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An exclusive monthly news report for private company CEO's
December 6, 2007
Sign of the Times
Did You Know
Ask the Expert
Market Stats
Helpful Links
Quote of the Month:

"If one of us dies, I shall move to Paris"

?????????????????????????? ---Sigmund Freud


Sign of the Times

A monthly market commentary

“Is the Private Equity M&A Party Over?”

This question has been repeatedly posed to me in the past several weeks. The financial press continues to?ask the?same question?and goes on to seemingly declare the roaring M&A boom to be largely over. Is that true? Well, for the mega billion dollar deals, the answer is clearly yes. Cheap capital in?billion dollar increments has disappeared as the large banks and financial units struggle with the 800 pound gorilla--the subprime fiasco. And, yes, it is a fiasco. More on that later.

At the lower?middle market and?micro cap?level where deals are done from $10M to $200M, the story is not the same.?While overall deal flow has weakened,?solid companies with a?good?story continue to be in high demand. In fact, I am getting more calls, e-mails, fancy brochures, dinner invitations and interest from industry buyers, including private equity groups than ever before. They are on the hunt!?

If you've been?considering the sale of your company and?are hesitant because of the recent negative news in the financial sector,?think again. I've been amazed how many companies that never should have come on the?market did?exactly?that in the past 2 years. Why is that??Simple answer. Many company owners felt that the perfect time to sell was in an environment where potential shortcomings, reduced revenue and earnings shortfalls would be overlooked.?On the outside?it may have appeared that way but?that was not the case when?questionable companies entered the marketplace. And there were plenty of them.?Using private equity groups as a buyer example, for every company they acquired or invested in,? another 200-300?were evaluated but not acted on. In some cases, it was a high as 1 in a 1,000. Those aren't good odds and sifting through a lot companies to find a suitable acquisition candidate creates a lot of clutter.

The good news is that for companies heading to market now with a story to tell, the timing is great. Don't be fooled into thinking it's not.

?Call me and we can discuss your particular situation.



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Did You Know

“Wealth Management AFTER The Sale of a Company”

I'm always surprised at the number of private company clients that are under represented when they are in the position of receiving large amounts of cash, stock etc. when a transaction is about to close. Some want to wait until the event is over and others are reluctant to consider new advisors that may be more appropriate for employing significant liquid resources previously not available. New levels of financial strength demand a higher level of attention and specialized focus.

I've been fortunate to?work with some outstanding wealth managers who have assisted company owners in setting, meeting and exceeding their financial goals. I recently attended a workshop along with 5 company CEO's that was sponsored by the Private Client Group at Merrill Lynch. Not only were the CEO's impressed with the presentation, we were all treated (including spouses) to a marvelous meal at Gary Danko. Now that's what I call the perfect way to end a workshop of any type! Thanks Stuart Reilly from Merrill Lynch. My only disappointment was that the wine list was kept slightly out of my reach for the entire evening.

Give me a call if you are interested in learning more about the AFTER impact of the sale of your company.



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Ask the Expert

“Are You About To Sign A Commercial Lease? Hang On !”

As most of us know?who have had?the pleasure (?!?!)?of dealing with commercial leases, they can get very complicated. 50 page leases and beyond are standard.

The bad news is that most leases presented by the building owners clearly favor the lessor and put the lessee at a significant disadvantage. You can't blame the lessor.?It's just business.

The good news is that help is on the way. For CEO's and company owners in the greater bay area struggling with?their attorney trying to sort it all out, Mark Leonard can be an invaluable resource. Just call him "Coach", the lease coach that is. Visit his website for more detail. http://www.theleasecoach.com/sanfrancisco.html

Mark has significant experience from?negotiating his own leases along with helping many others improve the terms of their leases. And he's a heck of a nice guy too.



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Market Stats

“Foreign Acquisitions of American Companies Dominate”

I find CEO's sometimes surprised when I discuss a possible acquisition by a foreign entity, particularly in areas where economies are rapidly expanding. Consider Dubai. We recently concluded a transaction?representing a?financial software company where the acquirer was a London based company that had recently sold a 20% share of their own company--to a Dubai based firm. Sound complicated? Risky? Simply put, in this case, it added another layer of work that was predictable, manageable, and in the end--everybody walked away smiling. This time we were in New York. This time they gave me the wine list.

The hard cold facts are that $1.4 trillion dollars was spent through September acquiring U.S. companies. Of that amount, foreign companies accounted for 20%, a sharp increase up from 14% last year. According to Thomson Financial, the biggest gains have been from Asia and the Gulf states.

U.S. based companies, private equity groups among them, have felt the heat from two new classes of strategic foreign acquirers: independent conglomerates from emerging companies like South Korea, Singapore and India, and wealthy state-owned companies from the Middle East and Asia.

The shift to Asian and Middle Eastern buyers is causing some reasonable concern among American politicians. While there may be some concerns about specific deals (think the Borse Dubai stake in Nasdaq), it will take a long while for emerging markets to catch up to the United States. In the meantime, American sellers are not complaining as valuations tend to run high.

The moral of the story is for a seller to consider not how the pie can be sliced up, but much bigger the pie can be--meaning the pool of buyers. The more the merrier.



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Helpful Links

“Thinking About Getting Away? Check Out Wikitravel

I've visited a lot of travel sites in the past, but for the sheer amount of information, not one touches the user generated content of http://www.wikitravel.org?. Need to find out how much to tip in Buenos Aires, the driving etiquette in Costa Rica, or where the sweet surf spots are in Punta Mita? Wikitravel is your one stop destination.

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