Have an interview with firm that investing in 10-30 EBITDA manufacturing firms in industrials and f&b. Coming from an IB tech group so know pretty much 0, would love to hear about valuation, trends, what consider from an investor perspective, etc..
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Caveat all of the below with the fact that your motivation and your technicals are by far the most important thing to bring to the table for an interview. The below is secondary.
VALUATION: This depends so much on so many factors that I don't want to give a specific answer, but a VERY general answer would be high single digit up to maybe mid-double digits. That said, anything can trade outside of this depending on the firm. What's important is to identify and socialise in your interview (if you're asked) the drivers of valuation (organic growth, EBITDA margins (level an sustainability), capex requirements, manufacturing footprint (e.g. spare capacity, level of investment, etc.), distribution (customer type, concentration, RTM), management quality, fundamentals of the end markets, product (commodity or specialised), procurement, etc. All of this factors into valuation (and by the way this is for manufacturing - F&B depends if we're talking branded, private label, agriculture, etc.)
The point I want to make is that you're looking for high and sustainable growth, margins, and cash flow, and great companies have qualitative characterisics that support those, and you need to "consider" red flags that would work against those (for example, a concentrated customer base is a risk to margin and growth sustainability).
TRENDS: In the LMM space, something you're going to see a lot of is buy-and-build, and professionalisation. Both are fairly well-understood, but the recipe is usually:
(1) Professionalisation: often these are family-owned businesses: clean up the finances, install a proper CRM and ERP system, get rid of overstaffed functions, invest in the production facilities. It's not so much about cost-cutting, but rather making existing businesses just more professional.
(2) Organic growth: Often the most difficult thing to get comfortable with, but the most important. The company needs to be growing by owns means, especially at this size range. This has always been important.
(3) Inorganic growth: Your buy-and-build - don't think I need to explain this.
What you're trying to do in LMM is take a small mom-n-pop shop and transform it into a polished, fully professional, and much larger organisation.
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