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

From my recent experience working with middle-market companies, I would have to agree with this article that states that there were an increasing number of divestitures by multinational corporations (MNC) in 2009.  In particular, my work in the specialty chemical industry showed me that the economic downturn has forced many MNC’s to reassess their portfolios. This reassessment includes divesting any businesses that are not aligned with future strategic goals. Divestitures will also allow these MNC’s to clean up their balance sheets -  in other words, “free up cash.”  The reassessment of these portfolios has generated tremendous opportunity for middle market companies that are strongly positioned financially. Look for this divestiture trend to continue in 2010.

Technorati Tags: Bob Kwaja, Capstone, divestiture, External Growth, Integration, M&A, M&A News, m-and-a, mergers, Mergers and Acquisitions, specialty chemical

The New York Stock Exchange ended 2009 up nearly 30% over 2008.  That makes a lot of individuals feel better about the economy because they “feel” wealthier.

Companies are no different.  With an up market we expect M&A activity to increase, generally as a laggard to the equities market.  Think about it:  a company’s stock price is up so they can use the stock as currency to buy other companies or as currency to obtain debt to acquire companies. Either way, we should  expect an uptick in 2010 M&A activity to follow the strong performance of the equities markets in 2009.

Warren Buffett commented on this topic recently when he skewered Kraft for its stock offer to Cadbury saying:

The share-issuance proposal, if enacted, will give Kraft a blank check allowing it to change its offer to Cadbury

Watch for more public companies to make acquisition announcements, especially after they report 2009 earnings.  This could be a good time to think about divesting!

Technorati Tags: Acquisition Strategy, acquisitions, berkshire hathaway, business acquisitions, Cadbury, Capstone, David Braun, divestiture, External Growth, Integration, Kraft, M&A, M&A News, mergers, Mergers and Acquisitions, warren buffett

Bloomberg recently reported that:

“Chief executive officers are so sure the economy will keep recovering they’re agreeing to prices that are 37 percent higher than the average since 2001, when Bloomberg started compiling data. While stocks in the S&P 500 are trading at the most expensive valuations in seven years compared with profits in the last 12 months, buyers are looking out to 2011, when analysts say earnings will have risen 52 percent.”

While I agree with the premise, I think the numbers can be a little misleading.  Specifically, which earnings are they taking the numbers from?  As we all know the past 12 months have been disastrous financial period for almost every business - except perhaps bankruptcy professionals and financial advisors.  If you took the multiples and based them on past averages or against projections for the next 24 months it is probably in line with past year’s valuation multiples.

The news here though, is that CEOs are back to buying, because they feel the future will be brighter than now.  I continue to believe that for the next 12-16 months it is a market for strategic buyers who have cash.  The credit markets are dormant and CEOs remain reluctant to use debt. So with the increase in the stock market and confidence that the markets have hit bottom and are now improving, many CEOs are getting back into the M&A market.  I predict that in late 2011 you will see a frothy M&A market - so sharpen your strategic focus and carefully evaluate your growth plans!

Multiples are down, debt is historically cheap, financial buyers are on the sidelines, the market is widely expected to improve so… (you know the phrase) if not now, when?

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, External Growth, Integration, M&A, mergers, Mergers and Acquisitions

I am hosting a webinar tomorrow (December 17) with CPE credit being awarded!

We’ve heard from our audience that they want an opportunity to earn CPE credits by the end of the year, so we’ve developed a webinar on an in-demand topic: current legal topics in M&A.

Even if you are not a member of the bar, 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:
- Define a typical timeline for the M&A process
- Describe the key principles and purpose of a Letter of Intent and Term Sheet
- Define the key differences between a stock purchase, asset purchase and merger
- Explain the basic contents of  typical sections of an acquisition agreement, including sale and Purchase, Reps and Warranties, Indemnification, Closing and Post-Closing

I will speak for 50 minutes followed by a question and answer session.

Date: Thursday, December 17, 2009
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/325735746

Registration Fee: None

Once you register, you will receive information on how to listen to the webinar and view the slides.

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

CPE Credits – 1 CPE credit in Business Law will be given for those attending this webinarP

Program Level:  Basic
Delivery Method: Group Internet-Based
Refund policy: N/A
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

For questions or concerns, please contact Matt Craft at 202-776-0500 or mcraft@capstonestrategic.com

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, business law, Capstone, CPE, David Braun, External Growth, Integration, M&A, Mergers and Acquisitions, webinar

A recent round table of corporate dealmakers at a conference sponsored by The Deal offered some interesting insights into the strategy mindset of some of the largest corporations in America.  All of the panelists expressed a “commitment to external growth.”

