Exit and Growth Strategies for Middle Market Businesses

Archive for 2012

JP Balestrieri Named to Ridge Global Board of Advisors

By Kim Levin | Apr 12, 2012

Gianpiero “ J.P.” BalestrieriLast week Ridge Global announced the appointment of CFA’s Gianpiero “ J.P.” Balestrieri to their board of advisors. Ridge Global is an international security, risk management and business consulting firm founded by Tom Ridge, the first Secretary of Homeland Security and 43rd Governor of Pennsylvania. According to the Ridge Global press release, JP brings his experience in corporate growth and development and joins a team of advisors which includes Lisa Gordon-Haggerty, General Barry McCaffrey and Herman Pirchner Jr. It is an honor to be so named and on behalf of CFA, I offer our congratulations to JP.

To read the entire press release, please click here.

Not All Private Equity is Created Equal

By Kim Levin | Apr 11, 2012

Waves CrashingWith nearly half a billion dollars to invest, US Private Equity firms are a major source of capital for middle market business owners…both those seeking growth partners and those interested in divestiture.  This quarter’s Capital Ideas takes an open, candid look at the types of private equity firms in the private equity space and examines why you may want to take a careful look at a potential private equity partner before you sign on the dotted line.   Not all private equity firms are created equal…so as the article suggests…seller beware.  You can read the article in its entirety by clicking here.


Posted by Greg McKinley.

Should You Consider a Recap? Part 5

By Robert St. Germain | Apr 03, 2012

Money BlocksIn the last four blog posts I have discussed the different types of middle market business buyers in the market today, how they differ and what they look for when they invest.  Now that we know about the buyers…is there anything the seller can do to make sure the transaction runs smoothly?     

If all the prerequisites have been properly put in place, the seller has at least one more tool to extract the highest price and best terms from the PEG marketplace. That is a well constructed, competitive sale process consistent with the protocols and expectations of the PEGs. As with selling to any third party, competition among potential buyers can help maximize the outcome for the seller. Read more »

Should You Consider a Recap? Part 4

By Robert St. Germain | Mar 29, 2012

Money GraphThis series of posts has examined the different types of buyers of middle market companies, focusing on selling to a third party.  Learning more about how the financial buyer makes investment decisions is important to anyone considering a business sale.

Although, as previously discussed, each Private Equity Group (PEG) has its own specific investment criteria, most of them are attracted to acquisition targets with certain general characteristics that independently and, in aggregate, help reduce the risk of their investment. Therefore, sellers interested in exploring recap opportunities should be aware of these and put as many as possible into place before marketing themselves to the PEG community. Read more »

Should You Consider a Recap? Part 3

By Robert St. Germain | Mar 27, 2012

This series of blog posts examines the exit options of middle market business owners as they contemplate the sale or recapitalization of their companies.  My first two posts in the series described the seven primary ways owners leave their businesses – sales of assets, sale to partners, sale to children, management, employees, to the public and a third party… and the ramifications when the third party is a strategic buyer.  The third party financial buyer is another option that may be worth consideration.

A financial buyer, for this discussion, is a private equity group (PEG). This is a type of investment manager that raises funds specifically to be invested in the private equity of operating companies in accordance with a limited partnership agreement between it and its sources of those funds (e.g. pension plans, universities, insurance companies, foundations, endowments, and high net worth individuals). The funds typically have a ten year life, during the first half of which, capital is invested into companies and, during the second half of which, that capital and any appreciation thereon is harvested back out through the resale or IPO of those companies. Read more »

Should You Consider a Recap? Part 2

By Robert St. Germain | Mar 23, 2012

Business PlanningThis series of blog posts examines the exit options of middle market business owners as they contemplate the sale or recapitalization of their companies.  In my first post we looked at the seven primary ways owners leave their businesses – sales of assets, sale to partners, sale to children, management, employees, to the public and finally to a third party.  We now focus in on the sale to a third party.

If the seller’s primary objective is to maximize price while giving up all ownership (i.e. a complete sale) and continued employment, then “strategic” buyers should be the focus. Read more »

Should You Consider a Recap?

By Robert St. Germain | Mar 21, 2012

Business ChartThere are essentially seven ways to leave your love (i.e. sell your business!). They include sale of assets, sale to partner(s), sale to children, sale to management, sale to employees, sale to the public, and, finally, sale to a third party. Each sale type has its advantages and disadvantages, which I will explore in the following series of blog posts.  We begin by listing the selling options here in order of typically least to most financially rewarding to the business seller.

Sale of assets (i.e. liquidation) will typically yield only pennies on the dollar because the assets are not being sold as part of an ongoing, cash generating business. Sale to partner(s) will likely be guided by a buy-sell agreement which, by design, will be very conservative in its valuation and payout algorithms to preserve cash for the remaining business owner(s). Read more »

Selling Your Middle Market Company – Seek Out the Best of Both Worlds

By Peter Moore | Mar 16, 2012

TechnologyThe world of middle market investment banking is very much a blend of old fashioned handshakes and state of the art marketing technology and both have a very real place and purpose in the anatomy of every transaction.  Business owners select an M&A consultant much like they choose an attorney or accountant.  They want to know their consultant has the right knowledge, skills and experience to represent them in the transaction.  This usually begins with a face to face meeting and an open and frank discussion of key goals and objectives.   New technology has not changed this part of the selection/selling process and future technology will not likely do so.  Read more »

Selling Your Business: The Timing is Always Right

By Kim Levin | Mar 13, 2012

Boy with SuitcaseIf you are a middle market business owner and are contemplating a sale…more than likely the first thing you will ask your investment banker is “what’s my business worth?”   You will become familiar with terms like “valuation” and “multiples”, and will want to be certain that when you sell the business you have spent a lifetime building, that you are selling at the right time.

Data shows that for the past 10 years, valuations and multiples for middle market businesses have remained fairly steady… and that’s good news for anyone considering a sale.  There really is no right or wrong time to sell a quality business.  March’s issue of the Middle Market Pulse gives some insight into this issue and you can read it here.


Posted by Greg McKinley.

Change Can Be Bittersweet

By Anthony Contaldo | Mar 07, 2012

Having just watched highlights from the Peyton Manning press conference this morning, one can make the case that the Colts’ decision to let Manning go is very much like a business owner making that decision to sell all or part of his company.   It is evident that the time for change has come.  The decision is emotional for all parties involved.  It’s in the best interest of the business entity to move on.   But it is also bittersweet.

Manning spent his entire career with the Colts and the team knew great success with him at the helm.  Management trusted his abilities and rewarded him amply.  He has gotten older and a step slower , apart from his recent injury.   Business owners spend a lifetime building a business and at some point they grow older, a step slower, and realize it’s time to either call in the reinforcements or find someone else to take the helm.

Peyton Manning will move on…play for someone else until that time when he hangs up his cleats.  He’ll have help deciding on his best options (his agent).    Business owners do the same…they move on…choose to concentrate their efforts elsewhere, whether it’s with a new venture, a charitable endeavor or  spending time with loved ones and improving their golf game.  They also have help deciding on their best options (their trusted M&A advisor). 

This change, this process of transition, is inevitably emotional and bittersweet.



Posted by Anthony Contaldo.