January 26, 2022   

The Vibrancy of Lighting M&A

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Guest Author:  Ted Konnerth, Ph.D., Merrimack Group

It’s a seller's market.  Are you ready to talk about your plans?


I’ve been an active lighting industry participant for over 35 years. I have a personally curated database of thousands of companies within the electrical and lighting industries; over 2000 manufacturers of lighting fixtures, lighting controls, light bulbs (lamps), lighting equipment (lenses, optics, photocells and more) and the manufacturers of LED drivers, modules, LED’s and more. The lighting industry ‘at large’ is large and complex. Over the past 15 years, there have been over 700 new lighting related manufacturers enter the market.

Of approximately 1200 US fixture manufacturers well over 98% of them are privately held. Lighting has a long history of entrepreneurial founders who have started from ground up and built successful companies. Lighting also is complex as it is both a commercial and personal choice product which emboldens and rewards entrepreneurs to create different solutions for different channel solutions and interesting product solutions to ‘lighting’.

With lighting being privately held, the size of the industry is left to broad attempts at estimating total lighting revenues. About 30 of 1200+ fixture manufacturers have revenues greater than $100M. Our internal estimate; using the Merrimack Index suggests that the median revenues for fixture manufacturers is around $10M. Smaller companies can be remarkably successful by focusing on the burgeoning expansion of lighting channel solutions. Merrimack Group (MG) has identified over 20 unique channels in the industry; defined as a buying influence that is large enough to support unique products and revenue to support a dedicated sales team.

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The diversity of the lighting market attracts investors that are looking for access to unique channels or unique products or simply gross revenues to meet the acquirers’ organic growth goals. Merrimack Group is anticipating a strong year of lighting acquisitions as a confluence of economics and demographics continue to strengthen:

  • Unprecedented levels of free cash to invest in the private equity (PE) market. PE firms are scrambling for quality companies to buy.
  • Strategic lighting manufacturers are seeing rising profitability and are eager to add revenue, or access to new channels or technology to further growth.
  • Environmental, Social, Governance standards (ESG) are rapidly being adopted through both corporate shareholder and PE oversight committees. ESG is a commitment to conduct business to further benefit the environment, social causes, and professional standards of governance. Lighting is an attractive space for PE firms that meets the ESG expectations for energy saving investments.
  • Most of the privately held companies are owned and managed by baby boomers. Many have realized that exit strategy is as simple as:
    • Sell the company
    • Or, passively sell the company to family or to employees (ESOP)
    • Or, simply lock the door and walk away
  • Valuations are rising. Whether a sale comes from a strategic manufacturer or a PE firm; the valuations are trending higher. And selling through a professional marketing plan, where there are multiple interested buyers tends to bid the price up.

So how do you start to take advantage of the seller’s market?

  1. Get help. Selling your business is far more complex than selling your home and requires absolute confidentiality so that your reps, customers, specifiers and industry contacts don’t find out you’re selling the business.
  2. Find a specialized consultant firm. Most M&A firms have no grasp of the complexity of the lighting market; multiple layers of channels, reps, overage, specifications, products, etc.
  3. Be prepared. Professionally selling your company entails a detailed process that requires a deep dive into your company; financials, customers, personnel, markets, products, forecasts, liabilities, assets and more. It is highly desirable to have audited financials. Regardless… the time to start organizing your financials and report systems is before you start the marketing campaign. Discretionary expenses often can be added back to arrive at an adjusted EBITDA; which will help your valuation.
  4. Manage expectations. Our process typically runs up to 6 months from engagement to final close; although it can go faster than that if you’re well prepared for the onslaught of information for the due diligence process. We can map out each stage of the process, but briefly.. 30 days to prepare the formal confidential information memorandum (the ‘book’); 30-60 days of marketing your company, handling NDA’s and inquiries from buyers, 30 days for final bid deadline for letters of intent (LOI) and negotiations and about 30-60 days for due diligence and close.
  5. Manage emotions. Selling your company is as emotional as marrying off your kids. The memories wash over you and you may get impatient or offended by preliminary offers. It’s an admission that your career is ending… or changing into a different career or role in life. Your M&A consultant should be able to assist with that as well.
  6. Want a free consultation on the feasibility of selling your business? Call us!


Merrimack Group is a unique M&A consultancy company that specializes in the lighting industry. MG has over 50 years of direct lighting experience, plus over 25 years of M&A activity.

We’re lighting guys, we get it.


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