What Drives Up Multiples in Enterprise Value?

Corporate Financial Planning: What Drives up Multiples?  Last newsletter, I provided a short (as I could) explanation of how to calculate enterprise value (EV) and why EV is an important topic for internal planning, valuing private company acquisitions, management buyouts and partner buyouts. A common follow-up question I get related to EV is What factors can drive up the multiples used in the enterprise valuation calculation? I will try to try to briefly tackle that question.  Key Reminder  Before we get to far down the road, its important to remember actual selling price and enterprise value are two different things. Selling price is an actual value a willing buyer […]

Using Capital To Grow Your Business As Featured On Texas Business Radio

Using Capital To Grow Your Business  As Featured on Texas Business Radio Texas Business Radio Featured Chris Risey, President of Lantern Capital Advisors as part of their national advisor showcase to discuss how entrepreneurs are using capital to grow their business.  Lantern Capital Advisors helps clients understand their options and match their financing needs as it relates to raising capital. Here is the transcript: Matt Register: Hey Guys, welcome to the show, Texas Business Radio. Texasbusinessradio.com is the Web site. We’re to a section we like to call National Adviser Showcase. There are a lot of really smart guys coming to […]

10 Strategies To Raise Capital Effectively

Attached is a link to a popular article Lantern Advisors posted with CFO.com.  It is most relevant to entrepreneurs and CFOs of high growth companies that have already achieved some level of success and are considering a capital raise as part of an effort to substantially grow the value of their business (and equity.)  For example, this is highly relevant to any profitable, $10 million revenue business that has the potential (with additional capital) to reach or exceed $100 million in revenue. This article address the key components contributing to a successful capital raise, such as a quality business plan, understanding of financing alternatives and how creating competition between potential investors can improve the pricing and terms […]

How To Get Funding Sources Interested In Your Business

How To Get Funding Sources Interested In Your Business Entrepreneurs have great ideas, and know how to execute the idea.  Typically they are visionaries, and excel at articulating their business proposition, know who they are going to go after, and can sell their product to those that have a need for what they’ve got.  Entrepreneurs are the most interesting people to work with, because they are the ones in the room what weren’t afraid to explore what was out there, to try something different outside of how everyone else was doing it, and are constantly soaking up information to transform […]

Smart Money Doesn’t Ensure Success

VCs are often called ‘smart money,’ because they are more selective about investments than the average angel investor or friends/family member. However, that doesn’t mean everything they touch turns to gold. A 2009 WSJ article listed companies that raised substantial sums of money only to fail in a fairly short period of time thereafter. Equally disturbing the brief article mentions that several had raised so many rounds of financing, the original owners lost control of the business. To me, the reminder is that business owners of promising companies should always do a “gut check” on the likelihood of success on […]

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 […]

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 […]

10 Strategies To Raise Capital Effectively

Below is a link to a popular article Lantern Advisors posted with CFO.com. It is most relevant to entrepreneurs and CFOs of high growth companies that have already achieved some level of success and are considering a capital raise as part of an effort to substantially grow the value of their business (and equity.) For example, this is highly relevant to any profitable, $10 million revenue business that has the potential (with additional capital) to reach or exceed $100 million in revenue. This article address the key components contributing to a successful capital raise, such as a quality business plan, […]

Capital Shortage? Hardly

In the midst of this credit freeze, I am routinely always asked, “Is there ANY one out there funding growing businesses?” My answer is, “of course!” Just like Warren Buffet is spreading his money around, the same can be said for SOME investors and specialty lenders and senior lenders. For every banker that is posting his resume to Monster.com, there’s another banker/lender working 60 hours a week. The real trick is knowing who is (really) doing what. But frequently talking to bankers/lenders/investors the truth is, some are very busy and others aren’t. Not only do I know this from personal […]