This post was contributed by Capstone Senior Vice President Wes Teague:

Lockheed Martin (LM), one of the country’s largest government contractors, recently announced its intention to sell or spin off one of its oldest and profitable units, the Enterprise Integration Group.  The EIG,  a unit of LM for 42 years and with revenues of over $1.3B (out of LM’s $45.2B overall revenues) would no longer fit in LM’s long-term strategic plan, due to potential conflicts-of-interest with other, larger units of the parent organization that were significantly more important to the future of LM.

The decision to shed a long-standing, profitable unit or division or product is a hard one to make, especially in uncertain economic times.  With a proper strategic plan in place that maps out the organization’s longer-term growth plans, the decision can be made objectively, based on clear criteria and priorities that help remove the emotionalism of losing a “favorite child”.  Facilitated (to remove emotions) planning sessions can help companies make these decisions that at first glance seem counter-intuitive.  Intuition has its place, but a strong, well-thought out plan is usually a better bet for long-term success.

Technorati Tags: Acquisition Strategy, acquisitions, Capstone, divestiture, Enterprise Integration Group, External Growth, Lockheed Martin, M&A, M&A News, mergers, Mergers and Acquisitions, wes teague

Negotiations, whether between individuals, businesses or even countries are nothing more than a process in which concerned parties come to an agreement that serves everyone’s best interests. Instead of one dominating or imposing power over the other, the parties attempt to reach a consensus in which everyone is satisfied.

When preparing to negotiate you need to ask yourself three questions: Why am I negotiating? Who am I negotiating for (myself, my company, my family)? And how much is my ego involved?

These questions will help you establish the importance of the negotiation - what the outcome will affect.

After answering those first three questions, additional ways to assess the situation include:

• Set goals and limits – what are your walk away triggers? You must be able to walk away from the table.
• Win or lose – Make sure you have a plan to deal with the outcome; both near and long term benefits
• Are you prepared to lose/win? What did I lose/win, if anything? If you did lose/win, what will it affect?
  • Long-term, short-term benefits
  • What will happen to the relationship?
• Will your relationship with the other party be intact when the negotiation is over? If not, is that the outcome you want? Could this negotiation come haunt you in the future?
• How do you want to be remembered once the negotiation is complete?

Taking a brief minute to answer these issues will leave you better prepared once you sit down at the table.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, External Growth, Gretchen Johnson, M&A, M&A News, Mergers and Acquisitions, negotiations

John Dearing, Managing Director of Washington, DC- based external growth consulting firm Capstone, is hosting a webinar with Capstone Analyst Bob Kwaja.

You’ve formulated your acquisition strategy.  You’ve assembled your growth team. You’ve researched and selected the top markets for growth.  Now, let Capstone show you how to find the best acquisition targets in those markets.

The next step in Capstone’s unique market-driven process, acquisition prospect research and selection doesn’t have to be a haphazard ordeal.  This webinar will show you how to approach the search for the right company systematically and efficiently using effective research methods. You will be able to take the emotion out of the process to objectively determine which prospects to approach.

After completing this course, you will be able to:
•    Define the Ideal Prospect for your acquisition strategy
•    Explain Prospect Criteria (including revenue growth and size, management team, culture and services) and how to use them to evaluate a prospect
•    Describe effective Secondary and Primary Market Research techniques to maximize your research resources
•    Explain the Triangulation Technique for prospect research to get the most relevant information to make decisions
•    Begin to develop Specific Tools to objectively compare and contrast prospects

John and Bob will speak for approximately 50 minutes followed by a question-and-answer session.

Date:  Thursday, June 24, 2010
Time: 1:00 PM ET/ Noon CT/ 11:00 AM MT/ 10:00 AM PT

No Prerequisites or Advanced Preparation needed!

To register, click here:  https://www2.gotomeeting.com/register/597914154

Registration Fee: $79

IMPORTANT PAYMENT INFORMATION:  Once you register, we will send you a request for payment via PayPal (may take up to 24 hours).  Once payment is confirmed, your registration will be approved and you will receive the log-in information for the webinar.

CPE Credits – 1 CPE credit in Business Management and Organization will be given for those attending this webinar
Program Level:  Basic
Delivery Method: Group Internet-Based

Please feel free to forward this information on to anyone who might be interested in corporate growth strategies.

