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Capital Ideas for Private Business

Welcome to this issue of Capital Ideas, our newsletter dedicated to business selling, business buying and financial resources for mid-market companies.

It’s What You Keep That Matters

Funding Retirement Goals

By Roy T. George, Vice President
Bernstein Global Wealth
& Jeff Johnson, Managing Principal
Northern California Office, Corporate Finance Associates

It is not necessarily what you get for your business; it is what you get to keep. Without proper advance planning, the after-tax proceeds from the sale of a business may be far less than the owner’s expectation and may not support the retirement life-style anticipated by the seller. When asked by us how much the business is worth, it is not unusual for the owner to tell us what they need to retire. Further discussions reveal that the business may be worth less than what is needed to fund that retirement goal

Smart estate planning can contribute to closing the gap between the owner’s retirement goals and the value of the business. Doing so enables one to significantly reduce the taxes paid to the IRS and therefore enhance the value of the deal.

One estate-planning technique that can be used... Read more »


Business Ownership & Real Financial Freedom

The Buzz That Nobody Talks About

By Jay Carter, Principal
Charlotte Office, Corporate Finance Associates

My clients depend on me to provide sound advice when they’re considering business ownership. I ask them all the same simple question: “Why do you want to be a business owner?” They excitedly rattle off their list of reasons, which typically include:

  • "I want to be my own boss."
  • "I want to be accountable only to myself."
  • "I want to pursue a field about which I am passionate."
  • "I want to increase my income."
  • "I want to have a more flexible work schedule."
  • "I want to see the results of my own hard work."

There are variations on this list, but the principles are the same. However, for all but a very few of my clients, the single most important objective is one that almost always goes unstated (and even unrecognized) until late in their careers and that is Real Financial Freedom for themselves and their families.

I define Real Financial Freedom as “the freedom to spend the rest of your life doing whatever you choose, without having to worry about your financial security.” Real Financial Freedom is achieved when your diversified base of investment assets reaches your pre-determined target... Read more »


Feature Capital Placement

Situation: Portland, Maine is home to several colleges, yet most feature limited housing. Rockport, Maine based developer Joseph M. Cloutier saw a need for a high-end apartment complex aimed specifically at the city’s 15,000 college student population. He asked CFA to arrange financing for the 100 suite complex designed to house 400 students. Bayside Village will meet the needs of students’ busy schedules, with amenities like sheltered parking, wireless internet, a fitness room, and bicycle storage.

Solution: Corporate Finance Associates designed a multi-layered capital structure including development stage funding, construction financing, term debt, and municipal tax increment financing totaling $26mm through a combination of short term investors, private equity, and bank financing timed to meet the projects funding milestones.


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