Vol. 8, No. 5, June 2010

FOCUS Represents Crossroads RMC in MES Software Product Acquisition

Illinois-based Crossroads RMC has executed a worldwide license for technology to be used in its next generation software product, NextTrack. FOCUS initiated this transaction, assisted in the negotiations, and acted as financial advisor to RMC, a firm that helps manufacturers increase productivity and manage costs with a complete suite of manufacturing operation solutions.

According to George Shea, FOCUS Partner and Software and Services Group Team Leader, “Crossroads RMC has established an enviable track record for quality products and services, and we are glad to have found them such a great product suite addition in NextTrack.” 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
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.

Selling Your Business or Low Basis Publicly Traded Stocks: How to Possibly Minimize the Capital Gains Taxation

By Chip Travis, Vice President and Senior Advisor, RMB Capital Management

One such strategy is very technical in nature and execution, but the concept is fairly easy to understand. We offer, in a variety of choices, the ability for an investor to be invested in a long portfolio of stocks, with the added potential benefit of generating capital losses, even if the portfolio is rising in value. How is this done?

In a nutshell, traditional money managers only look to harvest losses in December of a given year. If the market is up for the year (2009), losses in December are hard to find. With our strategy, we are perpetually harvesting losses throughout the year, taking advantage of momentary drops in the market.

Using 2009 as an example again, were there any losses to be had? Yes, the market continued to plummet till March 9, 2009. One of the strategies we use generated roughly a +36 percent gain for the year, while some clients generated ($250,000) in capital losses on a $1,000,000 portfolio. The losses to grab last year were in the first quarter, not in December.

Technology is the hero with this program. Software scans the portfolios and perpetually is looking for losses and then replacement or like securities are simultaneously purchased. Think of it in simple terms: sell Coke if it is at a loss and buy Pepsi, assuming Pepsi will track closely to Coke on an ongoing basis.

So, if the market has a drop in value, and some stocks are at losses from their original purchase price, book those losses, redeploy the proceeds in similar stocks, and if the market rallies back up, the portfolio has increased in value and you have capital losses in your pocket.

How does this help a business owner or a corporate executive of a publicly traded company? A couple of different ways:

If a CEO knows he/she wants to sell their business at some point in time, he/she implements a tax loss harvesting program. Capital losses can be carried forward indefinitely, so any losses generated can be used to help offset gains at the time of sale.
If the owner sells the business first, and redeploys some of the proceeds into our strategy, any losses generated throughout the remainder of that tax year can be used against any gains. For the executive with low cost basis/restricted stock, he/she is always looking for ways to diversify, but heretofore is wary of the immediate impact of capital gains. This executive, like the private owner, can use the perpetual loss harvesting strategy to accomplish their diversification objectives.

For either of the above solutions to work, the investor must be willing to have stock market exposure. Conversely, if the owner/executive has no risk tolerance, then neither scenario is of value. At these historically low interest rates, the odds are that sale proceeds will find their way into the stock market.

Finally, it is no secret that capital gains are going from 15 percent Federal to 20 percent, if not higher. Throw in your corresponding state rate (3 percent here in Illinois), now we’re talking about real money. I propose that instead of the old investing axiom, “Buy and hold,” you consider “Buy and harvest!”

Chip Travis is Vice President and Senior Advisor at RMB Capital Management, a wealth management firm. RMB is ranked in Barron’s as one of the top 100 advisors in the country and in the top 10 in Chicago by Chicago Magazine. Chip Travis can be reached at 312-993-5846 or by email at ctravis@rmbcap.com.

Roland Oliver Joins FOCUS’ Washington, DC Office as a Senior Advisor

Roland Oliver has joined FOCUS as a Senior Advisor in the Washington, DC office. According to Doug Rodgers, CEO and Managing Partner of FOCUS, “Roland’s vast experience in the venture fund industry and his many Board appointments give him the experience necessary to make a major contribution at FOCUS. We are thrilled he has joined our team.”

About Roland Oliver

Mr. Oliver is the Chairman and President of Monumental Venture Partners, LLC, the General Partner to MVP America, LP, an early stage venture capital fund. Previously he served as Chairman and President of Monumental Ventures Suisse, SA, a Geneva based registered Swiss investment advisor and private equity firm, and as a founder and Managing Director of Leveraged Green Energy, LP, a renewable energy fund focused on infrastructure investments in Eastern Europe. Read more...

FOCUS Industry Practice Groups

► Capital Financing -- www.focusbankers.com/capitalfinancing

► 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