Governance & Finance

  • The Affordable Care Act: What Businesses Face in 2015

    The Affordable Care Act will introduce new requirements in 2015, representing an important set of milestones for businesses—particularly midmarket companies. According to an NCMM report, more than 90 percent of midsize executives see health care costs as a challenge, and this latest series of provisions will certainly come into play for many companies.

    In addition, the shifting calculus of politics in Washington, D.C., as well as a Supreme Court–bound challenge of subsidized care, could cloud the future of what the ACA will ultimately do and the impact employers could face.

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  • Raising Equity: Minority vs. Majority Partnerships

    By Axial
    Raising equity for the first time can be an extremely difficult process for any business owner. One of the first and biggest decisions that must be made in this process is whether to sell a minority or a majority stake in the company. Understanding the implications, and pros and cons, of each route can help you make the right decision for a long-term business partner and for the future of the business. Here’s a breakdown of some the advantages and disadvantages of minority and majority partnerships that illustrates when each type of investment is best.  Read More >
  • What is an Earn-Out?

    By Axial

    Despite months of negotiation, buyers and sellers often have trouble agreeing on a specific purchase price. This misalignment on price can cause one or both parties to step away from the negotiation process. But the disagreement does not need to end the entire process. Rather than scrapping the transaction, one strategy to bridge the gap between the buyer and the seller is to use an earn-out.

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  • 4 Ways to Prepare Your Business for Sale

    By Axial
    When you decide to sell your company, it is not uncommon to find that many aspects of the business are not ready for a sale. Whether it’s incomplete financial statements, disorganized tax history, or legal oversights, the sale process can quickly become complicated and difficult. Consider these four areas before reaching out to intermediaries and investors in order to avoid a lower sale price and last-minute problems that could lead to the eventual dissolution of the deal.  Read More >
  • 4 Key Differences Between Financial and Strategic Buyers

    By Axial
    Whether you’re considering a sale of your business now or planning for a future transaction, understanding the mindset of different types of buyers is critical to your preparation and decision-making processes. By understanding the motivations and goals of each type of buyer, you can better prioritize which buyers fit your situation and focus on the right relationships.  Read More >
  • A Briefing for Owners of Middle Market Companies on Private Equity Firms as Potential Acquirers/Investors

    Many owners of middle market companies are relatively unfamiliar with the workings of private equity (PE) firms, and are therefore at a disadvantage when considering how and when private equity firms might be right for the potential sale of their business. Whether or not a potential sale of the business is something that you’re currently considering, this briefing document may prove helpful for when the timing is right.   Read More >
  • Financial Capital: 5 Broad Financing Options for Middle Market Firms

    While a middle market company has many critical relationships, such as those with customers, suppliers, and employees, its relationship with its financial capital providers may be the most important of all. Credit can be the lifeblood of expanding businesses, allowing for investment in new projects, the purchase of needed equipment, and more. Since the credit crunch beginning in 2007-08, banks have increasingly tightened their commercial lending standards and credit has become more difficult to obtain and more expensive, with higher interest rates and more demand for collateral. According to a National Center for the Middle Market survey, "54 percent of middle market companies said one of their key challenges was gaining access to financing."

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  • A New Case for Mergers and Acquisitions

    Nearly 40 percent of middle market companies express interest in mergers and acquisitions, with many actively looking for suitors. Traditionally, operational synergies have driven mergers - the idea that the target company and the acquiring company can enhance overall value post-acquisition. The companies' product portfolios or service offerings may complement each other, or a merger may eliminate redundant costs, bring enhanced purchasing power in negotiations with suppliers, or yield similar benefits of scale.  Read More >
  • Securing a Business Loan: Is the Climate Right?

    For the past five years, many middle market companies have struggled to get a business loan to invest and grow. There were several contributing factors, including Federal Reserve borrowing, new banking regulations, and slow economic growth. While all of the above are still prevalent, it appears we have crested the hill and are moving toward easier loan access.  Read More >
  • Get Business Funding Without a Bank's Blessing

    Capital is the blood of business. Without business funding, efforts are anemic. Growth, particularly for mid-sized companies trying to reach their next level, requires a good flow. Unfortunately, these companies face a challenge because traditional lending has yet to return to pre-Great Recession levels. That is why executives must consider non-bank financing strategies.  Read More >
  • Non-bank Financing for Middle Market Firms

    While many forms of financial activity have bounced back from the 2008-09 financial crisis, bank lending to middle market companies remains constrained. A 2012 National Center for the Middle Market (NCMM) survey found that 54 percent of middle market companies said one of their key challenges was gaining access to financing. And as banks face tightening regulations, from Dodd-Frank to Basel III, prospects for opening the lending spigots seem limited. As a result middle market companies need to pay close attention to the availability of financing available from non-bank sources. There are, in fact, a substantial number of institutions that provide funds to middle market companies.  Read More >
  • Rethinking Competitive Advantage: Why Mid-Sized Businesses may have the Advantage

    By Jay Anand
    Competitive advantage is the basis of the superior performance of a firm relative to its competitors. Over the last twenty years or so, the most popular explanation of competitive advantage has been based on the notion that the firm possesses something special in the form of superior resources and capabilities. In other words, firms that possess superior resources and capabilities would have a competitive advantage over their rivals in a given market, and hence they would show extraordinary profits and performance. Fellows of the NCMM, Anand and Lu, challenge this simplistic notion on the grounds that it is difficult to know which firms actually possess superior resources and capabilities until after the evidence of competitive advantage and superior performance is already in.  Read More >
  • A New Case for Acquisitions: Target Firms that Benefit from Financial Synergy

    Middle market interest in mergers and acquisitions is stronger than in recent years, with close to 40% of mid-sized companies at least open to - if not actively seeking - suitors. But, which target to go after? Frequently, the recommendation is to pair up with a target such that the combination will produce operational synergies, whether it is the elimination of redundant costs or new growth through the pooling of their joint capabilities. But, what about financial synergy? Could not a well-endowed acquirer benefit a resource-constrained target, which might otherwise pass on profitable investments? Helping the target to fund these profitable investments could create value for the mutual benefit of the acquirer and target. Therein lies a new recommendation for seeking a target, particularly in the days ahead when surely the Fed's stimulus will end and capital will be harder to obtain.  Read More >

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