SCA’s experience shows that most middle market companies ($20 million to $200 million annual revenue) operate very efficiently. We also see that most companies have good one year operating plans. However, we rarely see businesses in the middle market that have three year business strategies.
Most bulge bracket companies have very good three year business strategies and their internal corporate development departments are responsible for developing and implementing those strategies. Most middle market companies do not have a corporate development function, and likely do not need a full time corporate development team.
However, most of these same middle market companies could benefit from crafting a three year business plan designed to achieve the long term goals of the shareholder(s) and management team. SCA offers a corporate development service that works with management teams to develop these plans, monitor their implementation, and update/modify the plans year over year.
The corporate development process typically includes:
- Personal goals of the shareholder(s) and management team members
- Corporate goals
Product/Service + Industry + Geography + Customer Type Mapping
- Define existing business
- Define gaps between existing business and goals
- Identify opportunities for growth (or reduction) to achieve goals (i.e. fill the gaps)
M&A Strategy – where appropriate, build a merger and acquisition strategy to support achievement of the above
Sell Side Advisory
SCA prides itself on its expertise in assisting clients through one of their most important business transactions – selling all or part of their business.
SCA professionals have deep functional expertise in optimizing value for clients, whether it be with a new strategic partner or new financial partner or both. SCA professionals also have expertise across a variety of industries, including:
SCA believes that optimizing value is only part of the overall solution. Depending on the client’s individual goals, other attributes may weigh equally, or more, heavily. Such attributes include the new partner’s ideas on growth; their plans for the business, management, and staff; their future reporting and management requirements and style; overall personality fit; and more.
SCA deploys a unique analysis identifying and scoring the various attributes of each new potential partner to aid every client in making their best long term decision, considering more in the overall decision than just one measure.
Buy Side Advisory
SCA helps clients achieve their growth goals through targeted acquisition searches.
By working with each client to specify their targets based on industry, product/service, geography, customer coverage, size, and other operating metrics, SCA works to deliver an acquisition solution that drives value for the business more than simple top line growth can deliver on its own.
SCA works with clients from prospect identification through closing the transaction. These steps often include:
Contacting each target
Obtaining target company information
Conducting meetings between the client and target
Financial modeling to assist with structuring the offer and structuring the capital required to fund the transaction
Assisting with transaction negotiations and documentation post diligence
SCA helps clients determine the lowest cost and least dilutive structure to recruit new capital into the business to help fund growth, replace exiting shareholders, fund acquisitions, and more.
SCA professionals have deep and broad contacts across a wide variety of capital types throughout the world.
Creativity is key in capital raising. So is understanding the client’s business. SCA digs in to the business so when we recruit new sources of capital we match the short and long term needs of the business with capital options that optimize the short and long term impact on the business.
Furthermore, leveraging Signet Enterprises’ experience with domestic and international funding partners for real estate, operating businesses, venture funding, and other types of transactions enables SCA to bring non-traditional solutions to each capital raising transaction.
Thomas Carlyle, an 18th century Scottish philosopher, was quoted as saying “There are but two ways of paying debt – increase of industry in raising income, increase of thrift in laying out”. Far be it for SCA to disagree with a noted philosopher, but we believe that debt type, structure, and terms are actually more important that owing to the whims of economic cycles as it relates to the use of debt.
SCA assists clients securing a wide variety of debt types to help fund a wider variety of needs for the debt.
When evaluating whether or not to make an investment in a business, most investors and lenders evaluate each investment along three primary attributes, defined as Corporate M.P.G. ™ where:
M stands for the management team, or quality and breadth of the team
P refers to the past, or historical financial performance of the business
G indicates the growth opportunities the company offers for the future
The management team is the most important of the above attributes since the management team drives company performance, establishes company culture, and builds a foundation for the ongoing viability of the business.
This is true for any type of business and the value of the business can fluctuate based on the efficacy of each of the above. Companies that score well on each of the three attributes will generally have a higher value than similar companies with a lower score. The value for companies that score well on two of the three attributes will depend on which two of the three the business scores well as each of the three have a different value depending on a variety of factors such as industry, how long the company has operated, customer concentration, product concentration, and more.
Signet Capital Advisors provides a Corporate M.P.G. ™ assessment for businesses as part of the valuation process and to help shareholders optimize value for their business in the short term and for the long term. Using data from transactions and from other operating metrics, Signet Capital will score each business on each of the three attributes and provide insights on how to improve the score where a deficiency exists in order to improve the value of the business.