We’re Rule Breakers

When you look at Mergers and Acquisitions firms advertising their intermediary services in the lower middle market anywhere in the country, you will notice that most of them are franchisees of one of a half dozen or so national agencies.

What that tells us is a half dozen guys are writing the playbook for the majority of the industry. What they have in common is a process-heavy method of selling a company. A great example of this happened to us a short while ago. A longtime friend and investor asked us to identify an opportunity to invest several million dollars in a business that he could run passively with the help of senior management. He wanted to be anywhere within fifty miles of Fort Lauderdale, FL.  One of his desired sectors was construction services, and we identified a company that fit every one of his parameters. That business was already represented by a broker. We didn’t mind that at all because we were being compensated by our client.

When we approached the seller’s representatives, they wouldn’t divulge any information without a very complicated and tedious set of financial disclosures. Our client was in the UK for months attending to other interests, and he certainly wasn’t going to jump through hoops just to learn the basic details of their offering. They would make no exception to their rule, they told us. We reluctantly found our investor another place to put his money, and we’re not sure if that company ever made a successful exit.

That well-meaning ironclad rule was meant to prevent unqualified buyers from wasting the seller’s time. What it did was keep an eminently capable and motivated buyer from making an offer. That’s a standard industry rule that we break all the time. Would we have risked letting an unqualified bottom feeder see our client’s financials, or even learn his name? Of course not! What we would have done is ask for the name and occupation of the buyer. Within ten minutes our internet spooks would have known where he went to kindergarten. If a quick web search identified him as one of South Florida’s busier land developers (as it would have), we would have welcomed his interest and immediately begun the process.

In our organization, common sense and critical thinking rule the day, not rigid processes. Of course, we have some rules we never break. Like the rules of golf.

We’re Risk Takers

Calculated risk takers, that is.  We live in the real world with real expectations. Whether we are investing for our own account or in partnership with others, we understand that a good opportunity doesn’t stay on the market for long, and a great deal rarely even sees the open market.

But if you’re ever going to invest in anything other than a CD you have to assume some risk. How do we mitigate that risk? By knowing the market. By paying attention and knowing where to make the deep dive for timely accurate information.  Your chance of thriving in today’s corporate acquisition market is only as good as your ability to quickly and competently analyze risk and reward – and then act decisively.

We make capital investments in companies that interest us for myriad reasons. Sometimes we inject cash, sometimes we provide management services, sometimes both. Usually we will take one or more board positions, using those positions to reach out to resources the company needs. We have earned a reputation as an investment partner that can quickly identify toxic dynamics and processes, eliminate waste and inefficient sourcing, take remedial action and initiate best practices.

The phrase “risk takers’ lends itself to some funny pictures and rhymes with the other headings in this section. But make no mistake about it…there is no other concept more important to us than risk. We have an entire division devoted to managing and mitigating financial and personal risk for our young friends who are still playing a sport for a living. Heavy financial losses are rarely suffered by people who understand the rewards relative to the risk they’re assuming.

We’re Market Makers

A market maker stands ready acting as a seller to all buyers and a buyer to all sellers. He knows what’s happening in his market. Who is buying, who is selling, if supply is up, if demand is down and a dozen other daily indicators. He’s up to date an all the recent transactions.

We’re not a classic intermediary because more often we act in concert with a principal buyer as an active partner. In any industry we’re involved in, we know the numbers, we know the insiders, we know who’s in acquisition mode, we know who wants to finance transactions in those sectors and we know the supply chain from beginning to end. If you have a business you would like to exit, we can find you a buyer. If you want to add to the empire you are building, we will identify and approach potential targets on your behalf. We may or may not retain an equity stake in the transaction but when we do we frequently take an active role in the management and board of directors. We may arrange a new capital injection, ultimately identifying board members and management than can effectively bring the company’s product/service to the market.

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