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BUSINESS NEWS QUARTUS ENGINEERING RELOCATES SAN DIEGO HEADQUARTERS Quartus Engineering Incorporated , a San Diego-based engineering and manufacturing firm supporting aerospace, defense, and optical industries, has moved its corporate headquarters, offices and manufacturing space to a new facility at 9689 Towne Centre Drive. Just a few miles from the firm’s previous headquarters, the new UTC-area facility merges three separate offices into one, while also providing expanded manufacturing and clean room space, as well as room for growth for the engineering staff. “Our new facility nearly doubles our office space, allowing us to bring together 80 staff members who were previously spread across three San Diego locations, and giving them the opportunity to work more efficiently as a team with shared resources,” said President and CEO Doug Botos. “It also provides five times the

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previous clean room and manufacturing space, which we feel is needed to meet our customers’ increasing requirements. Finally, as we look toward the future, it provides additional room to grow our staff and bandwidth as our customer base expands.” The 47,000-square-foot space includes 5,000 square feet of Class 10,000 clean rooms for optical assembly, 17,000 square feet of manufacturing space for fabrication and assembly of hardware, 18,000 square feet of general office space and an additional 7,000 square feet for future expansion. “Our expanding customer base in multiple industries has necessitated adding staff, infrastructure, and fabrication capability,” said Vice President of Sales and Marketing Jeff Frantz. “This will assure we continue to provide state of the art engineering and manufacturing services to our customers so they can meet their product development commitments.”

MARK ZWEIG, from page 1

worth two or three times revenue, which of course they are not, but sellers don’t know any better (some, at least) and sign up with these firms for a year to see what happens. Nothing usually happens other than their bank accounts get tapped every month! 3)Sellers should be more concerned about tying down key people post-transaction. When someone buys an AEC firm, they are, to a great extent, buying the staff. The staff needs to be there for them to pay off the acquisition. Most smart buyers hold back a certain amount of money for a certain amount of time, in part, to be sure the key peo- ple stay on board. Sellers need to protect the buyers and their own interests and keep these people committed to the firm. That is where retention bonuses come into play. Stay so long and you get so much money. Some, if not all of this money, typically comes from the sellers themselves. 4)Terms may be more important than the price. How much cash you get up front or in a note may be more valuable to you than a deal with a higher total value but where half of the total consideration paid is based on meeting certain performance metrics. 5)There are less purely financially-driven buyers and sellers, and much more con- cern about future plans and compatibility. This is because there are so many more buyers out there in the market place – firms already in the business. They are smart and understand the reasons for doing an acquisition and the factors that lead to success or failure in this industry because they themselves are in it. I see this as a good thing! 6)People who move quickly are more successful in their merger and acquisition ef- forts. Foot-draggers, people who can’t make a decision, people who need to hold board meetings to review minor changes to an LOI, etc., will fail at the business of M&A – whether they are buyers or sellers. Firms that know what they are doing can move quickly and be responsive and flexible. It is essential today because there are so many buyers and sellers in the marketplace and everyone has other options! 7)Firms are doing well because the market is doing well, not necessarily because they are doing the right thing to run their businesses successfully. This is contrib- uting to a false sense of well-being on the part of many sellers who may find that during the next recession their firm’s performance will falter and their value and desirability to an outside buyer may fall as well. 2016 was an amazing year, filled with lots of success as well as great learning opportunities for me and the rest of our M&A folks at Zweig Group. Our prediction is a 100 percent increase in volume of M&A work in 2017. The market has never been better! MARK ZWEIG is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

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THE ZWEIG LETTER January 16, 2017, ISSUE 1183

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