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A D I F F E R E N T K I N D O F F I R MB U I L T F O R T H E M I D D L E M A R K E T
HELPING YOU FACILITATE LIQUIDITY TRANSACTIONS
February 19, 2020
SECTION I: FIRM SNAPSHOT
SECTION II: MIDDLE MARKET ACTIVITY
SECTION III: THE OPPORTUNITY
SECTION IV: BEST PRACTICES
2
MIDDLE MARKET LEADERSHIP
Top 20 M&A Advisors (<$250mm)Capstone Headwaters has closed over 500 transactions totaling $24 billion in value.
• 29% of our deals are cross-border
• Over 70% of M&A closings have been with strategic acquirers.
• We have active relationships with over 3,000 private equity firms.
• Initial transaction valuations are exceeded 67% of the time.
• The average valuation premium on our deals is 32%.
• We have earned a 96% performance rating from our clients.
60%M&A
Advisory
CSHW is an established market leader – dedicated to the middle market.
88%PrivatelyOwned
Market Focus
$25mm $250mmEnterprise Value
Rank Financial Advisor
1 Capstone Headwaters
2 Raymond James Financial, Inc.
3 Houlihan Lokey, Inc.4 Jefferies LLC
5 Piper Jaffray Cos.
6 KPMG International Coop.
7 William Blair & Co.
8 BDO, LLP
9 Citigroup
10 Robert W. Baird & Co.
11 JPMorgan Chase & Co12 Lazard
13 Evercore, Inc.
14 Canaccord Genuity Group, Inc.
15 Ernst & Young Global Ltd.16 Goldman Sachs & Co.17 Lincoln International LLC
18 Moelis & Co19 Greenhill & Co., Inc.20 Numis Corp. Plc
Source: FactSet, Thomson Reuters & Capstone Headwaters independent research, LTM December 2018 (number of reported deal closings ex. undisclosed transaction values)
3
ENTREPRENEURIAL DNA
} Our growth-oriented commitment to excellence has resulted in broad recognition from leading industry organizations and continuesto fuel extraordinary corporate results.
8Consecutive Firm
of the Year Awards
27Times Named
Firm of the Year
100+Aggregate
Industry Awards
TOP 10Investment Bank
To Work For
TOP 10Most Referred
Investment Bank
17Years of
Proven Results
2Rounds of
Growth Financing
6Strategic M&ATransactions
27%Compound AnnualEmployee Growth
32%Compound AnnualRevenue Growth
2002 2010 201620152014201320122011»acquired Morgan Stanley’smiddle market M&A groupto fuel national expansion
picked up Northeastcorporate restructuringpractice of ACM Capital
merged Sagepoint Advisors,a technology-focused
M&A boutique
expanded internationallywith Grenport Ltd,
London, UK
merged EQV Capital to adda dedicated presence in
the Southeast US
secured a 34 countryglobal alliance asUS member firm
launch ofDebt Advisory Group
2017
acquired Headwatersto solidify middle
market leadership
founded viaAndersen
MBO
2018 2019
launch ofEquity Advisory Group
Launch ofESOP Advisory Group
Our roots align us perfectly with middle market clients and their businesses.
4
BUILT FOR THE MIDDLE MARKET
MINERALS &MINING
FINANCIALSERVICES
INDUSTRY GROUPS
EQUITYPLACEMENTS
SPONSOR COVERAGE
DEBTPLACEMENTS
SELL-SIDEM&A
BUY-SIDEM&A
CORPORATERESTRUCTURING
PERFORMANCEIMPROVEMENT
PEGSOLUTIONS
FAIRNESSOPINIONS
CAPITAL FORMATIONMERGERS & ACQUISITIONS BUSINESS CONSULTING SPECIALTY SERVICES
EDUCATION& TRAINING
HEALTH &MEDICAL
AEROSPACE& DEFENSE
AGRICULTURE& FARMING
BUILDINGPRODUCTS & SERVICES
BUSINESSSERVICES
CONSUMER& RETAIL
ENERGY& POWER
INDUSTRIALTECHNOLOGY
INFRASTRUCTURE FINANCE
INDUSTRIAL &MANUFACTURING
REAL ESTATE
TRANSPORTATION& LOGISTICS
TECHNOLOGYMEDIA & TELECOM
RESEARCH TEAM
We offer a full suite of services to encircle the business owner as “Trusted Advisor”.
