SMG Industries Inc. acquires Barnhart Companies for USD 29,000,000 (2023)

Deal facts

Buyer: SMG Industries Inc.
Target: Barnhart Companies
Deal value: USD 29,000,000
Announced: 7 July 2023
Status: Completed
Sector: Logistics & Transport
Country: United States
Consideration: cash, loan-note, shares

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Deal timeline

1 update

7 Jul 2023CompletedClosed
SMG Industries Inc. completes acquisition of Barnhart Companies
Item 1.01. Entry Into a Material Definitive Agreement. Transaction Agreement On July 7, 2023, SMG Industries Inc. (the “Company”) entered into a transaction agreement (the “Transaction Agreement”) with Bryan S. Barnhart (“Bryan”), Timothy W. Barnhart (“Tim”), Timothy W. Barnhart, as Trustee of the Timothy W. Barnhart 2017 Irrevocable Trust (the “Trust,” and collectively with Bryan and Tim, the “Se
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OpinionExit Mode editorial

We see a clear pattern in this completed transaction between SMG Industries Inc and Barnhart Companies. Announced on 7 July 2023, the deal closed with a total value of 29 million USD. This strategic acquisition in the Logistics and Transport sector highlights how buyers are consolidating fragmented markets through mixed consideration structures. The payment mix of cash, loan notes and shares is not merely a funding choice but a deliberate signal of confidence in the target's future cash flow while managing immediate liquidity constraints.

For the SME founder reading this, the structure offers a vital lesson on balancing risk and reward. The inclusion of loan notes and shares alongside cash suggests the buyer is willing to share upside potential but also wants to align the seller's interests with the long-term success of the combined entity. This is a common mechanic in strategic acquisitions where the acquirer seeks to mitigate upfront capital outlay. It places a premium on the quality of the business model and the stability of the revenue stream, as the deferred elements of the deal rely on future performance rather than historical metrics alone.

The regulatory context here is straightforward given the US to US nature of the deal, yet the commercial mechanics remain complex. A structure involving loan notes often triggers specific change-of-control covenants in existing lender agreements that the seller must have cleared prior to signing. Furthermore, the share component introduces a need for robust lock-up arrangements to prevent immediate dilution or market volatility affecting the value of the consideration. These are not abstract legal points but concrete hurdles that define the net value you actually receive at completion.

We urge you to scrutinise the composition of your own exit offer beyond the headline figure. If you are negotiating a deal this week, demand a clear schedule detailing the vesting conditions for any loan notes or shares and verify how these instruments rank against other creditors in the buyer's capital structure. Do not accept vague references to "future value" without written terms that define exactly when and how you get paid.

Editorial opinion. Not financial or legal advice.

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