M&A Insight 2016 Provided Growth Capital and Exit Alternative Strategies

Attendees at M&A Insight 2016 gained insight on top challenges related to exiting their business and opportunities to increase business value despite today’s economic conditions at a discussion featuring experts from Akin Gump Strauss Hauer & Feld, Comerica Bank, Doeren Mayhew Capital Advisors, Kiley Advisors and Main Street Capital. With nearly 100 C-level executives, and key merger and acquisition (M&A) players in the room, panelists addressed central topics facing businesses in today’s market, including:

1. Growth capital

2. Exit alternatives

3. Building value drivers

4. Credit markets

Doeren Mayhew Capital Advisors’ Managing Director Tim Moore weighed in on current market conditions, including industries seeing increased M&A activity, existing overhang in private equity groups, today’s lending standards and decreasing leverage on transactions.

“Clients in the petrochemical and residential sectors are doing extremely well and seeing high multiples in revenues. As a result, businesses supporting these specific industries are also flourishing,” Moore explained. “The healthcare industry is also prospering in the marketplace and industries surrounding this sector, such as medical equipment suppliers, have also done very well in the past 12 months.”

Panelists discussed issues ranging from key areas of investment showing robust growth to creative methods business owners can use to maximize the value of their company to help prepare for their eventual exit. Preparation and out-of-the-box thinking were value drivers the panelists repeatedly praised while discussing smart business maneuvering.

“Attracting key talent, maintaining trusted relationships with vendors and training workforce are all key value drivers within any industry,” said Pat Kiley, a leading business advisor in Houston’s construction sector.

Main Street Capital Chief Investment Officer David Magdol further encouraged owners to challenge the status quo regarding mergers and acquisitions, and to keep an open mind to nontraditional deals. “It does not always have to be a cash transaction … we have seen a lot of focus on tangential markets and some really neat opportunities that have come as a result of that,” Magdol said. “Really pushing for alternative negotiations can make a big difference in the quality of a deal.”

From a lender’s perspective, Comerica Houston President J. Downey Bridgwater encouraged businesses to respect the desire for a win-win negotiation between the borrower and the lender, and to not see the relationship as threatening during an economic downturn. “If you are having a conversation with your lender before an issue arises, done your homework and prepared to compromise … that gives us the absolute most flexibility to work with you in coming up with solutions,” Bridgwater said.

Jennifer Mailhes, also a Doeren Mayhew Capital Advisors Managing Director, echoed these sentiments and advised business owners anticipating default to avoid wishful thinking and take action as quickly as possible.

“Using your slow time to focus on neglected areas of your business is critical in preparing for the upswing,” Mailhes said.  “One of the best things you can do as a business owner is to recognize a downturn as not only a challenge, but also as an opportunity.”

For business owners unsure of how to adapt to a changing economy, panelists encouraged attendees to prepare a structured plan of action for when business slows, know what your company brings to the table when negotiating a deal and use slow times as breathing room to identify opportunities to invest or sell.

If you need help putting an exit strategy in place or help building business value so you are prepared when the right buyer knocks, rely on Doeren Mayhew Capital Advisors’ investment bankers. Contact us today.