Capital Ideas | Corporate Finance Associates | Newsletter Q4 2014

Capital Ideas for Middle Market Businesses

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

Market Conditions are Driving Company Value Up

By John Hammett, Managing Director
Minneapolis Office
Corporate Finance Associates


Private company owners nearly always focus on the inside attributes of their companies when they think about selling. Do I have a management team that will add value in a sale? Are my margins good? Do I have a problem with customer concentration? How good is my intellectual property? How much growth can I project in the next five years? How good are my control and reporting systems? Are my sales people driving revenue?

These are all good questions, but in fact, at least today, the answers to these questions are not the main driver of the market value of a private company. The most significant question about company value right now is the question that is rarely asked.

The unasked question is: what is the demand for companies from buyers of private companies?

The answer to that question is: in the last ten years, we’ve never seen such a strong sellers’ market. Read more »

Access to Capital - Is There a Private Placement In Your Future?


By Craig Allsopp, Managing Director
Portland Office
Corporate Finance Associates

When sports camera maker GoPro went public over the summer the company sold 8.9 million shares to raise more than $255 million at a price of $28.65 per share.

The company’s stock has nearly tripled in price since, turning early investors and executives into millionaires and providing even more capital to fund growth and expansion.

If only accessing investor money was that easy for most companies.

Ask the CEO who lives down the street and you will probably get a frustrated sigh. The bank will only lend so much, and most other capital sources are simply too hard to find. Read more »

Featured Transaction - CFA Dallas

Source Technology is a leading supplier of measurement while drilling and directional drilling products based in Houston, Texas. Known for overmolded cable assemblies and a wide variety of MWD products, the company has built a terrific reputation by delivering superior products with stellar customer service. After over 20 years in the business, the founder decided it was time to move toward a business exit, but he had several caveats that needed to be met.

Firstly, his sons wanted to stay on and continue to grow the business. Secondly, he was looking for a partner that could not only add value but understood his business culture and would provide for employees, including his sons for years to come. CFA Dallas was called in to help find the perfect partner and through a comprehensive process identified several potential candidates to fill this role.

Winchester Electronics, a portfolio company of Audax, is a company with 8 different brands in various markets, a national sales force, complete back office support and mentorship by seasoned executives. Winchester was the clear choice to partner with Source Technologies and provide the growth platform they were seeking.



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