Refund policy: Requests for refunds must be received in writing by 1:00 PM ET Wednesday, June 23 and the money will be refunded in full within 5 business days.  After 1:00 PM ET on Wednesday, June 23 a credit will be given for a future webinar.  In the event of a cancellation, you will be given the option of of a full refund or applying your fee to a future webinar.

For questions or concerns, please contact Matt Craft, Capstone’s Marketing Coordinator, at 703-854-1910 or mcraft@capstonestrategic.com

Capstone Strategic, Inc. is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education of the National Registry of CPE Sponsors.  State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.  Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 4th Ave N, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba.org

Technorati Tags: Acquisition Strategy, acquisitions, Bob Kwaja, business acquisitions, Capstone, John Dearing, M&A, mergers, Mergers and Acquisitions, prospects, webinar

Two separate clients asked me for a Letter of Intent (LOI) sample within 48 hours.  Other typical questions include:  “What should an LOI contain (or not include)?” and “Why use an Memorandum of Understanding or a Term Sheet versus an LOI?”

Capstone looks at an LOI (and all of its derivatives) as a “marketing” document.  Especially in the not-for-sale M&A space, the LOI needs to “stand on its own merits”.  Meaning, the owner/audience and the direct influencers, need to be able to quickly understand three things:
•    Why you are interested in their specific company (e.g., talent, customers, markets, technology, etc.)?
•    What is your “vision” for the combined entity (e.g., joint benefits, why stronger together, etc.)?
•    What you are offering (beyond simply a price)?

To increase your likelihood of success, include components in your LOIs that clearly outline how you are addressing the owner’s needs, wants, and desires.  The owner ‘Hot Buttons’ as we refer to them. If you address them, letting the owners know you heard what they said while positioning your LOI as a stand-alone marketing tool, you will get more YES answers and “sales”.

Technorati Tags: Acquisition Strategy, acquisitions, Capstone, External Growth, John Dearing, Letter of Intent, LOI, M&A, mergers, Mergers and Acquisitions, MOU, Term Sheet

Capstone Webinar: Discovering the Right Markets for Growth

David Braun, CEO of Washington, DC- based external growth consulting firm Capstone, is hosting a webinar with Capstone Senior Analyst Matt Craft.

There is a unique opportunity in the next 12-15 months to grow your business through M&A.  However, before you start to go after acquisition prospects, you need to make sure you are looking in the right markets.

David and Matt will discuss Capstone’s unique market-driven process, which centers around future demand:  What will your customers want in 5, 10 or even 15 years?  Anticipating this demand is a key to future success.

In order to determine what that demand will be requires research.  The webinar will delve into where to begin with research and how to use limited resources to get the critical information you need to make a decision.

There will also be insights on how important research into market trends is to ensuring you are targeting the best companies to acquire.

After completing this course, you will be able to:
•    Define the Market-Driven Process and why it makes sense for your company
•    Explain Market Criteria (including market growth and size, competitive dynamics and barriers to entry) and how to use  criteria them to evaluate a market or segment
•    Describe effective Secondary and Primary Market Research techniques to maximize your research resources
•    Explain the Triangulation Technique for market research to get the most relevant information to make decisions
•    Begin to develop Specific Tools to objectively compare and contrast markets

David and Matt will speak for approximately 50 minutes followed by a question-and-answer session.

Date:  Thursday, May 20, 2010
Time: 1:00 PM ET/ Noon CT/ 11:00 AM MT/ 10:00 AM PT

No Prerequisites or Advanced Preparation needed!

To register, click here:  https://www2.gotomeeting.com/register/859711747

Registration Fee: $79

IMPORTANT PAYMENT INFORMATION:  Once you register, we will send you a request for payment via PayPal (may take up to 24 hours).  Once payment is confirmed, your registration will be approved and you will receive the log-in information for the webinar.

CPE Credits – 1 CPE credit in Business Management and Organization will be given for those attending this webinar
Program Level:  Basic
Delivery Method: Group Internet-Based

Please feel free to forward this information on to anyone who might be interested in corporate growth strategies.

Refund policy: Requests for refunds must be received in writing by 1:00 PM ET Wednesday, May 19 and the money will be refunded in full within 5 business days.  After 1:00 PM ET on Wednesday, May 19, a credit will be given for a future webinar.  In the event of a cancellation, you will be given the option of of a full refund or applying your fee to a future webinar.

