Blog

Selling Your Company To Management

Business owners often overlook selling their company to management as a possible exit strategy. But for solid companies with good cash flows, selling your company to management may yield a higher financial value for the owner and a much brighter future for the business, management, and the seller. Our latest white paper titled, “Sell Your Company To Management: How Selling Your Company To Management Can Be A Smart Exit Strategy”, was recently published on CFO.com. The white paper discusses the benefits of the strategy of selling the company to management, and illustrates it with an example of a company that […]

Partner Buyout: An Opportunistic Way To Build More Equity Value

Partner Buyout: An Opportunistic Way to Build More Equity Value.  Management Buyout and Leveraged Buyouts financing processes can be orchestrated in the same way in order to help individuals buyout a partner or majority owner of a business.  Partner buyouts can be financed on an all debt basis because the partner already has some equity in the business and this equity can be leveraged as the security in the business. Even during this sluggish economy, some of our clients positioned themselves to build much greater business and equity value by buying out other owners or buying out partners.  While some of these opportunities came about because owners […]

Focus on Growing Cash Flows Not Just Revenue

Several entrepreneurs with fast growing businesses told me they have recently made cost reductions in response to slowing business and the economy. One business owner told me, he and his CEO cut $600,000 of annual expense from their operating budget in 45 minutes! The more interesting thing was they all also said, “I wish I had done this two years ago. We don’t even notice the impact of the cuts.” Why this happens: Entrepreneurs particularly of fast growing companies often get overly fixated on revenue growth. Its understandable, why this happens. Revenue is easy to measure and its common sense […]

Shaken Economy Creates Management Buyout Opportunities

Management Buyout Opportunities: In a shaky economy a logical strategy for management is to focus on just hanging on to the business you have. For proactive management teams and owners it can be a time to reconfigure the business or ownership in order to realize in greater benefits in the future. Such is probably the case in recently announced buyout of Landry’s Seafood (NSYE: LDY). Looking at the proposed buyout terms, which include buying out all the outstanding shareholders at $21 per share and assuming $885 million of debt, the most interesting aspect is the upside for the future majority […]

Creative But Little Known Source Of Debt Financing

High Growth companies (Gazelles) looking for financing often don’t realize they may be able to finance their company with various forms of creative debt structures. This however is rarely debt you would find at your local bank. These more exotic forms of debt are provided in the capital markets by a whole variety of specialty lenders. These lenders may include hedge funds, insurance companies, SBICs, DBCs, special assets lenders, and many others. Few entrepreneurs know these groups because their marketing dollars are spent on private equity and buyout firms not entrepreneurs. Why? Because private equity represents serial customers. Unlike your […]

The New Get Rich Scheme: No Money Down!

I recently got a call from two people writing a book about buying companies and doing it with no money down. They wanted me to help people that read their book, do exactly that. After talking to them I looked around on the web and found several (paid) ads selling this same system either through an online course or book. To me this is the same old gimmick as the ‘no money down’ real estate schemes. I admit I have not bought any of these materials, but I believe my instincts that like any other get rich fast scheme, the […]

High Growth Companies In A Slow Growth Industry

One of our clients is a fast growing market research firm. They received an industry report from one of the gurus of the industry. Overall, revenues for leading market research companies were down slightly in 2008 and contracted by 1%. More interesting to us, was there were three companies that grew by over 30% growth during 2008! That finding is a constant reminder that innovative companies can often grow at significant rates while the rest of the industry is flat or contracting. (See other posts under this label and you will see similar insights on high growth businesses and their […]

Find A Financial Institution That Treasures Your Company

Working with clients, talking with bankers and everyone in between – the themes are all the same. Financings are getting done but deals need to be airtight. The WSJ journal reported an article about KKR’s buyout of Oriental brewing. It notes two things that are common and recurring themes: 1) Banks are providing capital at lower leverage multiples (which means the amount of debt relative to cash flow is down) and 2) only good or ‘airtight’ deals are getting done. What’s interesting not a good opportunity for one bank may be ‘airtight’ for another. As an example, I’ve been told […]

Banks Getting Tought On Line Of Credit Provisions

Working with clients, talking with bankers and everyone in between – the themes are all the same. Financings are getting done but deals need to be airtight. The WSJ journal reported an article about KKR’s buyout of Oriental brewing. It notes two things that are common and recurring themes: 1) Banks are providing capital at lower leverage multiples (which means the amount of debt relative to cash flow is down) and 2) only good or ‘airtight’ deals are getting done. What’s interesting not a good opportunity for one bank may be ‘airtight’ for another. As an example, I’ve been told […]