February, 2016     
MidMarket Talk:
Join Us In Welcoming Our Newest Members!

 

The Alliance of M&A Advisors invites you to check out our new Members here.

 

Visit our Member Directory to find Alliance Members near you! 

 

 
 
At the Alliance of M&A Advisors, we know that our members are among the best in their field. MidMarket Talk offers Alliance Members the platform to share their research, insight, and professional experiences. The Alliance offers Networking opportunities, education, and resources geared toward those in the middle market. Interested in becoming a Member of the Alliance of M&A Advisors? Visit us online at www.amaaonline.org
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How was your January Deal Flow?

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Articles Are Written By Our Expert Members

Submit articles and educational material for our monthly Newsletters and receive CPE Credit! Please send to: lhuntley@amaaonline.org
  • Send us your completed deal tombstones
  • Tell us about your speaking engagements
  • Send us your articles or white paper summaries

 

CMAA

2016 Dates Now Available 

The CM&AA (Certified Merger & Acquisition Advisor) Certification has become the "Gold Standard" for Middle Market Corporate Financial Advisors.  The 5-day program builds on your existing skills providing you with the necessary framework--and network--to further advance your professional and financial goals as well as those of the clients you serve.
 
For the second year, the Alliance of M&A Advisors is partnering with the Thunderbird School of Global Management to offer the CM&AA Certification February 29-March 4, 2016 on the campus in Glendale, Arizona - the Valley of the Sun.   The program will focus on all the many aspects of mergers and acquisitions on both a domestic and international basis. 
 
Other dates and locations available online, call us at 312-856-9590, or reach us by email at info@amaaonline.org

Upcoming Chapter Meetings
Keep an eye out for these
Upcoming Meetings

Attend a Chapter Meeting near you! 
  
Midwest Chapter Meeting
Thursday, February 25th

Phoenix Chapter Meeting
Tuesday, March 1st 

DC/MD/VA Chapter Meeting
Thursday, March 3rd

New York Chapter Meeting
Wednesday, March 16th

New England Chapter Meeting
Monday, March 28th

Get Involved
The below chapters are in the development stages.  Want to be more involved with a new chapter in your area? Please email  Corinne Samuelson, and she will schedule a call with David Belew, Director of Member Services.
 
  • Gulf Area (Houston)
  • Cleveland
  • Florida
  • Northern California
  • Southern California
  • Brazil
  • China
  • Europe

Join Today!
Why Become a Member of The Alliance?
  • Gain access to valuable Member Benefit technology platforms
  • Gain a valuable network of M&A expert Members who act as resources for other Members
  • Featured on our Member Directory, accessible to the public
  • Receive discounted rates to Alliance of M&A Advisors events
  This issue of MidMarket Talk features Certified M&A Advisors. Interested in learning more about the CM&AA Program and upcoming course dates? Visit us online.
26 Cooks in the Kitchen:
How The Middle Market M&A Handbook Came Together
 
Based on an interview with Kenneth H. Marks, CM&AA
Managing 26 contributors and reviewers should have been a recipe for disaster for a growing credentialing program like the CM&AA. Lead author Kenneth Marks takes us through the process of creating the Middle Market M&A Handbook for Investment Banking and Business Consulting and explains just how so many experts came to be involved.  
Kenneth has just explained how he came to be the lead author of Middle Market M&A. He noted that his experience publishing another handbook and his ability to synthesize information from others and deconflict diverging views put him in a good position to take the lead.
Kenneth H. Marks, Lead author of Middle Market M&A

The Alliance:   You mention diverging views. What do you mean by that?
Kenneth:   M&A in the middle market is different than Wall Street M&A. Arguably there's a lot more art and nuance because of the varying ambitions of the owners of smaller companies. In the big deals, it's all about shareholder value whereas in middle market companies, owners run companies for many reasons... and while price is always important, there are other drivers. This leads to varying techniques and approaches to addressing owner needs and to creative solutions in getting deals done.
The Alliance:  It sounds as if there isn't really a consensus on best practices in Middle Market M&A at this time, even among the authors of the book. Why do you think that is? And how did that influence your role as lead author?
Kenneth:  To answer your question, many deal makers in the middle market have alternate ways of solving these issues and thinking about the underlying theories of why we do things. Given so little formal research.... There are many views on middle market M&A and what's right/true and what's not. These varying views lead to conflict when you get more than a couple of talented deal doers in a room. Couple these perspectives with different motivations for being involved in a book project ... you get the need for there to be an honest broker of information.
My job was to assure that we captured, organized, synthesized and shaped the content of our M&A handbook, all for the benefit of the readers, the AM&AA and in direct alignment with the CM&AA program. The handbook needed to be usable for CEOs, CFOs, board members, attorneys, accountants, valuation experts and many others involved or interested in middle market M&A. At the same time, it needed to be of value to those who would contribute, so they would be motivated to contribute and invest valuable time and energy.
To read how the project grew from a handful of authors to 26 reviewers and contributors, read the full article here.

What is Working Capital and how does it Affect an M&A Transaction?

