Exit and Growth Strategies for Middle Market Businesses

Archive for 2013

How “Anti-Fragile” are You?

By Jeff Wright | Apr 16, 2013

Black SwanI recently read Nassim Taleb’s new book Anti-Fragile. Taleb is the brilliant thinker and writer who also wrote the best-selling book The Black Swan a few years ago. Taleb’s books have stimulated my thinking about our business and the company owners we talk with.

Taleb is a former successful hedge fund analyst and trader. While on Wall Street he developed innovative models around risk management. His models demonstrate that down side risk cannot be predicted by normal bell curve distribution but rather have more of a “long tail” distribution. In colloquial terms he popularized the term “Black Swan” events to illustrate his ideas about risk and risk management.

Much like in nature, when due to a freakish genetic mutation, a rare black swan is born; in Talab’s world Black Swans are hugely disruptive events that seem to come out of nowhere. They are not predicable, and while they are rare, they WILL occur. Read more »

CFOs Beware: Problems with Financial Modeling

By Marc Borrelli | Apr 11, 2013

Financial Chart ColorThrough my work I have dealt with thousands of Excel, and for those that remember Lotus, financial models and I have to say that most of them are bad. I would like to summarize five of my least favorite things about the “bad” models I have had the unfortunate experience to deal with during my career. All of these issues, except the last one, are sufficient enough for me to walk away from the work or opportunity as they indicate that I am likely to find more problems in the finance area or business. Read more »

Someone Wants to Buy My Company – Now What?

By Dan Vermeire | Apr 08, 2013

Nest EggSomeone wants to buy your company – they even made an offer.  That’s great news!  Time to celebrate, right?  The answer is “maybe.”  Maybe that’s great.  But maybe not.

The fact is that entertaining an offer from just one buyer is probably one of the worst things that could happen.  Especially an offer that is unsolicited.  It’s true that sometimes you can improve the offer  just by bringing in a professional on your side, because the buyer often takes it more seriously.  However, with just one offer you have zero leverage, no other options, you don’t control the timing, you don’t have a team ready, and you aren’t prepared for a transaction. 

How did this happen?  In most cases it is because the business owner wasn’t looking to sell, didn’t have a reason to sell, or the business wasn’t “on the market.”  Then, why take the buyer’s call in the first place?  Could be curiosity, or the idea that “if the right offer comes along, then I’d sell.”  Really? Read more »

What is My Business Worth?

By Kim Levin | Apr 04, 2013

Business ChartWhenever a business owner is considering a sale, the first question to an M&A advisor is usually “What is my business worth?”  Doug Nix, Managing Director and Principal at CFA Toronto West, wrote an in-depth article explaining why the EBITDA multiple, one of the most common methods of valuing a business, may also be one of the most misunderstood.  The article is a must read for anyone considering a sale or recapitalization.

Citing a real world example, Doug compares two EBITDA calculations and how each impacts the business valuation.  Doug notes, “There is a striking and vast gap between the actual market value ($14,000,000) and the owner’s Expected Market Value ($20,950,000).  One can easily see why many business owners have experienced great disappointment and have rejected a purchase offer at market value because of the distortion caused by using the Reported EBITDA multiples.”

I recommend reading the entire article.

Capital Ideas Newsletter


Sell Your Business Sooner Rather Than Later

By John Hammett | Mar 25, 2013

Money Graph“This year will be my best ever. I want to wait until that’s done, then I’ll sell my company.” (a former client, spoken in early 2008).

As you can imagine, the “Great Recession” overran all of his hopes and financial plans several months after my client spoke these words. By January of 2009, when he expected to report his “best year ever”, GDP had dropped 5% and Standard & Poor’s index dropped 46%, his” best year ever” didn’t happen and his outlook for the next five years was down substantially.

