Corporate Financial Planning: The Value of a Process Change

Corporate Financial Planning: The Value of a Business Process Change The Value of a Business Process Change: When thinking about strategies that significantly increase enterprise value, our minds tend to immediately think of strategies that grow revenues like adding a new product, investing more in sales resources or acquiring another business. One strategy that often gets overlooked is implementing a business process change. However, since most companies are valued based on a multiple of cash flow not revenues, finding ways to improve existing business processes can lead to significant growth in enterprise value. Here’s are some added reasons why a business process […]

Another Exit Planning Option: Sell To Management

Internal Management Buyout: Another Exit Planning Option: Sell to Management The one exit planning strategy that most often gets overlooked is an internal management buyout but it’s an approach that has several advantages that owners should seriously consider. This post is a very short explanation of 1) how an internal management buyout works, 2) who an internal management buyout works best for, 3) benefits and 4) initial planning steps for those considering it. How an Internal Management Buyout works  In an internal management buyout the company borrows capital typically from bank or non-bank lenders that is then paid to the […]

Growing by Acquisition: A key factor that drives successful acquisitions

Growing By Acquisiton: A Key Factor That Drives Successful Acquisitions. When targeting an acquisition it’s pretty easy to get lost in the numbers.  After all, financial analysis is critical for acquisition financing, valuing the acquisition and seeing how the Company can add financial or enterprise value to the current business.   When considering growing by acquisition, a harder question to assess is whether the acquisition is likely to successful in the long run.  A study*(see link below) done by PriceWaterhouseCoopers found that those acquisitions that provided a capability or strategic fit created on average 14% more value than those that […]

What’s Your Available Cash? An important, overlooked Financial Key Performance Indicator (KPI)

Available Cash: What’s Your Available Cash?  An important, overlooked FINANCIAL KPI (Key Performance Indicator) Available Cash?  I recently got asked by a CFO a question, I thought worth sharing. “How much cash should we maintain on our balance sheet in our business’?  I believe its good for companies to have ‘available cash’ of a minimum of two months of operating expenses but ideally up to six months.  Here’s a look at that formula and why’s its important.  The formula for calculating “Available Cash” is as follows: Available Cash = (Cash + additional borrowing capacity) / Monthly operating expenses Defined as: […]

Leveraged Buyout Single Buyer – Get Quality Financial Projections!

Leveraged Buyout Single Buyer – Management Buyout Consulting Leveraged Buyout Single Buyer:  Provide Multi-Year Financial Projections: Owners of growing companies often get approached by prospective buyers, even when they are not looking to sell. Suddenly, they are faced with a leveraged buyout from a single buyer. But owners that engage in those discussions, often face a challenge as the talks intensify. The challenge is they are talking to a single potential buyer, so they can’t use competition (i.e. interest from multiple bidders) as a way to drive up the Company’s price during negotiation.  One way to create leverage in those situations […]

Determining Value Early On is a Good Idea for Business Partners

Partner Buyout:  Determining Value Early On is a Good Idea for Business Partners I was recently asked if I could help a company develop a valuation methodology for their business so that if one partner wanted to buyout the other, they would already have an agreed up on formula valuing the business.     Two weeks later I got a different call from another owner asking for the name of a valuation consultant because one partner had died and they needed to get a valuation to figure out the value of the Company.  The spouse of the deceased partner was getting […]

What’s your EBITDA?

What’s your EBITDA? When I give speeches I like to wrap up the presentation by doing a group exercise where the participants have to look at a simple set of financial statements and calculate a Company’s EBITDA (earnings before taxes depreciation and amortization). This is the most commonly used financial short hand for understanding the operating cash flows a company generates. What’s interesting is many business owners and CEOs have a tough time calculating EBITDA. Many go back through their the notes from my presentation to look up the formula. What this tells me is many owners and CEOs of […]

How Do You and Your Team Use Corporate Financial Planning?

Corporate Financial Planning:  How Do You and Your Team Use Corporate Financial Planning?   Do you have a financial planning process that improves your business planning process?  There are numerous ways to apply corporate financial planning to drive more growth and value in your business. If you want help or ideas about that, give us a call.  We’d be happy to share with you some effective planning techniques and/or help you implement them. Corporate Financial Planning Management Buyouts Lantern Capital Advisors helps growing companies find the financing solutions to fund management buyouts while keeping management in control and preserve and/or […]

Financing Challenges: How We Helped a Client Buy His Division From The Owner

Management Buyout Financing Challenges:  How Lantern Capital Advisors helped a client buy his division from the owner. Situation:  A divisional manager wanted to buy his division from the owner who was having financing challenges with the bank. How Lantern Capital Advisors helped execute the management buyout: Lantern helped the manager negotiate the purchase price and terms of the management buyout and secure $7 million to finance it (management buyout financing).  As part of the transaction, this division was spun out into a separate entity.  The manager invested $200,000 and received a 25% ownership stake in the new Company.   If the […]

Growth and Liquidity Financing: How We Helped a Client Fund Faster Growth and Take Capital Out of Business

Growth Capital and Liquidity Financing:  How Lantern Capital Advisors helped a client fund faster growth and take capital out of the business. Situation:  Owners of a growing software and services company were interested to explore financing alternatives to fund faster growth as well as take capital out of the business. How Lantern Capital Advisors helped secure growth capital financing:  Lantern helped the company secure a variety of financing alternatives that ranged from bank debt financing of $3 million (without personal guarantees) to a variety of specialty debt and equity financing solutions that ranged from $5 million to $25 million. What our […]