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Exit and Growth Strategies for Middle Market Businesses

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M&A News In The Commercial Real Estate Industry Sector

By Peter Moore | Aug 06, 2018

The report below gives a good overview of the third quarter M&A activity in the Commercial Real Estate Industry Sector. M&A activity for North American based target companies in the Commercial Real Estate sector for Q2 2018 included 57 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in June when industry leader CBRE Group, Inc., diversified its services by acquiring FacilitySource LLC from Warburg Pincus LLC for US$290 million in cash. The acquisition strengthens CBRE’s ability to deliver integrated solutions for occupier clients. Founded in 2005, FacilitySource is located in Columbus, Ohio and provides outsourced integrated facility support services.

The 30-year fixed rate mortgage in the United States steadily rose in 2018 but began to decline slightly toward the end of Q2, which could spur activity in the commercial sector.
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M&A News In The Commercial Real Estate Industry Sector

By Peter Moore | Apr 23, 2018

The report below gives a good overview of the second quarter M&A activity in the Commercial Real Estate Industry Sector. According to data released by Ten-X Commercial, a leading transaction platform for commercial real estate, commercial real estate transaction volume edged down to $117.4 billion in Q4 2017 representing a 0.5 percent decline from the prior quarter.
Following two quarters of growth, the minor drop can be linked to a $6.7 billion decline in deal volume in the industrial sector. In comparison to the same period a year earlier, investment activity plunged by 13.2 percent.

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Capability and Capacity: Inseparable Components of Growth Strategy

By Peter Moore | Apr 12, 2018

As investment bankers to a wide variety of closely held companies we sometimes witness business owners investing heavily in new production output “capacities” (new equipment, new hires, plant expansions, or even acquisitions) well before they’ve properly established the full “capability” to put that new or expanded capacity to work on an optimized basis.

Generally the goal of creating new production or service capacity is to take advantage of a market opportunity, stay competitive, and create increased enterprise value in the business.

In this context “capability” is the condition of being sure your key team members have the know-how to produce the expanded product or service output. It also means having codified the processes employed to produce your product or service, so that new members to the team can also generate the product or service without any diminution in the quality or effectiveness to the customer. And it means you have the disciplines in place to continue producing the product or service with the same or better level of customer satisfaction, product integrity, and product reliability. It may also mean that you are continuously keeping an eye out for product relevance in your industry and marketplace, as well as being aware of what your competitors are doing and alternatives to your product or services.

Without being sure the capabilities are in place to get the greatest benefit from your new investment, you risk losing the financial advantage you expected. That new capacity (higher production rates, faster throughput, better engineering or design, or systems to reduce materials procurement costs, labor inputs, or transportation and logistics expenses) should be able to deliver measurable improvement in key financial metrics soon after the new investment in the capacity has been made.

While both capability and capacity can sometimes be developed concurrently it is often not advisable to make large capacity investments before you are sure you can provide the associated capability to optimize use of that new equipment, factory addition, acquisition, or expensive new talent.

Taking the time to plan on incorporating these two key elements of growth will help you more confidently achieve the goals you envision by adding new capacity.

For more information on this topic or assistance in expanding your company’s capabilities and capacities, and confidence, please contact your nearest CFA investment banker.


M&A News In The Commercial Real Estate Industry Sector

By Peter Moore | Feb 28, 2018

The report below gives a good overview of the first quarter M&A activity in the Commercial Real Estate Industry Sector.

Deal volume and prices increased yearly from Q3’11 through to Q3’16, but that was not the case in 2017. In the commercial real estate sector in 2017, increasing prices showed owners looking to hold onto assets with a focus more on cashflow (cap. rates) than a large pay out at disposition.

The trend of foreign buyers looking to invest in U.S. commercial real estate continued in 2017. According to data from the National Association of Realtors, the top countries of origin for foreign buyers included China, Mexico, the United Kingdom and Venezuela.

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How Investment Bankers Provide Value When Business Owners Sell

By Peter Moore | Jun 06, 2017

Sometimes in the process of discussing the sale of a company with a business owner, they turn to you and ask “What is it that you do to justify the fees you charge. Couldn’t we do this ourselves?” It’s a fair question, and especially for those who’ve never sold a company before, it’s a question whose answer is worth understanding.

Selling a company for most owners is a big and sometimes daunting undertaking. There is often a lot of emotion about the decision, and hundreds of details to manage.

