Corporate Finance Associates (CFA), an international middle-market investment banking services firm providing merger and acquisition, business valuation, capital resources, and financial advisory services, announced it advised in the management recapitalization of Abacus Plumbing by Berkey’s Plumbing and Air Conditioning of Southlake, Texas.  Recapitalization financing was provided by Berkey’s investors, Alpine Investors and Skylight Capital. Read more »

Overseas Investors See Value in US Middle-Market Businesses

In an earlier blog, I made the suggestion to look beyond our borders for possible acquisition targets, specifically in Brazil, where capital from the US as well as from European and Asian nations had been flowing at increasing rates over the recent years. This time, I would like to call your attention to the opposite phenomenon, one that has already been tagged by some investment bankers as a type of “reverse colonialism”.

While the economies of the developed world are still weak after the 2008 banking crisis in the US and the debt crisis that started in Europe in 2010, the emerging economies have been thriving, blessed with a continuous rise in commodity prices and their surprisingly sound fiscal condition.  This has created an unusual appetite for acquisition in the US and Europe by investors from countries such as Brazil, India, or Mexico among others. In fact, according to the World Bank the US and Britain alone were the destination of over $320 billion in emerging-market acquisitions between 2000 and 2010. Read more »

Seek professional advice to gain maximum value before selling your business.

As a good friend was getting ready to sell her home, she was advised to contact a Stager for assistance.  A Stager, I then learned, is someone with a good eye for home decorating and, especially, a good sense for homebuyer’s psychology, that helps preparing a house for sale.  Following her Stager’s advice, my friend bought some decorating accents, fixed minor defects such as leaking hoses, stained walls, and even changed the brand of light bulbs.  Always following the expert’s instructions, furniture was rearranged to increase flow and some pieces were simply removed to create a sensation of brighter and larger spaces.  So, a couple of weekends and less than a couple of thousand dollars later the house had effectively increased its appeal and soon afterwards it was sold!

If only preparing a business for sale were as simple…! Read more »

As business owners approach retirement at a faster rate than ever, many are finding out that exiting has been the one strategic aspect of their business they have paid least attention to.  Exiting requires planning.  Will the business simply be shut down and the employees laid-off when the owner no longer wants to work?  Will it be passed on to a family member? Is there a clear succession plan in place?  Will the business be sold and if so, to whom: a relative, an employee, a competitor, or to a yet unknown buyer? Is the owner willing to finance? Is he/she counting on the equity built into the business for retirement? Is that a realistic expectation?

Selling is one of the most common exit strategies and it can be the most rewarding too. Planning for the sale of a business  involves making a number of decisions both on a personal as well as on a professional level early on.  Decisions regarding adopting more efficient business practices, more effective reporting, better organized record-keeping, and, yes, decisions regarding delegating authority and building a reliable “second layer” of management, among many others. Read more »

Although it may sound contradictory, expanding through acquisitions may prove a sound phased exit strategy for some.

There are companies whose size makes them too large for individual, life-style investors and too small for financial or strategic investors. In those cases, growing through acquisition as a means to achieve critical mass may be a good first step toward positioning the company for a future sale. Read more »

Brazil continues to be a magnet for investment. Over five times as much capital found its way to the South American dynamo from January to April of this year as in the same period last year. Private equity and buy-out groups are setting up shop in the country, led by the likes of Carlyle, Blackstone, Advent International, KKR, and TPG, formerly Texas Pacific Group. While $8.1 billion were raised last year for investment in Latin America, companies are expected to raise over $10 billion for investment in Brazil alone this year.

A total 693 M&A transactions worth over $120 billion were announced in the country during 2010, according to Thomson Reuters. Some of the most notable transactions were in the energy, financial, telecommunications, commercial airlines, fast food, travel and education sectors.

At the same time, with Brazil’s currency, the Real, at a 12-year high against the dollar, some Brazilian conglomerates will continue to seek opportunities in the US to establish or expand their strategic presence here for when this market rebounds. Likely areas of activity may be in banking, food & beverage, business services & solutions, technology, and aeronautics, among others.

So whether you see yourself and your company as a buyer or as a seller, Brazil offers tremendous opportunities that you should seek assistance to better sort out. As with any cross border transaction, in addition to the standard legal, financial, operations, tax, logistics, and other aspects relevant to any domestic deal, a cross cultural dimension needs to be added to the equation, which, if not properly addressed, may irreparably hinder an otherwise viable and desirable transaction. So, talk to your CFA investment banker partner today and explore your options beyond the borders.

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Posted by Eduardo Berdegué.