Vol. 7, No. 5, May 2009

INTRODUCING “INTANGIBLE INSIGHTS,” A NEW COLLABORATIVE WEBSITE for internet-reliant company leaders and related M&A service providers.

Sponsored by FOCUS, the new site supplies a valuable array of content to better educate the internet and digital media community. Included are valuation metrics of M&A transactions, podcasts, surveys, interviews, primary and secondary research, an industry structure wiki, news, and a running commentary on its blog.

Brad Fleisher, FOCUS Managing Director and publisher of Intangible Insights (www.intangibleinsights.com), is an experienced investment banker, entrepreneur and attorney with over 15 years M&A, corporate finance and business development and advisory experience.

Please feel free to forward this newsletter to friends, colleagues and networking contacts. (Go to www.focusbankers.com for newsletter archives.)

Active FOCUS Deals

Operating nationally and internationally, FOCUS is currently working with buy- and sell-side corporate clients, private equity groups, holding companies and late stage venture capital firms in the following areas:

  • Advertising & Marketing
  • Building Materials
  • Business Consulting Services
  • Business Process Outsourcing
  • Call Center Services
  • Distribution
  • Education and Human Capital
  • Electronics
  • Energy
  • Engineering
  • Financial Services
  • Food, Beverage and Restaurant
  • Government, Aerospace & Defense
  • Healthcare & Life Sciences
  • Information Technology
  • Manufacturing
  • Media
  • Parking Operations
  • Retail Franchising
  • Semiconductor Equipment
  • Telemarketing
  • Warehouse Distribution

We have executed dozens of transactions in a range of market segments, but the same fundamentals apply across all of them. Our on-going transaction process provides us with up-to-the-minute market knowledge in these sectors that may be of corporate development interest to you.

Inquiries should be addressed via e-mail to info@focusbankers.com, by telephone to 202-470-1973 or by fax to 202-785-9413.

SunGard Public Sector’s K-12 Business Unit Acquires Performance Pathways, Inc.

FOCUS initiated this transaction, assisted in the negotiations, and acted as financial advisor to Mechanicsburg, PA-based Performance Pathways, Inc., a leading provider of instructional management software for K-12 school districts. The products are a logical extension of SunGard Public Sector’s PLUS Solutions integrated product suite offered to K-12 school districts.

“The combination of an outstanding data-driven decision making solution with one of the leading K-12 systems providers offers the real prospect for driving improved student outcomes,” stated Bill Bavin, a Managing Director at FOCUS and Team Leader of the Education and Human Capital Group, who managed the transaction. “In spite of a challenging economic environment, we expect strong companies to augment their solutions through selective acquisitions. Read more...

FOCUS Sponsors Innovative New Internet and Digital Media Portal

FOCUS is sponsoring a new online portal--Intangible Insights (www.intangibleinsights.com)--designed to be an educational and collaborative vehicle for internet-reliant company leaders and related M&A service providers, including bankers, accountants and attorneys. 

The site provides a wide array of valuable content to better educate the internet and digital media community, including valuation metrics of M&A transactions, podcasts, surveys, interviews, primary and secondary research, an industry structure wiki, news, and a running commentary on its blog. The site’s ultimate intent is to elicit common trends among markets, technologies and companies, and match these with deals and valuations.

“Although the country is in a recession, technology persists and online activity and expectations continue to alter the way business is conducted. Wireless broadband, mobility, virtual reality, cloud computing, social media and other innovations are changing the way businesses compete, as well as the way they are valued. These changes in technology and behavior will be a substantial growth opportunity for companies going forward. Our practice is focused on understanding these trends and assisting companies in capitalizing on the opportunities they create,” states Brad Fleisher, FOCUS Managing Director and publisher of Intangible Insights.

Along with the standard investment banking information related to deals and players, the new Intangible Insights site pays particular attention to the intangible value of companies in the internet industry.

“In addition to protected intellectual property, the value of internet and digital media companies lies in employee creativity, customer loyalty, online reputation, partner relationships, management vision and leadership, and a myriad of other attributes often difficult to quantify. Our clients want bankers who understand the value of these assets and communicate this value to potential buyers and investors,” says Doug Rodgers, CEO of FOCUS LLC.

Brent Costello Joins FOCUS’ Los Angeles Office as a Managing Director

Brent Costello has joined the Los Angeles office as a Managing Director. “Brent has more than 30 years of experience as an investment banker and mergers, acquisition and finance attorney, and will be a tremendous asset to the West Coast team,” said Paul Richey, Regional Managing Director of FOCUS’ Los Angeles office.

About Brent Costello

Prior to joining FOCUS, Mr. Costello was the Managing Partner of Sun West M&A Advisors. Mr. Costello has represented a wide range of clients in cross-border and domestic transactions, including small to mid-capitalization enterprises and public and private companies that also include family-owned entities. Previously, Mr. Costello was a partner with the international law firm Kaye Scholer LLP. He started his career as an associate at Cravath, Swaine & Moore, New York. Mr. Costello holds a J.D. from Georgetown University Law Center; and graduated (cum laude) from Yale University. Read more...

Should You Sell Your Company?

On February 3, 2009 an article in Forbes.com reports that according to estimates in The Deal Pipeline, in the range between $100 million and below, the number of deals during the first three quarters of 2008 increased by 15 percent over the same period in 2007. And valuations, while down slightly, held up reasonably well--reason for this resilience: Smaller companies still fuel the growth of larger acquirers. To quote the article:

Start with who's buying. There are two major types of acquirers: strategic buyers and private-equity players… For entrepreneurs who want to stay on but hedge their bets from a valuation perspective, a sale to a private equity shop may make sense--especially if the business is intended to be a new platform for a larger entity…

Prepare to be creative and flexible with the financial structure… consider a theoretical company with $25 million in annual revenues and no cash or debt on its balance sheet. Say a private equity player bid $30 million for it, while a strategic buyer bid $33 million.

OPTION A. The seller accepts the strategic buyer's $33 million, all paid in cash at the closing…

OPTION B. The seller agrees to a $30 million valuation from the PE investor. The deal includes $20 million paid in cash at closing; a $10 million note… and an "earn-out" based on the company hitting certain milestones during a specified period of time…

OPTION C. The seller agrees to a $30 million purchase price: $20 million in cash, a $10 million note--but instead of the earn-out as in Option B, the original owner gets to re-invest with the new equity investors at the same cost of equity…

OPTION D. Seller takes $25 million in cash at closing, along with the right to retain certain intangible assets, real estate holdings and intellectual property agreements--and future income streams…

To read the full article, go to http://www.forbes.com/2009/02/03/sell-your-business-entrepreneurs-finance_0203_sale.html