Consider these fundamental but time consuming activities your investment banker will be handling:

  1. They (a team of professionals whose full time job is selling companies) provide a proven process for representing the seller’s interest to a marketplace of sophisticated buyers. (It includes market research on your industry, developing marketing materials to present your company to qualified buyers, gathering years of historic company information and reducing it to an easy to understand story of your business, developing target lists of potential buyers, connecting with those prospects, making hundreds of phone calls, answering hundreds of questions, negotiating deal terms and preparing the owners for a closing.)
  2. Your investment banker will manage all the schedules of calls, meetings, and presentations so you can remain focused on running and growing your business.
  3. Your investment banker uses a marketing process, databases, and networks of market contacts to bring you the most qualified buyers possible, which creates a more competitive environment for your company.
  4. Your investment banker’s job is creating the greatest amount of competition to derive the greatest value for the seller.
  5. Engaging a qualified investment banker adds instant credibility to prospective buyers that the seller is serious and will be prepared.
  6. We are intermediaries that buyers may speak freely with, without getting emotional responses from owners. Buyers can float ideas which may ultimately help in crafting a successful transaction.
  7. We are sometimes needed to be the designated “Bad-Guy” to handle delicate parts of a negotiation.
  8. We have watched both buyers and sellers make hundreds of unfortunate mistakes. One of our goals is trying to minimize the unwitting errors of judgment and lack of awareness.
  9. We also support the selling process by preparing information about your company including, a valuation assessment, financial summaries and analysis, review of operations practices, talent and staffing requirements and the overall management team, sales and marketing activities, your competitors, industry trends, and much more. All of this is designed to present you in the best possible manner. This is often done with peer group and industry comparative analysis.
  10. Investment bankers also help you protect from having too much information divulged too soon, and we screen out “shoppers” who may be nosey or just “kicking the tires”, or those without the ability to close a transaction.
  11. We do all of these things and more in a highly confidential manner, and work closely with the business owners, and their other advisors (attorney, accountant, financial planner) to minimize the intrusions on their work day, and bring about an efficient close to a rewarding transaction.

 

If you are contemplating the sale of your business please consider contacting your nearest investment banker at Corporate Finance Associates. Find us at www.cfaw.com


Low Cost Loans Got You Feeling Complacent?

By Peter Moore | Feb 19, 2014

Don’t Get Caught in the Coming Interest Rate Updraft

Financial Chart ColorYou’ve heard the experts telling us. Interest rates are going to rise this year. The yield on the Ten Year Treasury (TYT) is already up 100 basis points since early last year.  At just under 2.75% the TYT could hit 4.0% or more by year end.  Why? The Federal Reserve Bank will soon decrease their economic manipulation known as Quantitative Easing by reducing the amount of mortgage backed bonds they’ve been purchasing from the market (thereby artificially pumping cash into the marketplace). At the peak they were buying over $85 billion each month. Over a trillion dollars a year in printed money dumped into the market to keep interest rates down and hopefully spur economic activity. This promotes inflation which is how the Fed pays off its debt with cheaper dollars.

Whether it worked or not is open to debate. What you should be mindful of is the coming increase in the cost of business loans and consumer loans. Increasing those costs will have a dampening effect on the economy in general, and for some businesses a very specific effect. Read more »


Business Owners and CEOs Need To Be Bi-Lingual

By Peter Moore | Jan 21, 2014

Financial Chart ColorBusiness owners and CEOs of small and medium size companies need to be at least bi-lingual to succeed in today’s information rich environment. They need to speak their regular native language – English in most of the U.S. and Canada, and the second language they should know is ACCOUNTING – the language of finance.

Yes, that’s right Accounting is a language. It’s also a system for keeping track of numerous facts and conditions and a method of reporting specific business performance results. More than knowing where to find the bottom-line on an income statement, it’s important for business owners and senior executives, to fully understand their own business the way others not in their business see and evaluate it. Read more »


2014 New Year’s Resolutions – Simple Steps to Achieving Higher Enterprise Values

By Peter Moore | Jan 15, 2014

2014 2Are you tired of the same old New Year’s resolutions for losing weight, dropping your golf handicap, increasing revenues, reaching unrealistic profit metrics, or spending more time with the family?

This year consider a commitment to increasing your company’s enterprise value.  So you might ask “how do I do that?”  Well, there are many ways, and they are unlimited with the creativity you and your employees can bring to bear on the question. Here is a short list to start with.  Really – the possibilities are endless. 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 »


Remembering Steve Jobs

By Peter Moore | Oct 06, 2011

No written history of the United States and the world will be complete without reference to and reverence for Steve Jobs. His visionary creation and leadership of Apple, Inc., his technology innovations and their revolutionary impact on our world, will be felt forever because of Steve Jobs.

His unique ability was to share his vision for creating great products that provided truly satisfying experiences for their users. He never stopped innovating, but rather continued to challenge himself and his colleagues at Apple Inc. to design, develop and deliver a continuous stream of blockbuster products. He set the standards for personal computing, movie animation, telephony, music enjoyment, and elegant design.

What an enormous contribution to mankind. And what a lesson about living your passion for everyone.

For me his greatest contribution was the originality of his ideas, his daring to articulate his own vision and his refusal to let others set his agenda.

Steve Jobs will inspire billions forever. What a legacy!

 

Posted by Peter Moore.