| SELLING
A PRIVATELY HELD BUSINESS may be the most important financial
event in an owner’s life. Identifying personal goals
in advance is an important element in helping maximize the
deal’s value.
In the article below ,“The
Art Before the Deal—Maximizing Personal Wealth
When Selling a Business,” the Wealth Management Group
at Bernstein Investment
Research & Management share the firm’s authoritative
research on a number of critical wealth management and pre-transaction
planning issues.
Bernstein, one of the country’s largest, independent
private client investment managers, was founded in 1967 as
a discretionary investment manager for private clients. Well
known for the integrity, accuracy, and independence of its
research operation, Bernstein has the largest independent
research team on Wall Street. The firm manages over $500 billion
for private clients, institutions and pension funds. Bernstein
does no investment banking, no underwriting, and no M&A.
In Bernstein’s Washington, DC office, Michael Bono
and Joseph Perta, have formed a specialized M&A team to
assist intermediaries (investment bankers, M&A advisors,
transaction attorneys, and accountants) in addressing the
investment needs of business owners who are selling or re-financing.
Please feel free to forward this newsletter to friends, colleagues
and networking contacts. (Go to www.focusbankers.com
for newsletter archives.)
Active FOCUS
Deals
Although our firm has over 22 years of experience
across many verticals, FOCUS currently has active transaction
engagements in the following specific business sectors:
- Call Center Equipment Manufacturing
(multiple assignments)
- Construction (multiple assignments)
- Consulting
- Digital Printing Services
- Distribution
- Government Contracting (multiple assignments)
- Healthcare Business Services
- Information Management
- IT Outsourcing (multiple assignments)
- Leisure
- Manufacturing
- Media
- RFID Technology
- Security (multiple assignments)
- Software
- Specialty Flooring
- Systems Integration
Our transaction process provides us with up-to-the-minute
market knowledge in these sectors. Are any of them of corporate
development interest to you? Give us a call or drop us a note.
Inquiries can be made via e-mail to info@focusbankers.com,
by telephone to 202-785-9404, x200, or by fax to 202-785-9413.
The
Art Before the Deal—Maximizing Personal Wealth
When Selling a Business
By Daniel J. Loewy,
Research Director; and Robert A. Weiss, CFA, Director; Wealth
Management Group, Bernstein Investment Research & Management
Because selling a privately
held business may be the most important financial event in
an owner’s life, the Wealth Management Group at Bernstein
Investment Research & Management has put together research
on these critical issues:
- The impact of key
deal terms on the owner’s wealth; the highest offer
may not be the best.
- How estate planning prior to the sale can enhance the
value created.
- Quantifying spending needs so that plans can be implemented
to meet other financial goals.
- The financial planning implications of liquidity strategies
other than a full sale.
Summary of Significant Bernstein Research
Conclusions
For many owners of privately held companies,
selling their business represents the culmination of years
of work and offers the prospect of financial security for
life. Identifying personal goals in advance can help maximize
the deal’s value.
Our experience has shown, however, that without
strategic financial planning prior to the sale, an owner may
not realize its full potential. By defining personal objectives
and putting a few key strategies in place, an already lucrative
transaction can become a golden opportunity – without
slowing down the sale process.
Bernstein Has Developed an Analytical Framework
Designed To Identify the Critical Alternatives When Selling
a Business
By integrating potential deal terms, key tax-
and estate-planning strategies, and the business owner’s
financial goals, the owner and his team of advisors can, we
believe, most effectively extract maximum value from the deal.
While the model is best used on a personal basis, our research
has uncovered some global themes:
The sale of a business
often allows the owner’s spending, legacy, and philanthropic
goals to be met – but not always, particularly
if strategies to meet them are not mapped out at the beginning.
The solution is to ensure that sufficient assets will be set
aside to address the owner’s top financial priority
(often his spending needs), and then work out plans for meeting
his other critical needs – all prior to the sale.
Generating the most
value from a transaction is not necessarily tied to finding
the highest sale price. Often, the maximum benefit
can be gained by making a few critical decisions in advance.
These decisions include:
- Weighing the safety of cash against the tax deferral
and greater return potential of a stock transaction. A stock
deal may seem more lucrative, but its additional risks need
to be factored in, including exposure to price fluctuations
before the deal is consummated and the imposition of a lockup
period.
- Evaluating key estate-planning strategies, which often
yield maximum benefit if implemented before rather than
after the transaction. A careful evaluation of the owner’s
goals and anticipated sale proceeds can help determine the
types of family or charitable trusts to establish –
whether to use a GRAT, a CRT, or both, for example –
and the amounts to allocate.
- Considering various exit or liquidity strategies other
than a straight 100% sale – such as the sale of a
minority stake in one’s business, a leveraged recapitalization,
or sale to an employee stock ownership plan. Key financial-planning
questions arise with these strategies, including how much
of the owner’s stake to sell.
Cooperation Is Essential
Investment-banking, tax, legal, and financial-planning
experts each can play a critical role in preparing for a transaction.
An integrated team is, in our view, imperative for putting
in place the most effective strategies. The Bernstein team
can be an important added value in helping clients to evaluate
offers from the perspective of their future life needs.
