M&A Masters

In today’s episode, we’re joined by Vania Schlogel-- the founder and CEO of Atwater Capital, who focuses exclusively on the media and entertainment sectors. 

In our chat, Vania shares with us the fine line between being able to have the formal, polished side of the business in conjunction with the creative and operational side.

Vania also chats about the areas she specializes in, and…

• Streaming services

• The emergence of technology in the media and entertainment world

• Her ideal client profile (and why it matters), and 

• Building relationships with managers and founders

The energy industry is going strong so far in 2020… and the outlook for the future is good as the industry responds to sustainability initiatives and reacts to market pressures. 

Bart Vossen of Houston-based SGR Energy shares how upcoming regulations are impacting the industry, as well as why the company looks beyond U.S. borders for most of its customers.

We also chat about mergers and acquisitions in the industry, talking about some prime targets SGR considers and how they conduct acquisitions, as well as where the company is headed in 10 years – they have some big goals, for sure.

Tune in to find out…

• The biggest obstacle to growth they’re working on this year
• The product mix that sets them apart from the competition
• The difference between upstream, midstream, and downstream
• Energy trends in the Caribbean and Central America
• And more

There comes a stage in every company’s life where organic growth is no longer enough. A strategic acquisition is the only way forward. 

But for middle-market companies, this is a tricky proposition. The management team is running the business… they don’t have time to research potential targets, negotiate price and terms, and all the rest that goes with an M&A deal.

Pejman Makhfi, the founder of Silicon Valley-based Synrgix, which provides a process management system to support growth through acquisition for middle-market companies, has a solution. And it’s vital that it’s implemented now because data shows that mid-market companies that aren’t acquisitive are likely to fail.

Tune in to find out…

• One thing any CEO or CFO must know to manage M&A deals
• How to manage ongoing M&A activity with minimum impact on resources
• A strategy to balance organic growth and growth through acquisition
• Why lack of resources doesn’t have to mean stalled growth
• And more

This is Part 2 in a two-part series about a recent M&A deal in which PE firm Broadtree Partners purchased SAAS company, RedCAT Systems, which provides specialized HR services for major corporations like Uber, NYSE, and LinkedIn. 

This time we’ll be covering the Buyer’s side of the transaction with Rob Joyce from Broadtree. (Be sure to check out my conversation with Steven Epstein of RedCAT here.)

Importantly, Representations and Warranty insurance was a crucial part of this deal. Broadtree wasn’t too thrilled about having this coverage in place at first, but, as Rob notes in our conversation, they did eventually come on board. 

We talk about the initial reluctance to get R&W insurance… what changed their mind… and how this coverage changed the dynamics of the deal dramatically, as well as…

• How the due diligence process was delayed because of two key factors (this is something unique to this size of company and industry)
• The total cost of Rep and Warranty coverage – how it breaks down and who pays for it 
• Why they saw RedCAT as a worthwhile acquisition (great clues for startups here)
• The sticking points that delayed the deal along the way – and how they could have been avoided
• And more 

The first of a two-part series of a real-world M&A transaction. First up, I’m talking to Steven Epstein, the founder of RedCAT systems, a Colorado-based SAAS company involved in HR and compensation solutions for clients like LinkedIn, Uber, NYSE, and many more.

They were recently funded by PE firm Broadtree Partners.

Specifically, we’ll be looking at how Representations and Warranty (R&W) insurance played a key role in the transaction. What’s interesting is that RedCAT would not have been eligible to use R&W coverage to be reimbursed by a third-party – the insurer – if there had been any breach in the Seller’s reps. 

We’ll talk about why insurers were willing to play ball now and how that could impact whether or not you can use R&W insurance on your next deal, as well as…

• Why one of their partners insisted on R&W insurance – and the Buyer said yes
• What they did to find a Seller who matched their philosophy
• The biggest thing he would have done differently prior to the sale
• The top benefits of R&W coverage and the surprising impact they had on the deal 
• And more

In the world of tech, a lot of companies, especially the smaller ones and startups, their financials are quite opaque. You never know on the surface if one is about to go under or go unicorn.