5
OUR HOLISTIC APPROACH
TEAM BUILDING(Transaction Expertise)
• Estate Planning• Wealth Management• Investment Banking • Tax & Accounting• Legal & Corporate• Management Team
PREPARATION(Process Pre-Planning)
• Personal & Estate• Optimal Transaction• Targeted Structure• Management Readiness• Financial Readiness• Strategic Planning
REALIZATION(Deal Execution)
• Production• Market Making• Bid Solicitation• Qualified Presentations• Refinement & Selection• Negotiations & Closing
STEWARDSHIP(Asset Management)
• Risk Management• Preservation v. Growth• Cash Flow Needs• Generational Planning• Insurance Strategies• Philanthropic
CAPSTONE HEADWATERS
CLIENT
Accounting Firm
Shareholders & Board Management Team
Tax AdvisorLegal Counsel
Commercial BankWealth Management
The transactions we complete have a dramatic impact on our clients’ lives.
We approach every transaction in a team-based, fully integrated fashion.
6
AWARD WINNING TRANSACTIONS
2019
CORPORATE / STRATEGIC DEAL OF THE YEAR INDUSTRIALS DEAL
OF THE YEAR
2019
CROSS BORDERDEAL OF THE YEAR
2018
USA RECAP DEAL OF THE YEAR
2018
CONSUMER GOODS & SERVICES DEAL OF THE YEAR
2018
USA PRIVATE EQUITY DEAL OF THE YEAR
2018
PRIVATE EQUITY DEAL OF THE YEAR
2018 2018
US CORPORATE M&A DEAL OF THE YEAR
2017
HEALTHCARE & LIFE SCIENCES DEAL OF THE YEAR
CROSS BORDER M&A DEAL OF THE YEAR
2017
CROSS BORDER DEAL OF THE YEAR
2017
GLOBAL INDUSTRIALS DEAL OF THE YEAR
2017
CROSS BORDERDEAL OF THE YEAR
2017
TELECOMMUNICATION SERVICES DEAL OF THE YEAR
2017
MINING & RESOURCES RESTRUCTURING DEAL
OF THE YEAR
2017
M&A DEAL OF THE YEAR
2016
PROFESSIONAL SERVICES DEAL OF THE YEAR
2016
2016 2017
USA DEAL OF THE YEAR
2016
INDUSTRIALS DEAL OF THE YEAR
2016
CONSUMER GOODS DEAL OF THE YEAR
2016
PRIVATE EQUITY DEAL OF THE YEAR
2016
2019
IT DEAL OF THE YEARPRIVATE EQUITY DEAL OF THE YEAR
DIVESTITURE OF THE YEAR
CHAPTER 11 RESTRUCTURING OF THE YEAR
CROSS BORDER DEAL OF THE YEAR
SEGA BIOFUELS
INFORMATION TECHNOLOGYDEAL OF THE YEAR
TELECOMMUNICATION SERVICES DEAL OF THE YEAR
Our clients’ transactions are often recognized in their respective industries.
