Category Archives: Tennessee

The Private Equity Phenomenon and the Fall of the IPO: An Interview with Bob Woosley

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.

Key Takeaways:

  • 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.

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What the Recent Sale of Southern Tool Steel Tells Us About the M&A Market in the Southeast

 

Key Takeaways:

  • 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.

Continue reading What the Recent Sale of Southern Tool Steel Tells Us About the M&A Market in the Southeast

What the Recent Sale of Southern Tool Steel Tells Us About the M&A Market in the Southeast – Part 1

Key Takeaways:

  • The sale of Southern Tool Steel supports several trends found in the Investment Banking South market survey, including:
    • Manufacturing is particularly strong in the Southeast and is an especially attractive sector to the M&A market.
    • There is a lot of money from outside the region looking for deals in the Southeast. Money is willing to travel to the region because prices are inflated in other parts of the country.
    • There is a lot of money chasing a few quality deals in the region, and it’s a seller’s market.
  • Even if a company has a few blemishes, it’s still a great time to sell if the business is properly packaged and the owner is emotionally ready.
  • Despite interest in the Southeast from investors across the world and advancements in communication tools, proximity can still matter and give local investors an edge.

Continue reading What the Recent Sale of Southern Tool Steel Tells Us About the M&A Market in the Southeast – Part 1

First Annual Market Expectations Survey

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.

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Local Investment Driving Memphis’ Diverse and Growing Market: An Interview with Matt Heiter

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.

Key Takeaways:

  • 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.

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Government & Economic Incentives: An Interview with Stewart McMichael

Based in Tennessee, Stewart is an expert and consultant on government and economic incentives. Having worked as an engineer, Wall Street tax attorney, fund manager and business owner, Stewart has a unique perspective on how small and mid-market businesses can maximize the use of incentives to help reach their goals. Currently, Stewart is working with FourBridges Capital Advisors to advise businesses on how to best integrate traditional forms of financing with all forms of incentives.

Key Takeaways:

  • Incentives (offered by federal, state, city and county governments, and some utilities) are readily available and can be highly effective. However, in many cases, they are underutilized.
  • With respect to any business within its taxing jurisdiction, the government effectively acts as a passive partner with a financial interest in the net profits of the business. Through this partnership, the government offers incentives as a way to foster the growth and prosperity of the business, reducing costs or providing it access to cheaper capital, property, infrastructure and job support.
  • In the Southeast, just at state and local levels, billions of dollars of incentives are offered each year to businesses of all sizes across most industries. Incentives can play a vital role in a business’s capital structure and should be considered as an alternative or complement to other types of capital.

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Early Stage Funding Growing in Tennessee, Middle Market Access More Difficult: An Interview with Commissioner Hagerty

Commissioner Bill Hagerty leads the Tennessee Department of Economic and Community Development, Nashville, TN.

Key Takeaways:

  • It is more difficult than it should be for middle market businesses to access growth capital, but early stage capital is becoming more available, especially in Tennessee. In addition to providing funding, early stage investors help entrepreneurs create a logical and disciplined capital structure that makes it easier to attract follow-on funding.
  • Obstacles to greater access to capital in Tennessee include the need for stronger links between research institutions and entrepreneurs, loss of major banks and a growing appetite for more direct flights from capital centers.
  • At the same time, Tennessee and the South benefit from the current low interest rate environment nationwide, which drives the current frothiness of corporate debt markets. This easy money environment has driven valuations higher as investors seek equity returns. With valuation multiples more reasonably valued in the South, disciplined investors are becoming increasingly interested in the area
  • Capital deployed in the South is made more efficient via a more business-friendly tax and regulatory environment that keeps more capital in the business working toward future growth.
  • Tennessee is benefiting from the states’ efforts to increase entrepreneurial activity and attract capital, including helping out-of-state private equity groups partner with local investors, which is key.

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The “Halo Effect:” An Interview with Bruce Doeg

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.

Key Takeaways:

  • 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.

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