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

I recently had the opportunity to drive over 1,500 miles over a five-day span throughout the southeastern US.  Two things stood out to me during my drive.  One was the number of shuttered motels, empty and fenced-in distribution centers, and vacant storefronts in small towns and strip centers.  All glaring examples of the on-going economic issues facing the country.

The other thing, however, was an equal number of new motels, new and bustling stores and shops, and numerous service and manufacturing businesses obviously enjoying success and growth.  This dichotomy was side-by-side; regional influences and general economic malaise could not account for the differences.

I believe the difference was the planning and foresight of some owners, and the lack of same by others.  Obviously, some owners see these times as an opportunity – they are willing to think ahead and to plan, and to execute upon those plans, while others wither and die as they “wait to be rescued”.  Don’t be like those shuttered motels and fenced-in empty businesses – take the effort to plan ahead and be opportunistic - if not now, when?

Technorati Tags: Acquisition Strategy, acquisitions, Capstone, economy, External Growth, Growth, M&A, M&A News, mergers, Mergers and Acquisitions, road trip, strategy, wes teague

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

A recent New York Times article, “How to Sell Your Business” provided some excellent advice about how to sell your own business. It recommended assembling “a team of professionals..an attorney and an accountant that you trust”. This is good counsel and should be followed by anyone selling, or buying, a business.

However, the article also suggests using “For Sale” forums, such as Internet sites listing businesses for sale, suggesting that “most savvy buyers” research the Internet to find businesses for sale.  I strongly disagree with this.  Why would you just set your business out on a shelf like yesterday’s bread?   You should use hire a professional firm that specializes in finding businesses that meet the buyer’s specific criteria for growth, fill a need, or are otherwise the “right” company to buy.

The Internet cannot do that and for-sale business bulletin boards cannot do that. In fact, many so-called business brokers cannot do that either. It takes the right kind of experienced firm, with a proven process and in-depth research capability to identify, research, qualify and close the “right” company. Most sellers only sell a business one time and they should beware of claims that make it sound easy - it’s not.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, divestiture, External Growth, for sale, M&A, M&A News, m-and-a, market research, mergers, Mergers and Acquisitions, New York Times, wes teague

Capstone’s Senior Vice President, Wes Teague, was featured in Future Age, the magazine of the of the American Association of Homes and Services for the Aging (AAHSA). Wes is vice-chair of Goodwin House, Inc., community for seniors in Alexandria, VA.  The article features comments Wes made after his attendance at AAHSA’s 2009 annual meeting, along with an interview.  The digital magazine can be accessed by clicking here, with Wes’ interview found on pages 38 and 39.

Technorati Tags: Capstone, External Growth, Future Age, senior housing, wes teague

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

As the Wall Street Journal pointed out last week, many Mom-and-Pop operations lack formal crisis plans - and are shutting down as a result of the current economy.  In our experience, this lack of planning is not limited to family enterprises.  It is disturbing how many firms – small, medium and even large – lack formal planning for crises, for succession, and for growth.

It is not always for lack of vision, or a desire to be proactive.  Many times, it is for lack of know-how, beginning with where to start.  Companies who use a systematic, process-oriented methodology to plan for the future stand a much greater chance of being successful.  Have you thought about planning for these issues?

• A five-year strategic growth plan
• Leadership succession
• Estate tax impact
• Continuity of operations in the case of a natural disaster

Firms would do well to ensure that they think about crisis planning as much as they do operations or finances, utilizing expert third-party facilitators if there is no in-house capability.  This is especially true in today’s uncertain business environment, where inflexibility or failure to act can be a death knell.

Technorati Tags: Acquisition Strategy, Capstone, disaster planning, divestiture, estate planning, External Growth, M&A News, Mergers and Acquisitions, wes teague

Three recent deals are being heralded as “the revival” of the M&A market.  Although the linked article captures some of the larger buy-side deals (for example Disney’s $4 billion purchase of Marvel) that are now beginning to emerge, we here at Capstone are seeing a similar trend in the area of the market where we mainly focus: smaller to mid-size ($25 to $200 million) transactions. Firms are beginning to react to the apparent improvement in economic conditions (according to some indicators, but not all - see today’s unemployment numbers), and wish to capitalize on lower prices and expectations before a full recovery occurs.

Technorati Tags: Acquisition Strategy, acquisitions, Capstone, M&A, M&A News, mergers, Mergers and Acquisitions, wes teague