Dr. Ken Cyree is the Dean of the School of Business and the Director of the Mississippi School of Banking at the University of Mississippi. He is also the Frank R. Day/Mississippi Bankers Association Chair of Banking, and a Professor of Finance at the University. He holds a Ph.D. in finance from the University of Tennessee at Knoxville. His research interests include banking and financial markets, and his papers have been published in the Journal of Business, Financial Management and Journal of Banking and Finance, among other academic journals.
The culture of debt financing in the Southeast has typically been risk-averse and remains that way today.
Because traditional banks remain risk-averse in debt financing, there are more investment opportunities in the Southeast for private equity firms, venture capital firms and angel investors.
To best fuel middle market growth and activity in the Southeast, create partnerships between venture capitalism, private equity, traditional banking and hedge funds to support companies from inception to the middle market stage and beyond.
The intellectual capital found in the South’s college towns and cities have the resources to spur entrepreneurial growth.
Ramon DeGennaro is the Haslam College of Business Professor in Banking and Finance at the University of Tennessee – Knoxville. He has served as a visiting scholar at the Federal Reserve Bank of Atlanta, as the Tennessee Bankers Association Scholar and as a William B. Stokely Scholar at the University of Tennessee. He was also a visiting scholar at the Federal Reserve Bank of Cleveland, and is the author of “How the Stock Market Works,” produced by the Great Courses. His current research involves financial markets, small-firm finance, investments and prediction markets. Professor DeGennaro is also a Luminary Member of the Angel Capital Group, which has an office in Knoxville.He holds a Ph.D. in finance from Ohio State University.
The Southeast’s business-friendly climate makes it easier to do business in the region than elsewhere in the country. Despite this, the Southeast still lacks large amounts of organized capital.
In order to receive funding from angel investors, entrepreneurs must be willing to accept coaching, have a proven track record of success and outline a clear exit strategy for investors.
There are real advantages to being financed by angel groups, but that doesn’t necessarily mean angel groups are the sole source of a company’s success.
With the political uncertainty surrounding the 2016 presidential election, investors will likely be more hesitant to invest in the coming year or two.
In the near future, evolving technologies will likely alleviate geographical shortages and surpluses in capital.
Doug Johns is a senior advisor to FourBridges Capital Advisors with many years of executive experience in the technology and telecommunication sectors. He also currently serves as the Chairman of the Board of Directors for NIVIS, LLC, the world’s leading developer and integrator of wireless network technologies.
Overall, the technology market in the Southeast is very robust, particularly in Atlanta.
From a tech standpoint, the Southeast is underserved in terms of access to capital, investment bankers and advisors.
The tech industry in the Southeast needs increased visibility to become comparable to other major tech hubs.
Developing incubators and accelerator programs are critical to the growth of tech startups.
Bobby Pearce is an attorney with Smith Moore Leatherwood and the co-managing partner of the firm’s Charleston office. His practice includes mergers and acquisitions, corporate law, private securities offerings and shareholder disputes.
Pearce has an entrepreneurial background, having started or invested in multiple companies, and since 1984, he’s spent a great deal of time working on economic development initiatives for the state of South Carolina and the Charleston area.
There is a broad chasm in South Carolina between investors with money and companies seeking to raise funds. With a shortage of mid-market companies that have the longer-term, proven track record that most investors are seeking, capital often is being left sitting on the sidelines.
Established companies, especially with EBITDA of $2 million and above, now have many more options for capital.
Charleston is on a fast growth track with its commercial and industrial base of companies; the number of home-grown and recruited successful, mid-market companies is expected to grow exponentially over the coming years.
The snowballing growth of mid-market companies in this region will lead to many more successful exits and then much more capital being reinvested into new companies in the Lowcountry of South Carolina, creating a self-fulfilling cycle of formation, growth and corporate and investor success.
Tech-savvy and creative millennials are migrating to Charleston at a rapidly accelerating rate because of its livability, coastal amenities, historic charm and now high-impact work opportunities. The region is one of the top 17 fastest-growing metro areas in the U.S. and is experiencing some growing pains, having to explore infrastructure options to better accommodate the increasing influx of people and businesses.
