Panel Discussion: Private Equity as a Partner May 8, …...Regulatory Consulting Risk Consulting and...
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May 8, 2019 Panel Discussion: Private Equity as a Partner
Transcript of Panel Discussion: Private Equity as a Partner May 8, …...Regulatory Consulting Risk Consulting and...
May 8, 2019
Panel Discussion: Private Equity as a Partner
Discussion Topics Brady Ware Capital Overview
M&A Market Overview
Private Equity Overview
Trends in the Industry
Private Equity Benefits & Challenges
Panel Discussion
Brady Ware Capital Overview
Brady Ware Capital, LLC – Investment Banking AdvisoryOverview Brady Ware Capital Team
Cliff BishopPresidentOffice: DaytonP: (937) 913-2538E: [email protected]
Roger FurrerDirectorOffice: DaytonP: (937) 913-2565E: [email protected]
Stephen FordDirectorOffice: ColumbusP: (614) 384-8423E: [email protected]
Keith WarnerManagerOffice: DaytonP: (937) 913-2539E: [email protected]
Grant KramerAssociateOffice: DaytonP: (937) 913-2516E: [email protected]
Affiliate of Brady Ware & Company, a regional accounting firm with 145+ employees and 4 locations
Strategic Relationship with Duff & Phelps, LLC, an international investment banking firm with over 70 offices and 3,300 employees
Broad Industry Experience Industrial Business Services Technology Manufacturing Consumer Products Financial Services Healthcare Retail
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22 YearsBWC Founded in
1997
150+Combined Years
of Experience
Invaluable Connections
Brady Ware Capital Additions
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Brady Ware Capital continues to grow with two additions to the team in 2019.
Stephen FordDirector
Columbus, OH
Grant KramerAssociate
Dayton, OH
Mergers & AcquisitionsValuation Services
Mergers & AcquisitionsCapital Raising
Brady Ware Capital Services▪ Brady Ware Capital has extensive experience working with middle-market companies to support an array of corporate objectives through
our services and solutions listed below:
Consulting services and business analysis including: Cash Flow
Debt Service Capacity
Divisional/Customer Profitability
Return on Equity
Investment Banking
Sell-side and buy-side M&A Specialty focus on lower-middle-market,
privately-owned companies
Minority and majority recapitalizations of debt and equity
Strategic advisory and valuation services
Corporate Finance Transaction Services
In conjunction with Brady Ware & Company, provide a variety of services relating to a transaction including:
Tax due diligence and structuring
Due diligence, accounting-related work, and Quality of Earnings reports
Financial Advisory Services
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Sell Side Advisor Sell Side Advisor Sell Side AdvisorSell Side Advisor Buy Side Advisor Senior Debt Advisor
Sell Side Advisor Sell Side AdvisorSell Side Advisor Sell Side Advisor Senior Debt Advisor
Provided financial advisory services to One10 regarding
senior debt providers
has been acquired by
Financial advisor to Quest Information Systems
has been acquired by
Financial advisor to The Retirement Plan
Company, LLC
has been acquired by
Financial advisor to Strategic Marketing, Inc.
has been acquired by
Financial advisor to Invotec Engineering, Inc
has been acquired by
Financial advisor to Vistech Manufacturing Solutions
has been acquired by
Financial advisor to Composite Advantage
has acquired
Financial advisor to Russell Cellular
has been acquired by
Financial advisor to C.H. Ellis
has been acquired by
Financial advisor to Ferco Aerospace Group
has been acquired by
Financial advisor to Cardboard Heroes
has been acquired by
Financial advisor to Absocold Corporation
Provided financial advisory services to Russell Cellular
regarding senior debt providers
has been acquired by
Financial advisor to Remington Steel, Inc.
Financial advisor to 3 Sigma Corporation
has been acquired by
Brady Ware Capital, LLC – Selected Transactions
has been acquired by
Financial advisor to Physician Technology Partners
has been acquired by
Financial advisor to Power Services, LLC
Sell Side Advisor Sell Side Advisor Sell Side AdvisorSell Side Advisor Buy Side Advisor Sell Side Advisor
Financial advisor to Qualitronics, Inc.