Austin Leo, VP of USI Insurance Services, highlights a specialized type of insurance, once reserved for large manufacturers, that can help larger companies identify who to do business with… especially those with the least risk of going under before they pay their bills. 

And that’s just one benefit.

It’s a great example of insurance coverage that adds tangible monetary value… even when you don’t have a claim. Austin walks us through the many ways these policies help and how they work in real-world terms.

Tune in to find out…

• A strategy to prepare for a gap in your accounts receivable
• A “backdoor” way to get information on potential clients
• How to increase sales with insurance 
• Why lenders love this insurance – and are ready to spread the love to you
• And more

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After culling through a decades-worth of data on IT services companies, Colin Campbell, Associate Director at Livingstone Partners, sees potential for a market downturn on the horizon.

He shares what trends he sees that point to this potential slowdown, as well as how Buyers and Sellers approach M&A deals to account for it. 

Colin says that Strategic Buyers are being quite selective in companies they target, and tend to go after the company aggressively once they “fall in love,” wanting to move quickly and are willing to pay a premium. 

This is in contrast to Financial Buyers (like private equity PE firms) who may have a wider appetite for acquisition targets, but factor into their analysis the possibility that values may level-off or decline due to an economic slowdown or other factors – they are mindful of the potential downside when pricing a target. 

In our conversation, we take a deep dive into the above concepts, as well as…

• The type of revenue that is most attractive to Financial Buyers
• What drives real value in data processing companies;
• Who’s buying IT services companies today;
• The disconnect between Buyers and Sellers in the IT services space;
• And more

Acquisition can be the ideal way to experience fast growth as a company. But there’s no need to stay within your home country when looking at potential target companies.

Jacob Whitish is the San Francisco-based vice consul for financial services for the U.K.’s Department for International Trade. And he doesn’t just work with U.K. companies looking into the U.S. but also American companies looking to expand in the other direction. 

We chat about the unique challenges – and benefits – of these sorts of cross border acquisitions, including… 

• Why Silicon Valley is an attractive market (and why Boise or Boston could be a better fit for certain companies)
• The most attractive U.S. acquisition targets for companies looking to accelerate into new markets quickly
• What win-win deals in multinational expansion look like
• Matching resources and business goals to a geographic region
• And more

When we usually see cross-border deals, it’s a U.S. company acquiring a foreign business. But increasingly the reverse is happening, says Craig Lilly, corporate partner at the Palo Alto office of Baker McKenzie, and there are three primary drivers for that trend.

But cross-border deals with foreign buyers aren’t without their pitfalls, especially with newly enacted regulatory and anti-trust and merger controls – at that’s just the start. Just look at what is happening with Chinese telecom giant Huawei.

Cross-border M&A is far from a done deal. Foreign companies are still acquiring U.S. companies, says Craig, but just engaging experts like his company to shepherd the transaction.

We talk about where cross-border M&A is headed in 2019 and beyond, as well as…

• The two biggest concerns in cross-border deals
• How changes at CFIUS have vastly changed the playing field
• When a cross border deal isn’t really a cross border deal – and why
• How American companies are taking advantage of Asian company’s hesitancy
• And more

What happens when a minority of shareholders don’t agree to the terms to acquire or merge their company? The terms could change drastically… or the deal could fall apart completely. 

But, says Nate Gallon, managing partner of the Silicon Valley office of Hogan Lovells, there’s a way to avoid that fate… because the shareholders will be contractually obligated to vote “yes” on the sale. This provision is well-known in the world of Private Equity and Venture Capital but not elsewhere.

Nate talks about how to lay the legal groundwork to make this strategy work, as well as…

• Why you have to look at the Liquidation Waterfall
• How to ensure that small shareholders don’t sabotage a closing
• The best person to provide you with this provision (if you don’t have it already and don’t even know)
• The dangers of appraisal rights claims
• And more