Given the wide range of personal situations,
tax- and trust-planning alternatives, tolerance for risk,
and deal terms, the Bernstein team can provide a quantitative
framework for understanding the trade-offs. Allowing a business
owner to evaluate alternatives prior to implementing them
can help owners and their advisors make the best decisions
in each unique case, and that goes a long way toward providing
peace of mind and getting the deal done.
You Can Download a PDF of the Full 28-Page
Bernstein Research Booklet by Clicking on The
Art Before the Deal Now
Printed copies of the booklet also are
available from two of Bernstein’s financial advisors
in its Washington, DC office, Michael Bono (bonoma@bernstein.com)
and Joseph Perta (pertajm@bernstein.com),
who have teamed up to work with intermediaries, business owners,
and their professional advisors to help evaluate different
transaction structures and their impact on a client’s
ability to meet lifestyle and legacy goals. For more information,
visit www.bernstein.com.
New
FOCUS Website Adds Client-Friendly Features
Today
FOCUS is launching a completely re-designed Website. Go to
www.focusbankers.com
to check out the new look and the new features, designed to
make the site a more effective tool for our clients. The new
site also reflects our growth as a firm: FOCUS now has offices
nationwide in Atlanta, Chicago, San Francisco, and Washington,
DC.
You will find an expanded overview
of the firm, our distinctive approach, our range of services,
and a summary of sectors where we are active. You will find
the latest information on recent transactions, biographies
of our professional staff, an archive of newsletter articles,
and a handy online form for subscribing
to the monthly FOCUS e-mail newsletter (excluding August
and December).
Use the links below to sample key
areas in the new site:
But a
website is nothing more than an introduction. There is, of
course, no substitute for a face-to-face conversation. Please
call us at 202-785-9404, x200 to set up a meeting if you would
like to learn more first-hand about FOCUS.
Merger
and Acquisition Specialist Phil Scott Joins FOCUS Enterprises
Company Expands Its West Coast Operations
to Include Southern California
Washington, DC (November 17,
2004)--FOCUS Enterprises, Inc., a national investment
banking firm providing merger, acquisition, and corporate
finance services to emerging growth, middle market, and small
companies today announced that Phil Scott has joined the firm
as a Partner working out of the San Francisco office but based
in San Diego. Scott brings more than 20 years of executive
level financial experience from companies that span a variety
of industries including healthcare, manufacturing, real estate,
software development, and services. He specializes in mergers
and acquisitions and management for turn-around situations.
FOCUS is increasing its number
of partners in California to three. Scott will join Robert
Netter and David M. Roberts, FOCUS Regional Managing Partners,
who joined the firm earlier this year and who jointly manage
the Western Region. Netter and Roberts are actively recruiting
additional senior level talent and hope to increase the number
of partners to five or six by the end of 2005.
“I am personally delighted
that Phil has joined our Western Region investment banking
team. Phil brings to our firm many years of operations expertise;
he has completed numerous transactions during his professional
career and he brings to FOCUS significant experience in the
healthcare segment, a market that is very important to our
firm and to our clients,” said Marshall Graham, FOCUS
Chairman.
About Phil Scott
Prior to joining FOCUS, Mr. Scott
was CFO of SurgiCare, Inc. (SRG), a public ambulatory surgery
center business. As CFO in a distress situation, he raised
interim equity and debt capital, and sold non-performing assets.
He negotiated and structured acquisitions of two medical billing
companies and completed negotiations for permanent equity
financing and a merger with an additional healthcare company
that created a multi-dimensional healthcare company.
Formerly, Mr. Scott served as CFO
for PSX, Inc., a manufacturing company in a distress situation.
He was able to raise debt and equity financing, restructure
operations, outsource production, and complete a sale to a
leader in the crafts industry. He also served as CFO for a
real estate development company acquiring and constructing
medical office buildings. Previously, he served as VP of Development
for HealthCare Partners, the largest private primary care
medical group in the country, and completed over $60M in acquisitions
in a two year period.
Mr. Scott also is a co-founder
of The Camden Group, a healthcare services business providing
software solutions, billing and collection services, and strategic
planning and consulting services for healthcare entities nationally.
Mr. Scott, a Chartered Financial Analyst (CFA), received a
BA from the California Institute of Technology and a MBA (summa
cum laude) from the University of San Diego.
About FOCUS Enterprises,
Inc.
Headquartered in Washington DC,
with offices in Atlanta, Chicago, and San Francisco, FOCUS
provides a range of investment banking services tailored to
the needs of emerging growth, middle-market, and small companies.
FOCUS specializes in transactions for entities with $5 to
$100 million in revenues, serving entrepreneurs, corporate
owners, public companies, private companies or operating units,
and various types of investors.
For 22 years, FOCUS has successfully
integrated corporate development consulting and transactional
expertise with its extensive research capability. The firm
has long standing experience in completing mergers, acquisitions,
divestitures, capital formation assignments, corporate development
consulting projects, and financial advisory engagements.
Operating nationally and internationally,
sixteen FOCUS Partners, Senior Advisors, and Principals provide
over two centuries of C-level operating experience in a variety
of industries:
- Aerospace
- Government Contracting
- Healthcare
- Manufacturing and Distribution
- Media and Communications
- Technology (hardware, software and services)
- Telecommunications
Please contact us at: info@focusbankers.com
Visit the FOCUS website at
http://www.focusbankers.com |
