Middle Market M & a

KENNETH H. MARKS is Founder and Managing Partner of High Rock Partners, a boutique firm of strategic and M&A advisors. He is an expert in mergers, acquisitions, and financing of emerging growth and middle market companies.
 
CHRISTIAN W. BLEES is President and CEO of BiggsKofford Certified Public Accountants and BiggsKofford Capital Investment Bank. He is the lead instructor of the Certified Merger & Acquisition Advisor (CM&AA) credentialing program.
 
MICHAEL R. NALL is Founder of Alliance of Merger & Acquisition Advisors and a recognized speaker on the valuation, growth, and sale of middle market companies.
 
THOMAS A. STEWART served as Executive Director of the National Center for the Middle Market, and Editor-in-Chief and Managing Director of Harvard Business Review.

An in-depth and practical exploration of middle-market mergers and acquisitions from leading experts in the field
 
In the newly revised Second Edition of Middle Market M & A: Handbook for Advisors, Investors, and Business Owners, mergers and acquisitions experts Kenneth H. Marks, Christian W. Blees, Michael R. Nall, and Thomas A. Stewart deliver a comprehensive overview of mergers, acquisitions, divestitures, and strategic transactions of privately held companies with revenues between $5 and $500 million per year.
 
You'll discover the market trends, perspectives, and strategies commonly affecting business transitions in all phases of a deal, as well as the processes and core subject areas (e.g. valuation, structure, taxation, due diligence, etc.) required to successfully navigate and close transactions in the private capital markets.
 
The latest edition of this handbook includes new discussions about:
* The middle market landscape and the evolution and impact of private equity on the private capital markets
* The concepts of mergers and acquisitions from an owner's point of view
* Ways in which transition and value growth planning can optimize the value owners and investors can realize in sell-side and buy-side transactions
* New technologies being used in the M&A process
 
Perfect for advisors, investors, and business owners, the new edition of Middle Market M & A is a must-read roadmap of the strategic transaction landscape that provides solid, practical guidance for attorneys, accountants, investment bankers, corporate development, exit planners, investors, lenders and the owners, entrepreneurs, and leaders of middle market companies.

Preface xxiii
 
Acknowledgments xxix
 
Part One Middle Market Overview 1
 
Chapter 1 The Middle Market 3
 
Performance and Impact 4
 
Definition 5
 
Characteristics of Middle Market Companies 7
 
Ownership 7
 
Access to and Use of Capital 8
 
Organization 8
 
Chapter 2 Private Capital Markets 11
 
Segmented Markets 12
 
How Market Players View Risk 17
 
Capital Providers 17
 
Owners' and Managers' Views of Risk/Return 18
 
Buyers 20
 
Market Activity 26
 
Chapter 3 Valuation Perspectives for the Private Markets 31
 
Private Business Valuation Can Be Viewed Through Different Standards of Value 32
 
Market Value 34
 
Investment Value 37
 
Fair Market Value 37
 
Fair Value 37
 
Incremental Business Value 38
 
Owner Value 38
 
LBO Value 39
 
Collateral Value 39
 
Book Value 39
 
Valuing Intangibles 39
 
Why the Different Versions of Value? 41
 
Valuation as a Range Concept 42
 
Value Worlds and Deals 43
 
Part Two For the Business Owner/Operator and Entrepreneur 45
 
Chapter 4 Transition, Succession, and Exit Planning 47
 
A Decision Framework 49
 
1. Owner Ambitions and Goals 50
 
2. Industry Cycle 51
 
3. Business Cycle 52
 
4. Company Foundation 53
 
A Team Approach 53
 
Chapter 5 Value Growth and Optimization 55
 
Increasing the Return on Invested Capital 57
 
Strategic Position 58
 
Customer Base 59
 
Cost Structure and Scalability 60
 
Working Capital 60
 
Human Capital 61
 
Reducing the Risk of Investment 62
 
Awareness and Planning 63
 
Growth Plans and Relative Position 63
 
Leadership Team 63
 
Predictability of Revenues and Earnings 65
 
Concentrations 65
 
Compliance 66
 
Keeping Current 67
 
Ease the Transfer of Ownership 67
 
Financial Information 68
 
Contracts 69
 
Title to Assets 69
 
Corporate Structure and Attributes 70
 
Don't Lose Focus on the Core Business 70
 
Summary 71
 
Formula Definitions 72
 
Part Three The M&A Practice and Processes 75
 
Chapter 6 Practice Management 77
 
Primary M&A Advisors 78
 
Marketing the M&A Practice 80
 
Target Audience 80
 
Networking 81
 
Marketing and Advertising 81
 
Pretransaction Consulting 82
 
Valuation Services 82
 
Other Consulting Services 82
 
Becoming an Expert 82
 
Client Acceptance 83
 
Confidentiality 84
 
Client Engagement 84
 
Identification of the Parties 85
 
Scope of Service 85
 
Limitations and Disclosures 86
 
Fees-- Selling Advisor 86
 
Example Fee Structures 88
 
Termination and Tail 89
 
Buy-Side Engagements 89
 
Licensure Issues in the M&A Business 90
 
Chapter 7 Sell-Side Representation and Process 93
 
Selling Process Overview 93
 
Step 1: Preliminary Discussions with Seller 94
 
What Is the Transaction? 95
 
Value Expectations 95
 
Process 96
 
Step 2: Data Collection 97
 
Step 3: Industry Research and Identifying Buyers 100
 
Research Market Buyers 101
 
Step 4: The Marketing Book 101
 
Preparation 103
 
Seller Motivation 104
 
Financial Disclosures 105
 
Specific EBITDA Presentations 105