Two observations stood out to me. First, Sean Murphy of Abbott Labs said they are still “looking for strategically sensible deals”, implying that even in the face of current economic uncertainty, strategic deals are still being done.  Duncan O’Brien of GE noted that there were “some deals (they) couldn’t pass up because of valuations in this economy.”  We here at Capstone have long advocated that companies should not stop looking for ways to grow their companies externally - they just need to be smarter about how they do it.

Second, as an example to reinforce this last point,  in referring to the use of joint ventures as an external growth vehicle, O’Brien stated that they have learned in a JV “to do enormous documentation in the beginning to circumvent problems” and to put in “the right leadership, putting emphasis on HR”.  In our opinion due diligence (enormous documentation) and integration (emphasis on HR after the deal is closed) are two sides of the same coin, and continue to be especially important in a strategic investment, where the return on investment can be as subjective as objective.

Technorati Tags: Abbott Labs, Acquisition Strategy, acquisitions, business acquisitions, Capstone, due diligence, External Growth, GE, Integration, M&A, M&A News, Mergers and Acquisitions, wes teague

There is a trend afoot for firms to become more vertically integrated – controlling their supply sources, manufacturing, and distribution channels.  A few recent examples include Oracle acquiring Sun Microsystems to integrate hardware and software and H-P acquiring EDS to capture more consulting and professional services revenue, along with buying 3Com to capture more customers.  In the past, companies divested non-core assets and outsourced much of their work to create a more variable cost model. I think this current wave of vertical integration will be short-lived. It is primarily to capture revenue which companies desperately need.

What’s next, then? There is now an opportunity for companies to be creative with deal structuring and consider minority investments and strategic alliances.  Firms then have the advantage of having identified resources as partners, and can invest in and be privy to the expertise of a company, but are not saddled with having to run the businesses which are out of their expertise.

For example, I don’t see GM returning to being a fully integrated manufacturer like it was 50 years ago.  Rather than being a solid vertical line, you will see companies have dotted lines where they own key pieces and outsource others and have minority investments in some, majority investments in others and even strategic alliances.  The key will be for companies to decipher what pieces will be critical for them in 2020 and then figure out what the best deal structures are to maintain those key components.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, External Growth, Hewlett Packarad, Integration, M&A, mergers, Mergers and Acquisitions, Oracle, Sun Microsystems, vertical integration

These are tough times for the legal profession.  Here in Washington, DC, one of the lawyer-capitals of the world,  it’s difficult to go a block without running into a recently graduated law student who’s looking for a job.  In these tough times, many law firms, large and small, are looking for a way to grow their business.  Two firms that are looking to grow externally are Lovells and Hogan & Hartson. Their potential merger would create  one of the world’s largest law firms with over 2500 professionals. While they share the common thread of regulatory and antitrust work, the merger is based on geographic expansion.  Lovells wants access to the US market and Hogan wants more access to Europe, while both are seeking to expand their presence in Asia.

Geographic expansion may make sense if you carefully target your strategic partner and perform the necessary diligence on that geographic market.  If it’s a fit, new customers (or clients) can easily become accessible.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, External Growth, geographic expansion, hogan & hartson, Integration, lovells, M&A, M&A News, Mergers and Acquisitions

The M&A statistics for the third quarter of 2009 are in and show the vast majority of the deals getting done are strategic.  The economic crisis and concerns over deal financing continued to significantly hold down the number and value of deals when compared to the same period last year.  Today, a Wall Street Journal article by Peter Lattman reports that leverage is out and equity is in.  Although these numbers are grim, there is reason for hope.  A number of big name deals, such as Kraft-Cadbury and Disney-Marvel, have injected the market with some much needed optimism.  These types of deals are evidence that strategic deals are going to lead the way to recovery with private equity to follow – not the other way around.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Cadbury, Capstone, cash, David Braun, Disney, equity value, External Growth, Integration, Kraft, M&A, M&A News, Marvel, mergers, private equity

There are countless books on how to effectively integrate two companies after an acquisition.  Some stress “communication” while others put the emphasis on “culture”.  While both concepts are important, neither is the key to integration success.  In my experience, the single best thing you can do to ensure a smooth integration is to buy the right company.
This may seem self-evident, but in many cases the choice of target is the hidden source of endless integration problems. If you’ve bought the wrong company, no amount of force or ingenuity can squeeze a square peg into a round hole. “The right company” means a company that serves a single, well defined strategic purpose. Experience shows that integration is infinitely easier when the buyer and the seller are aligned on the strategic rationale for the combination.  Throughout the entire acquisition process from market and prospect research through negotiations and due diligence, you have been looking for the characteristics, opportunities, resources, people and culture that will make an ideal fit with your own enterprise. Assuming you have done that right, it is reasonable to expect a relatively happy union.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, David Braun, due diligence, External Growth, Integration, M&A, Mergers and Acquisitions