Boeing’s new multi-billion dollar aircraft manufacturing and assembly plant here has spurred an explosive growth of investment in the Charleston region’s aerospace and aviation cluster. Daimler just announced its plans to grow the region’s automotive cluster by building a Sprinter plant, which will complement the already-existing defense, tourism and health care industry clusters.
South Carolina’s highly-integrated, 16-campus technical education college system has greatly helped to attract Boeing and other companies to the state and the region. This system offers unparalleled industry-specific training and education and thus provides a steady stream of well-trained, qualified employees, which most other states cannot provide.
Matt Heiter is a shareholder at Baker Donelson in Memphis, Tenn. He focuses his practice on public and private securities offerings, mergers and acquisitions, corporate governance and business planning.
Companies in Memphis garner capital from a strong local market of investors, as well as eager firms from outside the state.
Tennessee government has effectively marketed the state’s attractive business environment, encouraging a steady stream of out-of-state money.
The pent-up supply of cash from the recession and a general confidence in the economy has created a robust capital market.
In addition to strong financials, companies should focus on their management team when seeking investors.
Tennessee’s emphasis on start-ups has increased access to capital for companies of all sizes.
Bob Crutchfield is a general partner with Harbert Venture Partners, an institutional capital firm located in Birmingham, AL and Richmond, VA. Harbert Venture Partners invests in emerging technology and healthcare companies in the Southeast, mid-Atlantic and Texas. Bob has launched five successful new business ventures and has led four M&A transactions during his career.
Serious tech economies require a cohesive economic development model, combining private and public capital to provide predictable funding to fuel the early growth needs of startups.
A coordinated partnership between public and private organizations is necessary to commercialize the innovative technology being produced in Southern universities.
Government dollars, in the form of non-return on invested capital or technology-based economic development site prep, are most needed for seed funding of high growth companies.
State money relies on private intelligence. Therefore, if private entities allocate portions of their budgets towards seed-stage companies, it’s likely that state funding will follow.
Tech development is not a short-term process. Government funding vehicles are needed to maintain a level of continuity, and private funders can help facilitate funding predictability by smoothing out the disruptions that can result from political changes.
Investment should be paired with the organizational structure and management expertise that private industries provide for early stage companies to accelerate their commercialization time horizons.
Lee Lloyd is a senior strategic advisor for M&A and financing transactions through his independent advisory firm, J. Lee Lloyd, LLC. He has over 30 years of professional experience in investment banking, business law and accounting. Mr. Lloyd was previously an investment banker with Goldman Sachs and an M&A/corporate attorney recognized in “The Best Lawyers in America.” He has advised clients on deals ranging from $5 million to $6 billion, including cross-border transactions in over 26 countries.
In an effort to deploy capital, private equity firms and mezzanine funds are aggressively seeking out high-quality companies. As a result, companies of that caliber have numerous options for obtaining capital.
Since the recession, investors and lenders have become more risk-averse, so lower quality companies have fewer options for obtaining capital.
North Carolina companies currently are benefiting from readily available capital across all size and stage of maturity classifications.
The increasing ease and accessibility of cross-border transactions is a major trend. These deals are now more viable because of technology, relationships and experience.
Early-stage entrepreneurs should pursue external outreach activities to build their networks.
Out-of-state investors often seek a local co-investor when pursuing early-stage deals.
In the current M&A middle market, many entrepreneur-owned businesses are looking to grow through add-on acquisitions rather than harvest through exit transactions.
Mr. Doeg chairs Baker Donelson’s Business Department in Nashville, Tenn., which consists of more than 200 attorneys in the Securities, Corporate, Mergers & Acquisitions, International, Real Estate, Intellectual Property and Tax Groups in 21 offices across the South.
Capital is available for companies in the South with strong assets and steady cash flows – especially startups and early stage businesses.
Increased capital flowing into startups and early stage companies creates a halo effect that is leading to more capital for middle market companies, as well.
Most money is coming from money centers outside the South, as well as across the globe. Foreign investors, in particular, are looking beyond the coasts for better opportunities in other parts of the U.S., especially the South.
Southern cities doing especially well at attracting capital include Atlanta, Nashville, Memphis and New Orleans.
There are a lot of people with money on the sidelines who would like to get involved in equity investments, but they don’t have the experience, time or enough capital to be the lead investor. Need to provide a way for them to get in deals.