[PDF] - Building A Private Building A Private Equity/M&A Brand Carroll PDF Document

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Building A Private Building A Private Equity/M&A Brand

Carroll D. Hurst, CPA Partner | Keiter CPAs

Partner | Keiter CPAs

churst@keitercpa.com

Building a New Private Equity/M&A Practice Brand

St Steps: eps: I. Evaluate market size/competition

II. Determine service offerings
III. Identify strategic referral sources

IV.Develop your brand

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I. Evaluate Market Size and

Competition

1. Determine whether the M&A market

i l h t t M&A is large enough to support an M&A service practice

2. Identify potential competitors, their

service offerings and differentiators

II. Determine Service Offerings

M&A A M&A Advisory Servic visory Services es

1. Valuation
2. Purchase price allocation
3. Structuring and tax advisory
4. Deal structuring for sale of control or minority

interest to private equity or sale to strategic buyer

5. Working capital target calculations
6. Transition service agreement negotiation
7. Investment banking services

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II. Determine Service Offerings,

Continued

M&A A M&A Advisory visory servic services: es: Deal structuring for sale of control vs. minority interest to private equity firm

a. Common or preferred equity b. Put provisions and their durations c. Governance provisions d. Use of all equity or equity and debt leverage to finance the transaction

e. Board composition f. Size and terms of stock based compensation for management g. Acquisition strategy and funding strategy (use of debt vs. equity)

II. Determine Service Offerings,

Continued

Equity or Debt Financing Advisory Services

1. Valuation
a. Historical earnings or discounted future cash flows
2. Projections assistance and review
3. Structuring and tax advisory
4. Composition of debt and equity advisory services,

including negotiation of:

a. Senior debt
b. Subordinated debt /sub debt lender equity
c. Private equity or venture capital contributions
5. Investment banking services

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II. Determine Service Offerings,

Continued

Transaction Advisory Services

1 Buy‐side or sell‐side

1. Buy‐side or sell‐side

a) Independence issues

2. Quality of earnings analysis

Post‐Transaction Valuation Services

1. Valuation of specific intangibles

Business Succession Planning Services

1. Estate and gift planning
III. Identify Strategic Referral

Sources

1. M&A Attorneys
2. Commercial bankers
3. Investment Bankers
4. Sub-debt Lenders
5. Private equity/venture capital funds

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IV. Developing Your Brand

1 1 - Kno Know all the r w all the rele levant nt deal t deal terms rms of the

f the

tr transactions ansactions with y with your

ur legac

legacy client base client base

ver the pas

er the past thr three t ee to f four

ur years:

ars:

A. Valuation metrics database by industry and by strategic or financial buyer

B. Law firm, commercial bank, PE or VC Firm, subordinated debt lender

IV. Developing Your Brand,

Continued

1 - 1 - Kno now w all the r all the rele levant deal t nt deal terms of the rms of the tr transactions ansactions with with your legacy client base o

ur legacy client base over

er the pas the past t thr three t ee to f four y

ur years

ars,

, continued

ntinued:

C. Deal terms database by industry and deal size

a. Stock or asset (or 338 h(10))
b. Escrows and holdbacks
c. Indemnification caps and baskets

d All h C h l t h l t

d. All cash; Cash plus earn-outs; cash plus earn-out

and bonus

e. Working capital targets calculation methodology
f. Ancillary documents including employment

contracts, non-compete, license, and transition services agreements

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IV. Developing Your Brand,

Continued

2 2 - Develop elop a M&A A a M&A Advisory visory Pr Practic actice Gr Group

up
A. All group members should be familiar

with legacy client base transactions

1 Valuation multiples

1. Valuation multiples
2. Debt multiples
3. Other transaction terms by quarter and year, by

industry, as noted in previous slide

IV. Developing Your Brand,

Continued

2 2 - Develop a elop a M&A M&A Advisory Pr visory Practic actice Gr Group

up,

,

Cont ntinued inued Cont ntinued inued

B. Other sources of deal terms:

a) American Bar Association Private Target Mergers and Acquisitions Deal Points Study b) SRS M&A Deal Terms Study

C. Subscribe to relevant databases of deal

t ti

transactions

a) Lower middle market‐ GF Data Resources b) Middle to upper middle market‐ Pitchbook Data c) Used by larger investment banking firms‐ Capital IQ d) Other databases‐ Axial Markets

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IV. Developing Your Brand,

Continued 2 - 2 - Develop a M&A elop a M&A Advisory Pr visory Practic actice e Gr Group

up, Continued
ntinued
D. Network regularly and actively with the

individuals who are most active in M&A

1. M&A Attorneys
2. Commercial bankers

3 I b k

3. Investment bankers
4. Sub debt lenders
5. Private equity and venture capital fund managers
IV. Developing Your Brand,

Continued 2 - 2 - Develop a M&A elop a M&A Advisory Pr visory Practic actice e Gr Group

up, Continued
ntinued
E. Take an active role in M&A focused
rganizations (including officer and committee

roles and speaking opportunities)

1. Association for Corporate Growth‐ local and regional

chapters

chapters

2. Alliance of Mergers & Acquisition Advisors
3. Exit Planning Institute

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IV. Developing Your Brand,

Continued

2 - 2 - Develop elop a M&A a M&A Advisory visory Pr Practic actice Group

up, Co

Continu ntinued

G oup

up, Co

Co e

F. Make every opportunity to refer out private

equity, senior and sub debt funding opportunities.

1. Quality of earnings and transaction advisory services on both your legacy clients and other situations in which the PE or sub debt firm won the pitch 2. Tax advisory and structuring 3 P h i ll i d l i f ifi i ibl

3. Purchase price allocation and valuation of specific intangibles 4. Audit and tax services continuation for legacy clients and for new companies funded by the PE or sub debt firm 5. Audit and tax services for the PE or sub debt fund at the fund level

2014 Representative Engagements

Our Our 2014 M&A engagements 2014 M&A engagements to dat date:

1. Investment banking services related to a

minority recapitalization by a P.E. firm

a) Identified P.E. firm, negotiated the transaction terms, performed valuation services b) Legacy services increased from review to audit, including two years of audits

including two years of audits

2. M&A advisory services related to a

management buy-out

a) Identified senior and sub debt lenders, negotiated debt terms, performed valuation services

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2014 Representative Engagements

3. M&A advisory services and growth
3. M&A advisory services and growth

capital negotiations as our client explores their strategic alternatives of selling to an industry consolidator or pursuing a growth strategy.

4. Senior debt financing negotiations for a

4. Senior debt financing negotiations for a

growth company combined with negotiations of convertible debt issuance.

2014 Representative Engagements

5 Referral of a non client out of market

5. Referral of a non-client, out of market,

acquisition target to a P.E. buyer

a) P.E. firm won the bid and engaged us to provide tax structuring services and provide purchase price allocation recommendations b) We expect to be awarded the audit and tax work

6 M&A d i i i b d b d

6. M&A advisory services, senior, sub debt and

equity capital negotiations related to a management buy-out and redemption of all

f the stock of the company.

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2014 Representative Engagements

7. Provision of valuation services, and consulting services

related to the issuance of convertible debt and equity related to the issuance of convertible debt and equity capital to fund the growth capital needs of our client.

8. Reorganization advisory services, primarily related to tax

structuring for a large growth capital investment by a foreign investor in our client

9. Majority recapitalization advisory services in connection

with a change of control transaction

) i d h i ll i d i i

a) Tax structuring and purchase price allocation advisory services

10. Acquisition Advisory and valuation services for the

strategic purchase by our client of a company, enabling

ur client to vertically integrate in its industry