FOCUS Newsletter

Vol. 8, No. 3, March/April 2010

S&ME Has Acquired QORE Property Sciences

FOCUS initiated this transaction, assisted in the negotiations, and acted as financial advisor to QORE Property Sciences, a leading regional provider of geotechnical and environmental engineering services headquartered in Atlanta. S&ME, founded in 1973 in Raleigh, is one of the Southeast’s most respected engineering firms. The combined staff of 1,000 will work from 28 offices in North Carolina, Alabama, Georgia, Florida, Kentucky, South Carolina, Tennessee and Virginia.

According to Rich Pierce, Managing Director at FOCUS, “This transaction unites two strong engineering and environmental service firms in the Southeastern U.S. to create a single regional leader that can leverage a talented professional workforce and deep expertise in key industry verticals to position itself for future growth.” Read more...

Active FOCUS Deals

Operating nationally and internationally, FOCUS currently is 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
• Government, Aerospace & Defense
• Healthcare & Life Sciences
• Information Technology
• Manufacturing
• Media
• Parking Services
• Retail Franchising
• Semiconductor Equipment
• Telecommunications, Wireless and Media
• 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.

LAWYER’S CORNER:
Selling Your Business in 2010 When Federal Tax Rates Are Low

By Phil W. Jaeger, Partner, Bean, Kinney & Korman, P.C.

We are writing to alert business owners about current long-term capital gains tax rates and the higher rates that are likely to be enacted by Congress for January 1, 2011 and beyond.

If you are thinking about selling your business, you should consider selling your business in 2010 when Federal long-term capital gains tax rates are still low. After 2010, the Federal long-term capital gains tax rates on the sale of your business will probably rise from the current Federal rate of 15% to at least 20% and possibly higher.

During 2010, most owners who sell their business will pay the top Federal long-term capital gains tax rate of 15%. Under the current Federal income tax law, the top 15% long-term capital gains rate is scheduled to expire on December 31, 2010 and revert to its former pre-May 6, 2003 level of 20%.

During the past 35 years, the top Federal tax rate on long-term capital gains has ranged from 35% in 1976 to 15% in 2003. The top Federal rate on long-term capital gains was reduced in 1978 from 35% to 28% and in 1981 was reduced to 20%. The top Federal rate was raised to 28% in 1987, reduced again to 20% in 1997, and finally reduced to 15% in 2003. What will this pending change in the Federal tax laws mean when you sell your business?

If you sell before December 31, 2010, for every $1,000,000 in gain on the sale of your business, you will pay $150,000 (i.e. 15%) in long-term capital gains tax. If you sell after December 31, 2010, for every $1,000,000 in gain on the sale of your business, you will probably pay at least $200,000 (i.e. 20%) in long-term capital gains taxes, and may well pay $250,000 (i.e. 25%) if the long-term capital gains tax rate increases to 25%.

Consider, if you sell your business for $20,000,000 above your basis before December 31, 2010, you will pay long-term capital gains taxes of $3,000,000 (i.e. 15% of $20,000,000) for net after-Federal income tax proceeds of $17,000,000 ($20,000,000 less $3,000,000). If you sell your business for $20,000,000 above your basis after December 31, 2010, and the tax rate increases to 20% you will pay long-term capital gain taxes of $4,000,000 (i.e. 20% of $20,000,000) resulting in net after-Federal tax proceeds of $16,000,000 ($20,000,000 less $4,000,000).

By selling your business for $20,000,000 above your basis before December 31, 2010, you will probably save $1,000,000 in additional Federal income taxes (at a 15% rate vs. 20% tax rate on long-term capital gains) and you may save as much as $2,000,000 in additional Federal income taxes if the tax rate increases to 25%. If you are thinking about selling your business, you will probably do better by selling in 2010.

For more information on this article please contact: Phil W. Jaeger, Esquire, at Bean, Kinney & Korman, P.C., 703.525.4000, or at pjaeger@beankinney.com.

FOCUS Forms Healthcare and Life Sciences Group
Formation of Healthcare Group Marks Sixth FOCUS Industry Specialty

Over the past several years, one of the most active industries for FOCUS has been healthcare and life sciences and to better serve our clients in this segment, FOCUS has formally organized some of its most experienced investment bankers into a specialized team focusing on this industry.

The FOCUS Healthcare and Life Sciences team is led by Jim Millar, Managing Director in the Southeast region and Jonathan Wilfong, Regional Managing Partner, also in the Southeast. Other team members include James Hawkins and Gerald Turner, Managing Directors in the Mid-Atlantic region and Senior Advisors from the Southeast region, Mark Braunstein, Gareth Clarke and Bob Moore.

According to Jim Millar, Managing Director and Healthcare and Life Sciences Team Leader, “It was a natural progression to form a specialized healthcare and life sciences group. A large segment of our business comes from this industry and we have now devoted the specialized resources necessary to serve this market most effectively.”

“Jim’s more than 20 years of financial and business experience in the healthcare and life sciences industry makes him the perfect candidate to spearhead this specialized new group within FOCUS. He has the knowledge and resources we need to serve the needs of our healthcare clients,” adds Jonathan Wilfong, Regional Managing Partner and Healthcare and Life Sciences Team Co-leader.

The formation of this group will allow FOCUS to direct its resources, including capital and top bankers, to the healthcare and life sciences industry. Specialized research talent and marketing support have also been added to the team.

Further details on the FOCUS Healthcare and Life Sciences Group can be found on the FOCUS Healthcare and Life Sciences web page, www.focusbankers.com/health which features comments from clients, recent client engagements, and descriptions of the services that FOCUS provides.

For more information please contact either Jim Millar at Jim.Millar@focusbankers.com or by telephone at 404-963-8254 or Jonathan Wilfong at Jonathan.Wilfong@focusbankers.com or by telephone at 404-963-8252.

James Libby Joins FOCUS’ Atlanta Office as a Senior Advisor

James Libby has joined FOCUS as a Senior Advisor in its Atlanta, GA office. According to Jonathan Wilfong, FOCUS Managing Partner, Southeast, “Jim’s experience with numerous transactions over the years and his extensive dealings with investment bankers, law firms and CPA firms make him uniquely qualified to serve FOCUS’ client base.”

About James Libby

For the past 20 years, Mr. Libby was a partner with the Atlanta based CPA firm Williams, Benator & Libby, LLP, where he was responsible for all merger, acquisition and corporate finance services. While there, he also managed the firm’s relationship with Russell Bedford International (RBI), a global network of approximately 50 accounting firms. Mr. Libby began his career at Arthur Andersen & Co. Also, he was a Special Assistant to President Jimmy Carter, responsible for the White House Office Zero Based Budget, the Inauguration Budget, the Transition Budget and the Campaign Budget. Read more...

FOCUS Industry Practice Groups

► Education & Human Capital -- www.focusbankers.com/education

► Energy -- www.focusbankers.com/energy

► General Middle Market Businesses

► Government, Aerospace & Defense -- www.focusbankers.com/gad

► Healthcare & Life Sciences -- www.focusbankers.com/health

► Information Technology -- www.focusbankers.com/technology

► Telecommunications, Wireless & Media