FAQ

Frequently Asked Questions

Investment banks advise companies/owners looking to exit, grow by acquisition, raise capital, do initial public offerings, and pursue other financial and/or securities-based transactions. As a practical matter investment banks help organize due diligence materials, prepare marketing materials, run an efficient process and help negotiate and execute a transaction.

And according to a recent study of 85 middle market business owners that completed sale transactions ($10 to $250 million), 100% said that investment bankers provided value, with 69% saying the value was significant. And in terms of measuring the return on fees paid, value created by CM&Co was not less than 10x in situations or processes that allowed for measurement of incremental value. More on this can be reviewed in this article.

CM&Co professionals have over four decades of experience working with private and family-held businesses, portfolio companies of financial sponsor firms and public companies across a variety of industries and sectors. We have an extensive and successful track record with middle-market businesses in:

On the sell-side (helping owners exit) we work primarily with privately-held, owner-operator, or family-held businesses. This type of transaction is our specialty, as our experience enables us to help owners and families find the right exit plan through many highly complex profiles and histories. Most of our buy-side work (helping companies acquire other businesses) is with clients who have developed an acquisition criteria with a targeted list of businesses that may be a fit for their expansion plans.

CM&Co assists clients with capital raising to support growth initiatives, consummate acquisitions, address shareholder liquidity, or effectuate shareholder recapitalizations.

We also work with owners early in the process of considering exit options — whether they are six weeks or six years from engaging an investment bank. Our Pre-Transition planning service offers hands-on financial advisory guidance to owners so that when the time does come to exit, they are fully prepared and leave nothing “on the table.”

Yes.

At CM&Co we regularly engage with clients who were approached by competitors, private equity firms, or individuals interested in making an offer on their business. Often, this type of offer jumpstarts a sale process — whether solely with the offeror or as part of a more robust process.

When we are brought into these situations, it is not always the original prospective buyer that ends up being the best fit. And there is always opportunity for improving valuation economics and terms through the discipline of an actual or portended process.

For example, CM&Co was approached by a corporate attorney one week before his client planned to meet with the ideal strategic buyer. The owner was hesitant to work with an investment bank given the obvious fit and the prospective buyer had made an offer that met his perception of value.

We performed a valuation and demonstrated to the owner that his business was worth more than 50% above his initial expectations.

CM&Co compressed the transaction timeline by conducting an M&A process adapted to a singular buyer, while retaining the option of moving to a full auction process. As a result, the Company realized a price 30% above the initial offer (which incidentally represented more than 10x the CM&Co fee).

A strategic buyer is an existing operating company — this may be a competitor, vendor, or company internal or external to your supply chain. Strategic buyers focus on finding synergies between your company and theirs which will create incremental, long-term value for the buying shareholders. Because of the synergies realized from merging into an already existing operating company, strategic buyers often have the ability to pay more upfront for your company.

Financial buyers include: venture capital firms, family offices, private equity firms, high net worth individuals, and fundless sponsors. These buyers view acquisitions as investments and, like strategic buyers, will work with your company to find operating efficiencies and increase performance. Unlike strategic buyers, financial buyers expect to only own a business for a finite time (an average of 5-7 years) before exiting the company. Financial buyers are often able to move more quickly to close than strategic buyers, as their firms are built to review transaction opportunities and provide responsive feedback.

CM&Co typically approaches both types of buyers to make sure you have a strong understanding of all transaction structures available when making a decision.

When we say CM&Co does “sell-side” M&A advisory work, this means that we represent business owners who are looking to sell all or most of their business. The owners may want to retire, to have a liquidity event, or to get away from the challenges of day-to-day operations.

“Buy-side” M&A advisory is when CM&Co works with a business looking to grow via acquisition. We partner with management, the CEO, and/or the Board to help companies grow inorganically by buying other companies which are either synergistic or help them enter a new market. This type of advisory work may also require us to find acquisition financing to support the deal, either as debt, equity or a combination of both.

At CM&Co we don’t believe in siloed work. In fact, we pride ourselves on being a teamwork oriented firm. No matter the size of business, industry, or type of advisory work you may need, you will have senior attention from the leadership of CM&Co.  Each member of the transaction team is well-versed in every transaction and every client, making the transition process seamless. You will likely work more with one partner than another, but you are welcome to reach out to any of our team at any time.

This is a hard one, because companies come in all shapes and sizes and each owner receives an individualized process given their needs and desired outcomes. CM&Co believes businesses are the economic engine of our society, and we pride ourselves on being expert advocates for business owners throughout their most important financial events. 

We concentrate in helping lower middle market clients in the Midwest and the Northeast which loosely translates into valuations from $10 to $200 million. We look for clients who have built strong companies based on hard work and great ideas or are stewards for a remarkable legacy. Family-held businesses and owner-operators are our sweet spot as we have a significant depth of experience in a broad-range of scenarios.

This is one of our favorite questions — and one we do not take lightly.  When you work with CM&Co we do more than provide you with a range of expected value. We analyze the current M&A climate, looking at economical and political factors, both domestically and abroad.  CM&Co assesses in-depth comparable transactions that include businesses in your space in order to identify recent transaction successes and failures. We create case studies to help you better understand factors that will support or detract from a valuation multiple. We do a gap analysis, looking for the differences between your business and those at the high end of the multiple range and identify operational opportunities to help you maximize value.

At the end of the transaction, we want to have maximized the value of your business and don’t want you to have left anything on the table. With entrepreneurial intensity, CM&Co will actively manage creative and clear processes for you, making sure you’re prepared and know exactly what is happening every step.

  1. We are driven by a desire for others to have extraordinary success
  2. We are committed to clear, creative thinking and to a hands-on approach in executing exceptional ideas
  3. We are entrepreneurs who maintain a high work ethic, and marry excellence with fun and optimism

Our team is always on the lookout for new team members, both young and experienced talent. Send us your resume and a brief introduction and we’ll let you know if we have any openings: info@carletonmckenna.com.

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