After beginning his professional service career at Price Waterhouse, Bob became the first professional employee of Frazier & Deeter, a nationally ranked CPA and advisory firm, shortly after the company was founded in 1981. In 1985, Bob became a partner and over the next 18 years he served the firm as head of the Audit and Strategic Consulting services departments. In 2000 Bob founded iLumen, Inc., the CPA profession’s leading business intelligence and analytical platform that today is used by leading CPA firms and financial institutions across the country. Bob served as CEO of iLumen through 2010 and is currently an active board member and advisor to the company. In 2011, Bob returned to Frazier & Deeter where he served as the leader of the firm’s entrepreneurial consulting practice and directs the firm’s strategic growth initiatives on both a national and local level. He is now the firm’s national practice leader in private equity.
The private equity market in the Southeast has accelerated in recent years, with a lot of money chasing a limited number of quality deals.
A good deal of private equity firms are eager to invest in traditional, family-owned manufacturing and distribution companies.
Attention is shifting toward growth equity, which is more about making a minority investment in a company and betting on the existing management team.
The technology industry is driven more by revenue than the traditional Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)-based valuation model.
The Southeast is a great place to do business because of its business-friendly environment and growing entrepreneurial infrastructure.
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.
Bill Bynum is the founder and CEO of HOPE (Hope Enterprise Corporation and Hope Credit Union), a community development financial institution established in 1994. He has advised Presidents Clinton, Bush and Obama on community development while serving as a Chairman for the U.S. Treasury Department’s Community Development Advisory Board. He currently serves as Chairperson of the Consumer Financial Protection Bureau’s Consumer Advisory Board. Bynum has received several honors including National Entrepreneur of the Year (Ernst & Young/Kauffman Foundation), Ned Gramlich Award for Responsible Finance (Opportunity Finance Network) and Annie Vamper Helping Hands Award (National Federation of Community Development Credit Unions). Today, HOPE is highly regarded as a financial institution and policy institute that advocates economic inclusion across Mississippi, Arkansas, Louisiana and Tennessee and influences related policies and practices nationwide.
Generally, capital is more difficult to access in the Mississippi River Delta region – which includes parts of Mississippi, Louisiana and Arkansas – than in other areas of the Southeast, because it is home to many underdeveloped, rural communities that investors don’t find attractive.
Many minority business owners live and work in rural regions like the Delta where access to capital is limited.
Bringing traditional financial services back to low-income areas will stimulate economic growth by giving entrepreneurs the opportunity to build equity.
Community Development Programs, like the New Market Tax Credit Program, are a good way to bring capital to areas deemed less desirable, like the Delta.
With a growing and diverse population, the Delta offers strong business opportunities for entrepreneurs who can think creatively about sourcing the capital they need.
In 2006, Jim Leven and Bruce Mittman came together to form the broadcast group Community Broadcasters, with the goal of being the voice for the community in small and mid-sized radio markets. The duo’s primary area of focus has been in the Northeast, but recently they’ve expanded into the Southeast with the acquisition of 12 South Carolina radio stations from Miller Communications.
A booming retail sector and business-friendly government regulations make the Southeast a great environment for businesses, specifically those in the radio industry.
From a radio industry buyer’s perspective, the acquisition process doesn’t vary much from region to region. In addition to considering financials, there’s an increased focus on facilities and people.
The current landscape of the broadcast industry means there’s likely to be more M&A opportunities in the future.
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.
Even though boomer-owned companies may flood the market over the next decade, strong businesses will most likely still find little difficulty in selling.
Deciding to sell can be the longest part of the selling process. After that, should take roughly three to six months to prepare the business and an additional three to six months to market the business and negotiate and close a deal.
As a seller, it’s important to be realistic about your business. Deal advisors like investment bankers, lawyers and accountants can help clean up the presentation, but they cannot build an entirely new company.
Because selling a business should result in swapping the source of the owner’s income from a business to investments, personal advisors like lawyers and wealth managers can do a lot to create an efficient transition.
Glenn Oken is a managing director at Mangrove Equity Partners in Tampa, FL, where he focuses on originating deal opportunities and qualifying acquisition candidates. Glenn has been a private equity investor focusing on the lower middle market for 27 years and has completed 129 transactions across 57 different niche industries.
For lower middle market companies in Florida, there are no longer geographic barriers. Money is willing to travel.
However, capital for startup companies may more commonly find seed funding through local angel groups and investors. Once they prove their business model they tend to attract interest from local investors, or from the start-up focused areas of the country.
Face-to-face meetings are essential in M&A deals. While numbers are important, relationships are key. In-person meetings give both sides an opportunity to assess the character of a potential partner.
As equity partners seek out lower middle-market companies, they look for those whose products or services are essential, non-cyclical and non-commoditized. Often, this ends up being companies with some measure of engineering content, customization, or technical capability who offer mission-critical products or services.
Thanks to the strength of the manufacturing and industrial services sector, the South may be one of the best regions for investors focused on those industry categories.
The M&A market has not yet seen a sudden mass exit by Baby Boomers. Multiple factors, not just age, are involved in an exit decision. Thus, deal volume seems to have followed a natural cycle over the years, rather than a sudden deluge of exiting Baby Boomers.
A look at what investors, business owners and their advisors see in the year ahead for mergers & acquisitions in the South.
Presented here are highlights from the first annual Investment Banking South Survey, in which we ask investors, business owners and their advisors to look back to 2014 and forward to 2015 in order to give us a sense of where the merger & acquisition market in the South is today and where it is going.
Conducted in April 2015, this survey was completed by 338 investors, business owners and business advisors – such as attorneys, accountants and bankers – from Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee.
As we note in the first paragraph, this will be an annual survey, with the results of each year building on the previous year, so that we can identify trends and patterns over time that may shed further light on the evolution of the middle market in the South.
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.