 

By Chad Byers, CM&AA

Managing Partner, Symmetrical Investments, LLC
 

In the simplest terms, working capital can be defined as current assets less current liabilities, but ultimately it is the amount of operating liquidity or cash available to a business at a given point in time. Working capital is an essential part of the day to day operations of a business and is just as important as employees and physical assets.

When selling a business the buyer will often require a normalized level of working capital so that the business can continue operating seamlessly and fulfill obligations to customers and creditors post-acquisition.

In a merger or acquisition, one of the most difficult parts of the transaction is often negotiating the amount of working capital that remains with the original business. Naturally this can be an emotional topic for the seller, and should be taken care of as early as possible. In nearly all transactions there will be some form of working capital adjustment as part of the purchase price agreement. A mergers and acquisitions advisor is instrumental in getting both parties to agree on the way working capital will be calculated, making for a much smoother transaction.
What is considered in a working capital adjustment?

Advisors will begin by looking at the selling company's current assets over current liabilities on a monthly basis. Typically this process will start with the current month and go backwards over the most recent twelve trailing months but could go back as far as the past thirty-six months. It will be critical to understand the accounts receivables and how quickly the company collects revenue (and if all of this A/R will actually come in). It is also imperative to understand the current liabilities and the relationships associated with these debts. Advisors will keep in mind the type of business, industry, demand, market changes, competition, seasonality, and more.
You can read the full article here.

Unlocking Client Value Leads to Firm Growth

Whether you're an M&A advisor, a business valuator, a CPA, a transition planner, or a turnaround consultant, you would probably be very successful if you could consistently execute this simple growth strategy.  For most people, the challenges of differentiating and scaling often seem to prevent success.  However, once you know the secret to differentiating, landing the highly profitable new client becomes exponentially easier.  Then, with the help of various toolsets available in the marketplace, delivering amazing client value, in a scalable manner, is far easier than you might imagine.
Growth Strategy:
  1. Land Highly Profitable New Client;
  2. Deliver Amazing Client Value;
  3. Repeat ... Differentiate ... Scale.
We all know how competitive the marketplace is for any kind of professional services and, no matter how you try to explain to a business owner why your expertise is different, it often seems to come down to price.  So, how do you differentiate?

For the first eight or nine years of my consulting career, I found it incredibly difficult to differentiate, despite constantly expanding my formal training and expertise to new areas including turnaround management, M&A advisory, and business valuations, to go along with an already strong corporate finance background.  Despite the expertise I had to offer, competitive proposals still most often came down to who offered the lowest price, and I did not want to play in that commodity market.  So I decided to try a different approach, and the results have been dramatic, both for my practice and for my clients.  It is so simple, so logical, and so easy to execute, that I wonder why it took me so long to get it.
Read the full article here.
January Resource
In Partnership with Divestopedia  

Finding the Right Investment Bank to Sell Your Business

For most business owners, finding a new partner for the business can involve some very unique challenges. Those challenges can become magnified when searching for an investment bank that will be best suited for your specific transaction. Achieving a superior outcome in any liquidity event - whether a full sale, a debt recapitalization or a minority investment - demands proactive planning and strategic thinking. That can make many investment banks, which tend to focus on near-term change-of-control transactions, a poor fit for private companies in need of strategic guidance.

Though many business owners interact with investment banks and " business brokers" on a somewhat frequent basis, hiring an investment bank can be a once-in-a-lifetime decision for private business owners contemplating a transaction that can represent the summation of a life's work. We asked a handful of successful business owners to share what they wish they had known when they first hired an investment banker. We encourage you to consider how their advice may apply to your situation.

Can I Do This Alone?

The biggest hurdle for many clients when selling their business is often the very first one - they're not sure they need an investment banker to help with a transaction.
We've worked with plenty of private company owners who tried a do-it-yourself approach to corporate finance the first time around - only to find themselves and their management team mired in complex, contentious and time-consuming negotiations and distracted from running the business. They tell us there are six main reasons why it's smart to hire an investment banker:
  1. Working with a banker in advance of a transaction can help clarify and prioritize shareholders' objectives;
  2. Bankers can prepare management and the company to show their best for potential buyers;
  3. A transaction process that maximizes value while minimizing distractions for the company and its leadership is best accomplished with the assistance of an experienced banker;
  4. It's important to have a banker act as a buffer between companies and potential investors or buyers and to maintain momentum toward a transaction;
  5. Bankers can create competition for the business or the perception that there is the threat of competition; and
  6. An experienced banker plays a crucial role when it comes time to negotiate, structure and close a transaction.
Time and again, we've seen that hiring a banker pays for itself, as companies that conduct efficient, well-planned transactions attract higher valuations, achieve better terms and have a higher certainty of closing. The work of a good banker can add many multiples of the banker's fee to the final purchase price of a company. You likely know other company owners, some of whom have done transactions with and without bankers. Talk to them about what value the right banker can add to a liquidity transaction.

Read the full article  here.



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The Alliance of M&A Advisors┬« 
(The Alliance) is the premiere International Organization serving the educational and resource needs of the middle market M&A profession. Formed in 1998 to bring together CPAs, attorneys and other experienced corporate financial advisors, the Alliance's 1000+ professional services firms - including some of the most highly recognized leaders in the industry-draw upon their combined transactional expertise to better serve the needs of their middle market clients worldwide.