7
2019
AN ELITE REPUTATION
2019
GLOBAL MID-MARKETS BOUTIQUE INVESTMENT
BANK OF THE YEAR
2019
CROSS BORDER INVESTMENT BANK OF THE YEAR
2018
US - DEBT FINANCING ADVISORY OF THE YEAR
2018
US MIDDLE MARKETS INVESTMENT BANK
OF THE YEAR
2018
US MIDDLE MARKET INVESTMENT BANK
OF THE YEAR
2017
BOUTIQUE RESTURCUTING INVESTMENT BANK OF THE
YEAR
2017
TOP 10 MOST REFERRED INVESTMENT BANKS
2016
INVESTMENT BANK OF THE YEAR
2016
US MIDDLE MARKET INVESTMENT BANK OF THE
YEAR
2016
TOP INVESTMENT BANK TO WORK FOR
2016
OUTSTANDING SELL-SIDE ADVISORY FIRM
2016
US MIDDLE MARKET INVESTMENT BANK OF THE
YEAR
2016
2018
CORPORATE RESTRUCTURING ADVISORY
FIRM OF THE YEAR
INTERNATIONAL INVESTMENT BANKING FIRM
OF THE YEAR
INVESTMENT BANKING FIRM OF THE YEAR
TURNAROUND AWARDS INTERNATIONAL AWARDS
Our reputation affords our clients immediate market credibility and priority access.
SECTION I: FIRM SNAPSHOT
SECTION II: MIDDLE MARKET ACTIVITY
SECTION III: THE OPPORTUNITY
SECTION IV: BEST PRACTICES
9
SUMMARY MARKET CONDITIONS
DEAL FINANCING
Debt multiples are back to their highest levels for over the past 12 years
VALUATIONS
EBITDA multiples in the $100-$250mm range reached historic levels in 2019 with valuations of 10.0x EBITDA
PE M&A
Building on momentum in 2018, PE firms executed 2,684 transactions in 2019, a slight decline year-over-year
PE EXITS
PE exits in the middle market remain lower year-over-year with 904 exits in 2019 compared to 1,240 in 2018
PE FUNDRAISING
PE fundraising increased to $310 billion in 2019, eclipsing record levels and increasing nearly 58% year-over-year
PUBLIC MARKETS
Public markets tested all-time highs throughout 2019 with the S&P 500 returning 31.5% in the midst of historically low cost of capital
DEAL VOLUME
Transaction volume in 2019 increased 10.3% year-over-year, recording 14,988 deals
FOREIGN M&A
Foreign buyers increased nearly 21% year-over-year, following a year of historically low acquisitions among foreign companies in 2018
STRATEGIC M&A
Acquisitions among private companies increased 10.2% year-over-year in 2019 and total deal value rose to $79.3 billion
Market conditions remain favorable for private business owners seeking liquidity.
10
AN IMPORTANT HISTORICAL PERSPECTIVE
} The number of completed transactions in 2019 reached 14,988 compared to 13,588 transactions in 2018.
} The market remains stable, supported by strong M&A fundamentals, favorable business owner demographics, and the persistence of the U.S. economic bull market.
} The average transaction value reached $61.7 million in 2019 and remains well above the historic average.
Middle Market Transactions
Source: Capital IQEnterprise Value < $500mm
MM M&A activity remains robust and near record highs.
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$ in
mill
ions
Tran
sact
ions
Transactions (Undisclosed Value) Transactions (Disclosed Value) Average Value
2012 Reference Point
>15%
11
VALUATION TRENDS
Middle Market Transactions
Source: Capital IQIncludes multiples 3x-16x
Enterprise Value < $500mm
9.3x
7.6x
8.6x9.0x
8.6x 8.7x9.2x
8.1x
8.8x 8.8x9.0x 8.9x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
10.0x
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ente
rpris
e Va
lue
/ EBI
TDA
MM valuations (in most sectors) are at/near all-time highs.
} Valuations have normalized slightly, but this has placed a higher premium on growth-oriented companies with recurring revenues.
} As we move to a risk-sensitive buyer market, we are seeing more “deal structure”.
