AMZN) does not currently sell ammunition online.

What Does It Take For A Bill To Become A Law?

In a typical session of Congress, well over 10,000 pieces of legislation are introduced for consideration. "Legislation", when used as a verb, means the consideration and enactment of laws.

In practice, many will be considered, few will be enacted. During the 105th Congress, for example, 13,882 pieces of legislation were introduced. Out of all of those, only 354 (2.6%) ended up getting a presidential autograph to become enacted laws. (source: About.com, part of The NY Times Company)

What Was The Reaction In The US Capitol To SOAS?

From Rep. McCarty's statement, "We have introduced legislation to ban large ammunition magazines and all we hear is silence." One could assume that's not the kind of reaction Rep. McCarthy had been hoping for.

According to The Los Angeles Times, "The muted response from other lawmakers underscored the long odds gun-control advocates face. The Republican-controlled House has supported National Rifle Association (NRA) efforts to expand gun rights, and many Democrats are skittish about taking up the issue as they court rural votes."

Rep. McCarthy had also introduced a bill after last year's shooting of then-Rep. Gabrielle Giffords, (D-AZ), in Tucson, targeting ammunition magazines containing more than 10 rounds. But the measure has languished for more than a year.

Other Perspectives Against Greater Gun Control

House Speaker John A. Boehner, (R-OH) said, "The White House has made clear they're not going to use this horrific event to push for new legislation. I agree."

Senate Minority Leader Mitch McConnell, (R-KY) said he did not see "Any movement ... in the direction of thinking that stricter gun control laws would likely have prevented this horrible occurrence in Colorado."

An NRA spokesman said: "We believe that now is the time for families to grieve and for the community to heal. There will be an appropriate time down the road to engage in political and policy discussions."

Other Perspectives For Greater Gun Control

According to the Examiner, well known gun control activists include New York City Mayor Michael Bloomberg, CNN's Piers Morgan, U.S. Sen. Charles Schumer, D-N.Y., and U.S. Rep. Carolyn McCarthy, D-N.Y., all of whom are considered extremists by those who are involved in the movement to protect the Second Amendment to the U.S. Constitution.

What About The Court Of Public Opinion?

PewResearchCenter recently published an article titled: Views on Gun Laws Unchanged After Aurora Shooting. In addition to "Shootings Don't Shift Views On Gun Control" (chart top right), two other findings are instructive. They are, "Most See Aurora Shooting As An Isolated Event" and "Gun Control Has Been Losing Support In Recent Years." In total PEW Research Center's findings appear to be bad news for SOAS.

Actionable Investment Commentary

Since the Aurora shooting, Cabela's stock price up 15.8%.

Based on the reaction in the Capitol, influential public figures, the media, NRA, and PEW Research Center's 'Court of Public Opinion', it appears unlikely that the 'Stop Online Ammunitions Sales' (SOAS) proposal will become law.

Assuming that's the case, this should also be a non-event for shareholders in publicly-traded on-line ammunition sellers like Cabela's and Wal-Mart.

What is your opinion? Please comment below.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: My employer and I do M&A investment banking work for e-commerce companies in many sectors including the outdoor sports equipment and supplies product category.