This past week, David H. Crean, PhD, Managing Director and head of our Life Sciences and Healthcare Practice Group, spent time reviewing the >400 life science opportunities that were presented to him and our investment banking firm in 2017 in which entrepreneurs and business owners were looking for either capital financing, sell-side M&A, strategic advisory services or partnering/ licensing. Nearly invariably, each investment pitch lacked the complete and necessary material to tell the comprehensive story that would be compelling for an investor to write a check. These entrepreneurs are very smart and passionate about their mission but need to recognize and think like investors or strategic buyers. Investors see and hear many investment opportunities and you need to be differentiated and stand out from the masses.(more…)
A wise advisor once said, “Obvious buyers are obvious”. This truism serves as a recommendation to sellers to seek beyond the obvious buyers when constructing a list of potential acquirers
Obvious buyers typically identified include a mix of direct competitors and the large players that dominate the sector. Many investment banks often provide sellers with a list of the 25 or so obvious buyers, resulting in the seller feeling a false sense of comfort because all the names of the potential acquirers that they are familiar with are on the list. And, while many of these companies may represent high-fit potential acquirers, the seller is missing out on engaging with a large number of less obvious, high-fit potential acquirers. These acquirers have a strong strategic rationale to acquire and a resulting high willingness to pay a premium purchase price.
The fundraising landscape for healthcare and life science companies has changed dramatically over the past several years. Entrepreneurs and business owners in these industries need to look toward emerging categories of investors to provide the funding that was historically serviced by venture capital firms (VC’s). Corporate venture funds, angels and angel networks, government agencies, and foundations are all actively investing in these sectors and represent newer, non-traditional avenues for raising capital. However, the latest growing trend is the participation of family offices.(more…)
When owners decide to sell their company, one of the first things they consider is building a list of high-fit potential acquirers for the business. With private equity (financial) acquirers becoming so abundant in the last 10 years (over 2,500 in North America), the list of potential acquirers to approach in the sale process is likely to consist of both strategic and financial acquirers.
You received an inquiry or offer to buy your company - now what?
An unsolicited acquisition offer for your business can come as a surprise. If you haven’t considered selling your company or you are 3-5 years out from your planned exit, you may be caught off guard. This can lead to stress and worry about making the right decision in order maximize the sales price.
No matter what your industry of focus is, there are some key strategies you should employ when faced with an inquiry or offer to acquire your company. The decision you make must be an informed decision in alignment with your objectives.(more…)
From the moment you make a decision to set up and operate a business, you’re in the “business lifecycle.” Fasten your seatbelt before the drive as you’ll journey from idea to startup, and if successful, through to the growth and maturity phases. Each stage of the lifecycle has a unique set of obstacles to deal with and overcome. Being flexible in your thinking and adapting your strategy as you move along will serve you well. This not only applies to a business strategy but also to the financial plans to support the development and growth of the Company. A capital financing strategy should summarize investor targets for outreach by stage of the lifecycle, inflection points and how these will change valuation, and the actions to be taken over a three-to-five year period to achieve the company's goals in its business evolution. Putting together the strategy is hard work that takes time and considerable thought. Raising money is also hard work, so get started today.(more…)
David H. Crean, PhD, Managing Director and head of our Life Sciences and Healthcare Practice Group provides his thoughts and guidance to entrepreneurs, founders and business owners in the life sciences sector on what he has seen as successful pitches to investors and strategic companies in the initial pitches of their company and technology. By providing as much of the information noted below during the process, we believe that you can improve the probability and chances of landing a transaction that supports company growth or exit strategies. David has also previously authored related articles on this topic that can be viewed here and here. Happy to clarify any topic if needed.(more…)
By Channing Hamlet
Managing Director, Objective Capital Partners
In the wake of a number of accounting scandals in the early 2000s (Enron, Tyco, WorldCom), the IRS enacted new legislation, Section 409a, to curb perceived abuses in deferred compensation. This was mainly a reaction to executives of these companies withdrawing significant cash from their deferred compensation plans at a time when the companies were failing and shareholders were left holding the bag.
In typical IRS fashion, the reaction was significant and far-reaching. As a result, Section 409a is a large and relatively complex body of legislation. To boil it down to a simple concept: if a company provides guaranteed compensation to a recipient, taxes are due at the time the agreement is made rather than when the compensation is paid.
As part of 409a, beginning December 31, 2008 the IRS required private companies to perform formal valuation analysis when granting stock options to ensure that the strike price of the option is granted at or above fair market value of the Common Stock. Going back to the spirit of 409a described above, if the strike price is below fair market value, the recipient is supposed to recognize income. As part of the 409a regulation, the IRS provides a safe harbor for companies that choose to work with a qualified appraiser.(more…)
By Channing Hamlet
Managing Director, Objective Capital Partners
For business owners to truly assess the potential value of their business, they must first understand what drives business value in their industry. While at a very high level one can use metrics like Enterprise Value (EV)/Revenue or Enterprise Value (EV)/ EBITDA multiples to assess rough hypothetical values, the reality is that each industry has a unique valuation metric that is used to assess businesses that operate in a particular space or sector. Additionally, there are a number of factors besides just growth and profitability that drive significant value.
Successful business owners and leaders create, understand and track specific metrics that increase the value of their business. This article was written to assist you in defining the things to think about in order to manage and grow the value of your business.(more…)
This article is provided for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC makes no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person.