All dealmakers know the tale of the corporate orphan - the unit nobody wanted that bloomed as soon as it was freed from its parent company. This is the rationale behind most private equity carveout transactions, but also serves as a backdrop to smaller companies' misgivings about selling to a larger strategic. Increasingly, these misgivings are fading, even for relatively tiny companies confronting sales to Fortune 500 companies.

To wit, when Cobblestone | Harris Williams managing director Harold Williams won the assignment to sell E-Mon, a manufacturer of sub-metering products and systems, he specifically targeted larger strategic buyers.

E-Mon owned proven technologies that most companies within the energy space would want to own. In the end, Williams wasn't at all surprised when the $33-billion-marketcap conglomerate Honeywell International emerged as the winning bidder.

The acquisition didn't even register with the analysts who follow Honeywell's stock. The buyer, however, should be able to offer a more complete portfolio in the green energy space as the deal supports its smart-grid offering.

E-Mon was already an equipment manufacturer for Honeywell, so the synergies of the combination made sense to the seller. Moreover, the opportunity to cross sell to Honeywell's clients, which include Lockheed Martin, Pepsi and other Fortune 500 companies, opens up more opportunities for E-Mon than perhaps a sale to a private equity firm would have yielded. Just as crucial, especially when it comes to the energy space, E-Mon currently has one employee tasked with keeping tabs on Washington, while "Honeywell has relationships all over the government," according to Williams.

Of course, there is always the chance a smaller company could get lost in a corporate behemoth with the size and scope of Honeywell. It happens all the time, especially when buyers pursue a deal in the interest of precluding a competitor from gaining access to a technology or client.

Still, in today's market, corporate acquirers have again ascended to the favored status, even among tiny businesses, ever wary about being overlooked.

In the late 1990s, strategics were an appealing buyer because they were willing to pay so much more for assets on the basis of ambitious synergy expectations. Anecdotally, this is not the case today.

"Strategics are valuing the deals similarly to their financial counterparts, but they have the ability to come to a deal with no financial contingencies," says Chris Hammond, a managing director with Green Manning & Bunch. He adds that that alone provides a "significant advantage."

Another aspect, perhaps unlike previous eras, is that strategic buyers seem to be more accountable for how they deploy capital. The $1.8 billion sitting on corporate balance sheets is a number often repeated by market observers.

But in the context of record amounts of debt, unfunded pension obligations, and perhaps inflation fears, strategics are watching where every penny is going. This may suppress valuations to a certain degree, but it guarantees attention for smaller companies post close.

And with a captive audience comes trust from the sellers that a strategic intends to follow through on harnessing the synergy promised from a deal. In January, Brickman, a nationwide landscaping business with more than 160 branches in 29 states, acquired The Green Plan, a small landscaping business with two locations in Colorado. Based on revenues, it was a $700 million company swallowing a $10 million regional player.

Jeff Pope, owner of The Green Plan, says that Brickman, despite its substantial scale, was the best fit for his employees and customers. "I realized that in order to grow the company further, it meant either retooling the business model completely or partnering with a larger company," Pope says.

CCG Advisors managing partner Brian Corbett worked on the Brickman transaction. He notes that there can often be some hurdles to cross when such a disparity in size between buyer and seller exists.

"The owner of a smaller business is used to being a lone ranger with no board of directors or boss," Corbett says, adding that it can create a culture shock for both management and the employees.

On the other hand, there is also less uncertainty in many cases. Alluding to the difference between large corporate buyers and financial sponsors, Corbett cites, "The strategics are known quantities.... The private equity groups can be scary to smaller companies that are unfamiliar with them."

Other factors are at play that may help distinguish a large strategic as the right buyer. Chris Barnes, a managing director with Sarowdin Partners, says that oftentimes, corporate buyers may overlook certain attributes that would trigger red flags for sponsors. He recently advised on a deal in which a $200 million revenue company acquired a $40 million business. Ninety five percent of the target's revenue was tied up with one client.

"Very few acquirers can handle that type of customer concentration," Barnes says.

"The larger strategic was able to leverage that relationship," muting the risk.

At the end of the day, what makes strategics attractive is the fact that they're out buying assets. Cobblestone's Williams notes that traditionally he has seen dealflow at his end of the market split evenly between the corporate and financial sponsors. Over the past 18 months, interest from buyers has tilted much more heavily toward the corporates.