12
SECTOR ACTIVITY
LTM EBITDA Multiples by Sector LTM Transactions by Sector
Source: Capital IQLTM ended 12/31/19
Includes multiples 3x-16xEnterprise Value < $500mm
10.4x
9.5x
7.4x
8.4x7.9x
8.3x
9.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
ConsumerDiscretionary
ConsumerStaples
Energy Healthcare Industrials InformationTechnology
Materials
Ente
rpris
e Va
lue
/ EBI
TDA
1,791
514 360
1,538
2,703
1,839
466
0
500
1,000
1,500
2,000
2,500
3,000
ConsumerDiscretionary
ConsumerStaples
Energy Healthcare Industrials InformationTechnology
Materials
Tran
sact
ions
} The Industrials, IT/TMT and Consumer Discretionary sectors have been the most active..} Companies with differentiated business models are in high demand, regardless of sector.
The manufacturing rebound was followed by a consumer rebound.
13
SIZE PREMIUMS (OR NOT?)
Average Enterprise Value to EBITDA Multiples
Source: Capital IQIncludes multiples 3x-16x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ente
rpris
e Va
lue
/ EBI
TDA
Enterprise Value $10-100mm Enterprise Value $100 -250mm Enterprise Value $250 -500mm
} Larger companies command higher multiples (scale, market share, debt, etc.).
} In 2019, there was a shift to the $100-250mm market segment, achieving its highest EBITDA multiples in over a decade.
MM is surging – we are seeing a market anomaly presently.
YUGE!
14
LEVERAGE TRENDS
} The availability of debt along with low interest rates continue to facilitate transactions.
} Debt multiples in Q3 2019 approached the all-time high attained in 2017, reflecting an abundance of available and affordable financing.
Source: GF Data®Includes multiples 3x-15x
Enterprise Value $10mm-$250mm
Average Debt Multiples of Middle Market LBO Transactions
3.7x
3.3x
2.9x 3.0x
3.4x 3.5x 3.4x3.7x
4.0x 3.9x4.2x
3.9x3.7x
4.1x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
4.5x
5.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 '18 Q3 '19
Tota
l Deb
t / E
BITD
A
Cheap debt capital continues to add fuel to the fire, the leverage is creeping up.
>10%
15
STRATEGIC ACQUIRER ACTIVITY
Source: Capital IQEnterprise Value < $500mm
Acquisitions by Private Companies Acquisitions by Public Companies
$0
$20
$40
$60
$80
$100
$120
$140
0
2,000
4,000
6,000
8,000
10,000
12,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
($ in
mill
ions
)
Tran
sact
ions
Transactions (Undisclosed Value) Transactions (Disclosed Value) Average Value
$0
$20
$40
$60
$80
$100
$120
$140
0
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
($ in
mill
ions
)
Tran
sact
ions
Transactions (Undisclosed Value) Transactions (Disclosed Value) Average Value
} Total number of acquisitions by private companies increased for 2019 but the average value declined.
} Total number of acquisitions by public companies declined in 2019 but the average value above the historic average of $65mm
Strategics are active – with a new universe of potential buyers (private PE-backed).
>25%
>(15%)
16
PE ACTIVITY
Source: PitchBookNote: Pitchbook changed methodology to only include buyout deals as of Q3 2017. All data reflects new methodology.
Middle Market Transactions Closed by
Private Equity Firms
746
1,281
1,530
1,821
1,596
2,116 2,105 2,1752,358
2,729 2,684
0
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Tran
sact
ions
$99
$61$75
$99
$164$180
$147
$221$242
$197
$310
0
50
100
150
200
250
300
$0
$50
$100
$150
$200
$250
$300
$350
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
PE Fundrais ing ($B) Fund Count
$ in
Bill
ions
Fund
Cou
nt
Middle Market Fundraising by Private Equity Firms
} Closed transactions for PE Firms remain well above historic averages
} PE fundraising increased over 57% from 2018-2019
Sponsors are losing market share … to strategics and themselves!