For questions or concerns, please contact Matt Craft, Capstone’s Marketing Coordinator, at 703-854-1910 or mcraft@capstonestrategic.com

Capstone Strategic, Inc. is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education of the National Registry of CPE Sponsors.  State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.  Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 4th Ave N, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba.org

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, External Growth, M&A, market research, Matt Craft, mergers, Mergers and Acquisitions, webinar

H-P is acquiring Palm for $1B and they say it is to position them further into the smartphone market which reportedly grew by over 60% last year.  H-P’s head of strategy, Shane Robison said “It’s an opportunity for us to get into a very big market”.   Understandable?  It is to me.  I’m not saying it’s a good strategy, but they have ONE reason for the acquisition and from my experience H-P is more likely to be successful because people get it.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, H-P, M&A, M&A News, Mergers and Acquisitions, one reason, Palm

Capstone Webinar:
Finding Opportunity for Growth in Tough Times
CPE Credit Awarded
Thursday, April 8, 2010; 1:00 PM ET

David Braun, CEO of Washington, DC- based external growth consulting firm Capstone, is hosting a webinar.

David will focus on where you can find opportunity for growth in the toughest economy in a generation.  His main message remains, “If not now, when?”

You and your company may be trying to simply weather the current storm, but others, perhaps even your competitors, are getting stronger now and positioning themselves for the future.  David will offer solutions for how you can take advantage of the current climate.

After completing this course, you will be able to:
•    Use Statistical Evidence and Trends to Discuss Today’s Economy from a Historic Perspective
•    Define the Five Growth Options for Your Company
•    Explain why External Growth (Acquisition, Joint Venture, etc.) Can Be the Best Option for Your Company
•    Describe the Current State of the M&A Market Using Relevant Statistics and Indicators
•    Begin to Develop a Formalized Step-by-step M&A Process for Your Company

David will speak for approximately 50 minutes followed by a question-and-answer session.

Date:  Thursday, April 8, 2010
Time: 1:00 PM ET/ Noon CT/ 11:00 AM MT/ 10:00 AM PT

No Prerequisites or Advanced Preparation needed!

To register, click here:  https://www2.gotomeeting.com/register/692231858

Registration Fee: $79

IMPORTANT PAYMENT INFORMATION:  Once you register, we will send you a request for payment via PayPal (may take up to 24 hours).  Once payment is confirmed, your registration will be approved and you will receive the log-in information for the webinar.

CPE Credits – 1 CPE credit in Business Management and Organization will be given for those attending this webinar
Program Level:  Basic
Delivery Method: Group Internet-Based

Mark your calendar for our upcoming webinars for CPE Credit:
•    Thursday, May 6, 2010 1 PM ET: “Identifying the Right Markets for Expansion” - 1 credit in Business Management and Organization
•    Friday, June 5, 2010 1 PM ET: “How to Find Top-Notch Companies” - 1 credit in Business Management and Organization

Please feel free to forward this information on to anyone who might be interested in corporate growth strategies.

Refund policy: Requests for refunds must be received in writing by 1:00 PM ET Wednesday, April 7 and the money will be refunded in full within 5 business days.  After 1:00 PM ET on Wednesday, April 7, a credit will be given for a future webinar.  In the event of a cancellation, you will be given the option of of a full refund or applying your fee to a future webinar.

For questions or concerns, please contact Matt Craft, Capstone’s Marketing Coordinator, at 703-854-1910 or mcraft@capstonestrategic.com

Capstone Strategic, Inc. is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education of the National Registry of CPE Sponsors.  State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.  Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 4th Ave N, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba.org

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, Cisco, CPE, David Braun, demand, External Growth, M&A, M&A News, mergers, Mergers and Acquisitions, webinar

Valuing a for-sale opportunity becomes more challenging during periods of economic and financing uncertainty.
During an economic boom, sellers are often able to obtain top dollar due to increased competition among buyers, with readily available financing options.

However, in today’s market, buyers are more cautious about the businesses they are buying and the amount they are willing to pay. Despite a challenging economic market, most sellers have not adjusted their expectations regarding the value of their businesses. Such misperceptions make negotiating a purchase price much more difficult.

An earnout provides a way to bridge the seller/buyer gap with contingent payments that mitigate risk for buyer and creates incentives for sellers/ management. For example, the targets can be based on meeting certain revenue goals or the development of a product. While not new, earnouts are more frequently used during economic downturns and with small, private company acquisitions.

Earnouts are challenging instruments to structure. Since earnouts can result in litigation among the parties, it is vital that the buyer and seller carefully consider the conditions under which future earnout payments will be made.