I had lunch with that former client in 2011, and he was still waiting for his company to be worth what it was when he said those words.  He was 64 when he decided to wait just 12 months.  Five years later, he’s now 69 and still has most of his net worth in one, smaller, basket.  Things are finally looking up now, and I hope that he’ll be able to sell his company sometime soon. Read more »

The American Taxpayer Relief Act of 2012

By Kim Levin | Mar 20, 2013

Money BlocksAs April 15th approaches, tax insights take a front and center position on many blogs… and ours is no exception.  In our first quarterly Client Newsletter of 2013, David DuWaldt provides an insightful narrative about The American Taxpayer Relief Act of 2012 and how last minute negotiations averted the “fiscal cliff”.  I invite you to read David’s article here.


Capital Ideas Newsletter


A Sense of Where You Are: Planning Your Business Future

By Sam Adams | Mar 12, 2013

basketballMarch Madness is upon us, and that means high-energy college basketball is everywhere.  The competition is fierce and features lots of rivalries. Games are intense: carefully-developed strategies and plays either unfold with precision or come flying apart on the court.  Players have to make split-second decisions and deal with how the set-up looks in the moment, not how it looked in practice.  If you are a business owner you have a good appreciation for that kind of competition and pressure—even if you’ve never picked up a basketball.  We can learn a thing or two from college ball if we think about the tension between planning and execution, between how we plan our business future and how we implement that plan on “game day”—which for most of us is every day.

One of the great books on college basketball is “A Sense of Where You Are” by John McPhee.  Published in 1965, it’s a profile of Bill Bradley and his incredible NCAA career at Princeton University.  It’s an in-depth look at Bradley, his gifts, his team and coaches, and their game style.  Bradley was a gold medalist in the ’64 Olympics and in his senior year led Princeton to Ivy and Eastern championships and a third-place finish in the NCAA.  His performance still shines in NCAA tournament history books, with a second in points-scored in 5 games (177) and a fifth in all-time points-per-game (35.4).  Did I forget to mention that he was also a Rhodes Scholar, played pro with the Knicks (including for 2 NBA championships), and was later a Senator and Presidential candidate?  Not bad.  Read more »

Thomson Reuters Q3 League Tables Ranks CFA in Top 10

By Kim Levin | Mar 10, 2013

Corporate Finance Associates (CFA), an international middle-market investment banking firm providing merger and acquisition, capital resource, and financial advisory services, ranks among the top ten of all US Investment Banks serving the middle market on transactions up to $50 million, according to the recently published Thomson Reuters Small Cap M&A Advisory Report.  CFA also ranks 21st in Thomson Reuters  Mid-Market M&A Advisory Report which focuses on larger M&A deals up to $500 million.  The Report measures transaction volume for the first three quarters of 2012.

“Our position in the industry’s League Tables is a direct result of the dedication and professionalism of our investment bankers who have worked tirelessly completing client transactions,” said Peter Heydenrych, Chairman and CEO of Corporate Finance Associates.

League Table Q3 2012

Mergers & Acquisitions Outlook for 2013

By Kim Levin | Mar 05, 2013

February Issue Middle Market Pulse 

Download the Middle Market Pulse

As we put 2012 behind us, we look to see what greets us on the M&A horizon for 2013.  Conditions are paradoxically both ripe for improvement and uncertain enough to hint at challenges in the coming year.

On a global scale, deal flow contracted for the second consecutive year in 2012.  Investors were skittish due to economic and political uncertainties.  Although some of the issues concerning politics and taxation were somewhat put to bed as we entered the new year, as we step into month two we note a quiet time.  Is this the calm before the storm, and by storm we mean a flurry of activity? Read more »

Is Your Management Team Increasing Your Business Value?

By Peter Ventre | Feb 26, 2013

Business Meeting with PaperYou’ve worked diligently to grow your company.  You’re building a solid management team that you can count on.  This management team should allow you to step back a little from day to day business, and focus more on strategic matters, positioning the company for the future.  You know your management team members well; many have grown up with you.  You know they are loyal and devoted. 

But are they achieving the results you desire?  Are they objectively measured against fair, but challenging goals? Are they each in the right seat? Are they receiving sufficient mentoring and training?  Do they each see their individual path forward within the company? Read more »