57%
17
PE VALUATIONS & CONTRIBUTIONS
} A shortage of quality targets, competition, and an abundance of available debt financing have driven valuations.
} The average equity contribution in Q3 2019 was 45.9%.
Source: Source: GF Data®Includes multiples 3x-15x
Enterprise Value $10mm-$250mm
EBITDA Multiples Paid by Financial Buyers Average Middle Market LBO Equity Contribution
6.4x 6.3x6.5x 6.4x
6.7x 6.7x
7.3x 7.2x 7.1x7.4x
4.0x
4.5x
5.0x
5.5x
6.0x
6.5x
7.0x
7.5x
8.0x
8.5x
9.0x
2011 2012 2013 2014 2015 2016 2017 2018 Q3 '18 Q3 '19
Ente
rpris
e Va
lue
/ EBI
TDA
49.6%46.6%
49.8%45.6%
42.8%44.8% 44.7%
48.6% 50.3%
45.9%
0%
10%
20%
30%
40%
50%
60%
2011 2012 2013 2014 2015 2016 2017 2018 Q3 '18 Q3 '19
Equi
ty C
ontr
ibut
ion
Due to competitive pressures, PE valuations are at historic levels.
4%
>17%
18
FOREIGN ACQUIRER ACTIVITY
Source: Capital IQEnterprise Value < $500mm
Acquisitions by Non-U.S. Buyers
Perc
enta
ge o
f Tra
nsac
tions
0%
5%
10%
15%
20%
25%
30%
0
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Tran
sact
ions
Transactions with Non-U.S. Buyers Non-U.S. Buyers as % of Total Transactions
} Foreign acquisitions increased 21% year-over-year.
} Foreign buyers have targeted mid-sized acquisitions to develop a U.S. footprint and to globally leverage combined products and expertise.
We have seen a recent rebound in foreign buyers active in US deals.
21%
19
2020 MM M&A OUTLOOK
CORONAVIRUSSUPPLY CHAIN DISRUPTION
EUROPEAN INSTABILITYPOLITICAL UNCERTAINTYEQUITY CAPITAL BACKLOG
LOW COST OF LEVERAGEEXTENDED MARKET RUN/RECORDS
RECORD LEVEL VALUATIONSAGING BUSINESS OWNERS
Crystal Ball – Market fundamentals favor the bull (for the time being anyway).
SECTION I: FIRM SNAPSHOT
SECTION II: MIDDLE MARKET ACTIVITY
SECTION III: THE OPPORTUNITY
SECTION IV: BEST PRACTICES
21
THE OPPORTUNITY
The Transition Wave 2016-2025
45 55 65
5% 70%
25%
CEO’s Age in 2016
Baby Boomers
Source: Headwaters Research
} Four million privately-held businesses stand to change hands over the next two decades as baby boomers, the largest group of owners of these companies, continue to retire.
} There is a massive opportunity to convert corporate assets into liquid assets.
} Companies will either have to decide to transition their companies to the next generation of owners/executives or to monetize their ownership.
A tremendous opportunity for the private wealth management industry.
22
Source: VIP Forum analysis of the Federal Reserve’s Survey of Consumer Finances.
-$ 5.0
$5.0
$15.0
$25.0
$35.0
$45.0
$55.0
$65.0
$75.0
$85.0
$95.0
$1 - $10 $10 - $25 $25 - $50 $50+
$ in
mill
ions
Financial Assets Business Assets Non-Financial Assets
$2.5
$14
$31
$91
76%
69%
59%38%
Between 40% to 80% of a business owner’s wealth is tied up in the company.
POTENTIAL NEW AUM
Unplanned exits result in steep value losses for the founders.
~75% of business owners do not have an exit plan in place.
23
KEY EXIT DECISION DRIVERS
Structural changesDisintermediationCommodification
Policy changesRegulatory riskMarket conditions
Cash flow needsCapital needs
Key employee risksKey customer risks
Cost issuesCompetitive pressures
Inability to address opportunity
Age & HealthFamily IssuesLiquidityDiversificationEstate PlanningPartner conflictUnsolicited offer
Personal Business
IndustryEnvironment
The alignment of various factors ultimately drives exit decisions.