has been acquired by
Sell Side Advisor
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Duff & Phelps OverviewCorporate Finance
Compliance and Regulatory Consulting
DLMC
Valuation
M&A Advisory Financial Sponsors Group Fairness and Solvency Opinions Restructuring Advisory Private Placement of Debt and
Equity Transaction Advisory Services
Financial Reporting Valuation Tax Services Transfer Pricing Fixed Asset Management and
Insurance Solutions Real Estate Services Alternate Asset Advisory
Disputes and Investigations Legal Management Consulting
Compliance Consulting Regulatory Consulting Risk Consulting and Infrastructure Regulatory Tax Advisory Business Services
North America 1,500+ Total Professionals 200+ Corporate Finance
Professionals
Asia 250+ Total Professionals 10+ Corporate Finance Professionals
Europe 1,500+ Total Professionals 250+ Corporate Finance
Professionals
We Perform: Over 10,000 engagements annually for over 5,000
clients Over 6,000 valuation advisory engagements for more
than 1,700 clients Portfolio valuation advisory services for 70% of top-tier
private equity firms Over 1,000 transaction opinions for $2 trillion in deal
value since 2005 Nearly 400 M&A transactions over the last five years
We are the largest independent global
investment banking and valuation services firm
3,300+ EmployeesServing clients globally through
70+ Offices and AffiliatesIn North America, Latin America,
Europe, and Asia
Strong Global Presence and Capabilities
Overview
Worldwide reach bolstered by globally focused ownership group
8Brady Ware Capital, LLC
M&A Market Overview
BWC Market Observations
Strong pressure to deploy abundant capital for the right deals (more buyers than sellers) S&P 500 companies are
holding approximately $2 trillion in cash
Private equity firms are holding over $850 billion in committed capital
Competitive and complex markets require companies to look for acquisitions to stay ahead
Low interest rate environment Level of due diligence is high Private equity is available to lower
middle market companies Many entrepreneurs remain
“stuck” Solid valuations that reflect
business fundamentals
More sellers coming to market Rising interest rates and stock
market volatility 2020 election Strong economic expansion
entering 10th year Unknown events, e.g. tariffs,
geopolitical risks, etc.
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Healthy Economic Backdrop Driving Strong Appetite for Acquisitions Potential Turning Points in the Market
Lower Middle Market Deal Statistics
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Source:Pitchbook Source:Pitchbook
Private Equity Overview
Private Equity Overview- A Snapshot
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Differentiating FactorsSizeSpecialtiesServicesExperiencePreferred Transaction StructuresIndustries of InterestLocations of Interest
Sources of CapitalPublic and Private Pension FundsQualified IndividualsEndowment FundsInsurance CompaniesInvestment Advisors & Money Management FirmsSovereign Wealth FundsCharitable FoundationsFund of Funds
Source: Prequin
Private Equity Overview- Acquisition Objectives
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Goals & Objectives• Encourage owners and management to re-invest in the
business to align long-term interests• Grow through strategic initiatives: Add employees to facilitate expansion Improve and increase service and product offerings Increase market share through organic growth and acquisitions Enter new markets
• Increase efficiencies and optimize operations• Sell the business when strategically optimal
Trends in the Industry
Private Equity Committed Capital
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$182
$106
$150
$158
$285
$281
$255
$312
$326
$346
$0$100$200$300$400$500$600$700$800$900
$0$50
$100$150$200$250$300$350$400$450
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cum
ulat
ive
Ove
rhan
g ($
billi
ons)
Cap
ital R
aise
d ($
bi
llion
s)
Dry Powder Capital Raised
$855
Source:Pitchbook
Approximately $855 billion of private equity capital remained unallocated atthe end of the fourth quarter in 2018.
Significant Private Equity Capital Remains Available
The number of deals and total deal value continue to rise at a robust pace.
Private Equity Deal Statistics
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Private Equity Deal Value and Count Continue to Increase
Source:Pitchbook
Increasing average hold times for portfolio companies is decreasing the amount of sales per year.
Private Equity Deal Statistics Cont.
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Private Equity Exit Activity Remains Moderate
Source:Pitchbook
Private Equity Add-on Acquisitions
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Acquisitions to expand current portfolio companies continue to increase as a percentage of total buyout activity.
Add-On Acquisitions Continue to Rise
Source:Pitchbook
Private Equity Benefits & Challenges
Private Equity Benefits and Challenges
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Benefits Challenges
Equity & Growth Capital• Liquidity and diversification for the owner• Growth capital to expand the business
Transfer of Duties• Allows owner to focus on the business
attributes he/she enjoys
• Private Equity can bring invaluable expertise to grow the business
Expertise
Entrepreneurs as Employees• Transition from owner to employee
• Redundancy resulting in job loss-typically in administrative departments
• Use of leveraged buyouts is a common practice and can put pressure on future cash flows
Potential for Loss of Jobs
Increased Leverage
Panel Discussion
Our Panelists
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Pete Munson
Managing DirectorCardinal Equity Partners
John Jacinto
President & CEOVistech Manufacturing Solutions
Jim Whalen
Chairman and CEO of Hartzell
Former CEO of GEMCITYEngineering and Manufacturing