Since an earnout is based on future financial performance, both parties should be clear about the method for calculating the performance targets (including accounting methods), how much control over the operations of the business the seller retains during the earnout period (including the amount of capital available to fund the business, who has the ability to hire and fire employees, and how strategic business decisions are made), and seller’s remedies (such as a fixed dollar amount of damages) if the buyer breaches its obligations under the earnout.

While earnouts are not appropriate for all transactions and can be complicated and time consuming to negotiate, earnouts provide an additional tool to consider as either a buyer or seller – particularly in an uncertain and challenging economy.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, earnouts, External Growth, Gretchen Johnson, Integration, M&A, m-and-a, mergers, Mergers and Acquisitions, valuation

M&A: From LOI to Close
CPE Credit Awarded
Thursday, March 11, 2010; 1:00 PM ET

David Braun is hosting a webinar with Capstone Senior Vice President Wes Teague.

Building on the success of our last webinar on Contemporary Legal Issues in M&A, Capstone is presenting a new program that will lead you through one of the most challenging, yet exciting parts of any deal:  The journey from Letter of Intent to Close.

This webinar will provide insight that any professional involved in M&A will want to know.

After completing this course, you will be able to:
•    Explain the structure of an Letter of Intent and how to make it beneficial to your situation
•    Describe how to manage the Due Diligence process from both the viewpoint of the Buyer and Seller
•    Utilize strategies to negotiate an agreement that is beneficial to both sides
•    Identify how valuation is affected during the Due Diligence and Closing process
•    Recognize what is expected at Closing
•    Begin to execute your Integration game plan
David and Wes will speak for 50 minutes followed by a question and answer session.

No Prerequisites or Advanced Preparation needed!

To register, click here: https://www2.gotomeeting.com/register/875225514

Registration Fee: $79

IMPORTANT PAYMENT INFORMATION:  Once you register, we will send you a request for payment via PayPal (may take up to 24 hours).  Once payment is confirmed, your registration will be approved and you will receive the log-in information for the webinar.

Mark you calendar for our upcoming webinars for CPE Credit:
•    Thursday, April 8, 2010 1 PM ET:  “Finding Opportunity for Growth” - 1 credit in Business Management and Organization
•    Thursday, May 6, 2010 1 PM ET: “Identifying the Right Markets for Expansion” - 1 credit in Business Management and Organization
•    Friday, June 5, 2010 1 PM ET: “How to Find Top-Notch Companies” - 1 credit in Business Management and Organization
For questions or concerns, please contact Matt Craft at 703-854-1910 or mcraft@capstonestrategic.com

CPE Credits – 1 CPE credit in Business Management and Organization will be given for those attending this webinar

Program Level:  Basic

Delivery Method: Group Internet-Based

Refund policy: Requests for refunds must be received in writing by 1:00 PM ET Wednesday, March 10.  After 1:00PM Wednesday March 10, a credit will be given for a future webinar.  In the event of a cancellation, you will be given the option of a full refund or applying your fee to a future webinar.

Capstone Strategic, Inc. is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education of the National Registry of CPE Sponsors.  State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.  Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 4th Ave N, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba.org

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, due diligence, External Growth, Indication of Interest, Integration, Letter of Intent, LOI, mergers, Mergers and Acquisitions, webinar, wes teague

Clients always want to know how  we can quickly understand the perspective of the owner of the acquisition target.  Over the past 15 years focusing on the privately-held, not-for-sale space, we have a 98% success rate getting our clients in meaningful conversations and meetings with companies that are deemed to be a strategic fit.

The reason the Capstone approach is so successful is that it is truly unique – and we continue to hone it every day.  Many clients and prospective clients have experience ‘attacking’ owners with bulk mail and cold calls - which are almost always unsuccessful. Owners on the receiving end of this barrage tell me, “I get calls from people who want to buy my company every day.  I ignore them.”  This is in addition to CEOs who tell me that generic letters go straight into the ‘round file’.

If you were to talk to owners we target, you would hear a much different response.  Usually, it sounds like “I am not sure why I returned your call but something was different about you.  It seemed sincere…you know more about us.  It makes sense.“

You need to have the right data to deem a company attractive.  You need the right information to ‘open the door’ with an owner.  You need to have a well thought-out approach and story for the owner.  Remember, they not only don’t need to sell – they don’t need to talk to you.  Consider how you can alter that dynamic.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, External Growth, Growth, John Dearing, M&A, M&A News, m-and-a, mergers, Mergers and Acquisitions, owner contacts, owners