24
LIQUIDTY – ONE SIZE DOES NOT FIT ALL
Liquidity can be accomplished in several ways depending on owner objectives.
100% SALEsale to strategic
MAJORITY SALEmajority sale (70-80%)
ESOP / MBOemployee ownership
MINORITY SALEminority sale (<50%)
DEBT RECAPliquidity via debt
Liquidity Complexity Autonomy
ü Potentially the highest valuationü Provides the most liquidityü Strategic fit
ü Provides liquidity for ownersü Flexible ownership structureü “Second Bite of the Apple”
ü Provides some liquidity for ownersü Typically used for growth capitalü Current owner remains in control
ü Some liquidityü Employee utopiaü Augments transition plans
PROS
O Current owners give up controlO Potential for layoffs and disruptionO Integration issues
O Owners answer to boardO Partner may add little valueO Adds leverage to the company
O Additional debt on balance sheetO New investors take Board seat(s)O Restrictive covenants common
O Limits alternatives down the roadO Report to Trustee of ESOPO No/limited fresh capital. All debt
CONS
ü Least disruptive to businessü Current owner remains in controlü Faster and simpler to execute
O Additional debt on balance sheetO Provides less liquidity for ownersO Restrictive covenants common
2525
PHASE 1PREPARATION
PHASE 2MARKETING
PHASE 3QUALIFICATION
PHASE 4SELECTION
PHASE 5NEGOTIATION
PHASE 6CLOSING
Activities:
Information Request ListMemorandum and TeaserTarget List and NDA
Quality of Earnings
Objectives:
Precise PositioningMarket StrategyMarket Readiness
Hurdles:Availability
TimelinessCommitment
Activities:
Contact TargetsDistribute MemorandumAddress Questions
Objectives:
Broad AccessConfidentialityMarket Education
Hurdles:Market Timing
Internal FocusMoving the Needle
Activities:
Preliminary IndicationsParticipant QualificationCompany Presentation
Objectives:
Valuation GuidanceParticipant SeparationTeam Rehearsal
Hurdles:Financing Environment
Clarity of GoalsTeam Readiness
Activities:
Site VisitsAdditional InformationLetter of Intent
Objectives:
Company ShowcaseValue DefensePricing Competition
Hurdles:Financial Performance
Mgmt. PerformanceTimeline Sync
Activities:
Data RoomSite VisitsQuestion Responses
Objectives:
Total AccessValue DefenseFinancing
Hurdles:Volume
DistractionSpeed
Activities:
Purchase AgreementDisclosure SchedulesRelated Contracts
Objectives:
Final DiligenceValue PreservationRisk Management
Hurdles:Surprises
PerformanceReserve
THE DEAL PROCESS
Transactions are hard work and take 6 to 9+ months to complete.
262626
IT TAKES A VILLAGE
Trust & Estate
Wealth Mgmt.
Co. Lawyer
M&A Lawyer
Acctg.Tax Advisor
M&A Advisor
OptimalSuccess
Construction of the requisite team is critical to transaction success.
SECTION I: FIRM SNAPSHOT
SECTION II: MIDDLE MARKET ACTIVITY
SECTION III: THE OPPORTUNITY
SECTION IV: BEST PRACTICES
28
START A CONVERSATION (IBC = ROI)
Private owners can get the same coverage as their public counterparts.
IBC
PERecap
DebtFinancing
EquityFinancing
ESOPAdvisory
StrategicSale
AcquisitionAdvisory
BoardAdvisory
StrategicPlanning
IndustryResearch
TransactionInsights
4MM transactions tend to be more event-driven without long-term, dedicated coverage services that add strategic value and critical market insights.
