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Exit and Growth Strategies for Middle Market Businesses

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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.

 


Accessing Growth Capital – An Alternative Source

By Peter Moore | Sep 19, 2011

In the best of times it’s still challenging to access growth capital for small and lower middle market sized companies.  Other than bank loans and economic development agencies there are few substantial sources of organized capital available for early and growth stage companies. However, some often overlooked sources of funding are the investment accounts of Self-Directed IRA and 401(K) retirement accounts.

Nest EggMillions of Americans hold hundreds of billions of dollars in their IRA and 401(K) plan accounts. Many are disappointed in the performance and seek alternatives to try and improve on their results as they continue to fund these accounts with regular periodic contributions.

Under the IRS tax code certain private investment transactions are permitted within the investment guidelines for IRA and 401(K) retirement plan accounts. (See you tax and retirement specialist for details) They include private equity investments, commercial real estate, loans to businesses and much more. Read more »


Capital For Business

By Peter Moore | Sep 06, 2011

It’s Always About Access to Capital

Whether you are a start-up entrepreneur, a growth oriented middle market company CEO, or a seasoned company owner seeking an exit sale to ride off into your retirement sunset – access to capital for business is and should be a topic about which business owners will be rewarded for maintaining a regular and up to date awareness.

Money LendingThe struggling start-up entrepreneur is generally forced to cobble together his own personal resources, those from willing friends and family, a helpful angel investor or two,  a few economic development agency grants and Venture Capital funding for those “lucky”  1% or 2% who are deemed worthy. It’s a tough environment, even in the best of situations, and most hope that their success allows them to never look back at raising capital. Read more »


Mergers & Acquisitions in an Uncertain Market

By Peter Moore | Aug 09, 2011

The stock market plunge yesterday is another clear indication that financial markets abhor uncertainty. Whether unchecked growth of government debt or unresolved corporate and personal federal tax policy, each of these, together with their European counterparts, have contributed greatly to yesterday’s  market Money Graphreaction. Unfortunately, the Federal Government’s tortured decision making of the last few months is expected to persist..

However, the Middle Market and Lower Middle Market for M&A remain strong and robust.  There continues to be clear signs that bank credit and private equity availability, as well as corporate acquisition appetites, are strong and supported by substantial available liquidity. These capital providers remain eager to commit to quality deals for well run U.S. companies.

So, in spite of the side show in Washington and on Wall Street, Main Street USA is alive and well and deals are getting done at a robust rate.  And while there might be some hesitation, the dynamics for a strong M&A market remain constant and will most likely improve as investors move away from public markets as they grapple with further adjustments.

Comments or questions are welcome and I’ll be happy to respond accordingly.

Posted by Peter Moore.

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Exit Strategy for Businesses

By Peter Moore | Mar 29, 2011

Successfully Finding Your Path to Life-After-Business

As investment bankers working with clients to develop their business exit strategy we deal with a whole constellation of their specialized advisors.  These include estate planning attorneys, tax accountants, investment advisors, insurance advisors, business attorneys and more. Together this group of trusted individuals will help our client to articulate a plan for achieving their financial goals through an orderly ownership transition. We will help the client minimize the impact of taxes, market the company to internal or third party buyers and ensure the continuity of value during the time it takes to complete. 

We have a process for doing this and it works very well. However, one ingredient that sometimes keeps business owners from moving forward with these best laid plans is a compelling personal vision for life in the second half of adulthood.

Bob Buford, author of Half Time, writes about shifting your game plan “from success to significance”.  By rediscovering a new purpose, joy and balance, entrepreneurs and business executives can use their talents and resources to make a new difference in the world.

Before pulling the trigger to sell their company, business owners need to have their own picture of a compelling future.  They need to articulate a vision for what they are going to do with their life after selling the business they have spent decades nurturing, growing and using to form their identity, reputation and financial success.  The decision to sell is every bit an emotional one as a financial one.

With a carefully thought out plan, Buford asserts, comes new excitement, a new passion forms and a clear purpose and focus draws them to make the change.  In Half Time, Buford helps people define a compelling, joyful and sustainable Plan B for life-after-business.  It’s about finding new purpose for the second half of life.

Whether you want to buy or start another business, pursue philanthropy, run a foundation, teach, coach or commit to something more than a lower golf handicap, check out Bob Buford’s book Half Time.  You’ll enjoy the conversation starters to help you formulate your own compelling and rewarding second half to your life. 

Posted by Peter Moore.