4You can offer “IBC-As-A-Service” and establish a major differentiator, offering full lifecycle benefits tailored specifically for the private business owner.
• Dedicated industry team
• Access to research & industry trends
• Insights transactions & valuations
• Transaction planning
• Board advisory & valuations
• Capital markets access
29
INTEGRATE THE PRE-PLANNING
Asset capture is ensured when WM teams are integrated into the process.
4 Help define exit timing and other 'life' goals
4 Analyze post-retirement cash flow needs
4 Wealth management planning to ensure exit supports personal and financial goals
4 With client’s accountants, estimate after-tax proceeds & identify tax strategies
4 Establish trusts and other wealth-transfer vehicles to minimize taxes related to the exit
4 Incorporate the business sale into estate and philanthropic planning
4 Estimate business value; identify strategies to enhance value and prepare for transition
4 Analyze what the business would need to meet owner’s valuation goals
4 Analyze the pros & cons of various transaction alternatives compared to owner’s goals
4 Perform preliminary due diligence to uncover 'thorny' issues or missing documentation
4 Provide valuation and activity trends in the equity and M&A markets in their industry
4 Provide periodic updates: industry, market and valuation trends related to the business
WELATH PLANNING(Provided by Financial Advisor)
BUSINESS PLANNING(Provided by Investment Banker)
30
EMBRACE THE PAIN – ITS A HARD BUSINESS
2019 ACTIVITY REVIEW FREQUENT CHALLENGES
580 Companies Reviewed
52 Selected for Corporate Finance
Assignments
Closings?
ê Companies are not prepared
• Key person challenges
• Corporate governance not in place
• Books are not ready
ê Missed Projections
• Keep running your business
ê Emotional Fortitude
• Work with a full team of professionals
• Market is great, therefore very challenging
Its volume-based blocking & tackling, with lots of challenges – just keep pounding.
31
I want people I can trust … a team I like … a firm that understands what
I need …
I want someone who knows my industry … is connected to the trends & key players …
I want a firm with presence … deep capabilities with the reach I deserve …
Personal FitTRUST
Senior Attention
Industry FocusEXPERTISE
Market Insight
Domestic/LocalSCALE
International
Brand StrengthTRACK RECORD
Reputation
I want proven results … a firm that will deliver a successful outcome … a brand that matters …
HELP SELECT THE RIGHT IB FIRM
ì VALUE ì SPEED ì PROBABILITY OF CLOSE
Helping your client select the right IB is mission critical (if not us J).
32
GET SMART ON VALUATION
} Financial Momentum
} Large Market Size
} Competitive Barriers to Entry
} Diversified Customer Base
} Industry Sector Dynamics
} Market Share & Brand Reputation
} Key Differentiators
} Sustainability & Recurring Revenue
} IP Position
} Long-Term Growth Plan
} Acquisition History
} Management Team
} Customer Concentration
} Inconsistent Financial Performance
} Legal/Industry Risk Exposure
} Lack of Management Depth
} Weak Financial Controls
} Sector Cyclicality
} Governance Issues
} Contingent Liabilities
} Non-Compelling Growth Strategy
} (No growth strategy)
} Key Man/Woman Exit Plans
} Low Defensibility
Help your clients understand their valuation and manage expectations.
33
WRAP UP
} The demographics at work in the US will likely overpower any short term market movements – this is a significant, once in a lifetime, opportunity.
} Have the conversation with your business owner clients.
} We can be your Investment Banking support team.
} We believe that we can help you both serve your clients as part of your overall solution.
} We are the US leader in working with partners, lets share information and best practices.
} We can promise high levels of responsiveness and unbiased advice to your clients.
CONTACTS
DANIEL MCBROOM
Co-Head of Investment Banking Services
Phone: 303.951.7128
JOHN FERRARA
Founder & CEO
Phone: 617.619.3325
We see tremendous opportunity to work together with EPI members.