Strategic Equity Group provides the service that you would expect from a boutique firm, and the experience and expertise usually only found in larger firms. We are a relationship driven, results oriented firm that specializes in the following areas:
Sell Side Representation
Strategic Equity Group provides a broad range of services in the mergers & acquisitions area. When assisting in the sale of a business, SEG begins by conducting preliminary discussions prior to the engagement. During these discussions, we explore the goals and objectives of the selling shareholders, including valuation expectations and desired outcomes in non-financial areas. We help educate the parties about the steps involved in completing a transaction, as well as what to expect during the process.
Once a decision to sell has been reached, a formal engagement triggers the next step in the process. This step involves performing an evaluation of the business, including an assessment of the strengths and weaknesses of the company, its operational and management structure, and its historical and expected future performance. At this stage in the process, we attempt to identify value drivers that we can use to enhance the overall outcome for the seller. This information is organized into a confidential selling memorandum that is intended to answer those questions most often asked by buyers, and highlight the attributes of the company.
With the assistance of management, our expert team then compiles a list of potential buyers and develops a strategy to attract those buyers that are likely to bring the maximum value to the opportunity. SEG works with these buyers to enable them to present offers, which ensure the highest price at the best possible terms for our clients. In many cases, we are able to foster an auction environment to improve our negotiating position and maximize the overall outcome of the transaction.
In situations where the parties to the transaction are already known, we provide assistance with transaction structuring and negotiation. We support our negotiating position with in-depth analysis based on supportable data. This approach has resulted in an enhancement in the purchase price of many of our clients in cases where the buyer had already been identified prior to our involvement.
In those instances where boards of directors deems it advisable, we also have the capability to provide fairness opinions which help them determine whether the transaction is fair to all of the shareholders.
Buy Side Representation
For individuals and companies seeking to acquire a business, Strategic Equity Group works to clearly define an acquisition strategy, emphasizing the client’s strengths, including industry experience and financial resources. SEG then focuses the acquisition search by defining the attributes of the target company, including size, location, and industry. Once these specific attributes are defined, SEG contacts potential candidates to initiate a dialogue as to their desire to exit the business. Once preliminary interest to move forward has been established, SEG then obtains and analyzes the relevant financial information of the target to develop an offer to acquire the company. Once the offer has been negotiated and accepted, SEG assists the buyer through the due diligence process, and ultimately the close of the transaction.
For business owners who are seeking a partial or complete exit on a tax-advantaged basis, an Employee Stock Ownership Plan (“ESOP“) may be an ideal structure. Subject to ERISA, an ESOP is an employee benefit plan that is designed to invest primarily in the sponsoring employer’s stock. ESOPs are typically used in the following scenarios:
- The business owner wants to monetize a portion of his typically largest and most illiquid asset, but doesn’t want to sell the entire company
- The business owner is proactive, and wants to establish a vehicle for a future exit strategy
- Two or more shareholders have goals and desires that are inconsistent
- The business owner wants to provide an employee benefit tied to company performance, while still achieving other goals
Attributes of companies that make ideal ESOP candidates are relatively stable cash flow, a high payroll base, the presence of second-tier management team, infrastructure to support an ERISA plan, and an employee-minded owner. For appropriate situations, ESOPs provide a way for the selling shareholder to defer, and in many cases eliminate, the capital gain on the sale of the interest. At the same time, subject to certain limitations, the Company can deduct both principal and interest in the repayment of the loan used to buy the selling shareholder’s stock.
Strategic Equity Group possesses significant expertise in this area. Let us help you assess whether your company would make a good ESOP candidate.
GAAP has changed, and all companies, public and private, are subject to the new accounting rules. ASC 805 must be applied in valuing a transaction and measuring its impact on future earnings. Goodwill must be initially recognized as an asset in the financial statements and measured as the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. ASC 350 must be applied when a company has made acquisitions resulting in goodwill. With the adoption of ASC 350, amortization of goodwill is no longer required or permitted. Instead, goodwill must be tested for impairment at least annually at the reporting unit level using a “fair value” test.
Strategic Equity Group possesses particular expertise in helping clients comply with ASC 805 and 350. In a coordinated effort, SEG will assist management, their accountants, and attorneys in an effort to:
- Determine reporting units
- Allocate previously acquired goodwill and intangible assets to the reporting units
- Identify and determine the fair value of intangible assets
- Estimate the remaining useful life of intangible assets
- Determine the fair value of the goodwill reporting units
- Allocate the purchase price of acquired entities to assets, liabilities, and goodwill of the reporting units
- Test for goodwill impairment on an ongoing basis
Strategic Equity Group is on the cutting edge in compliance with ASC 480, having just completed engagements for several noteworthy clients. Please contact us for more information regarding our expertise in this area.
SEG has performed these analyses for numerous publicly traded and privately held companies. Big 4 and other national and regional accounting firms have accepted our conclusions. Contact the professionals at Strategic Equity Group to discuss how this expertise can be applied to your unique situation.
Strategic Equity Group provides expert business valuation and financial opinion services. Our expertise in business valuations, securities design, and financial opinions has been gained through the performance of hundreds of engagements for closely held businesses, middle market companies, and occasional Fortune 500 clients. As a result of its extensive client base, SEG has expertise in most industry categories.
Parties requiring a financial expert’s opinion on pricing, fairness, solvency, or structure have engaged SEG in an advisory capacity. The caliber and credentials of our professional staff affords our reputation and work product the credibility required to withstand scrutiny by the Internal Revenue Service, the Department of Labor, the Securities and Exchange Commission, and various courts of law.
Valuation and financial opinion services are often provided to satisfy the client’s tax, legal, or fiduciary obligations. In addition, management, in connection with a proposed transaction, or as a tool, often requests our opinion for internal planning purposes. SEG provides financial opinions for the following business purposes:
- IRC Section 409A
- Purchase Price Allocation (ASC 805)
- Estate Planning, Estate and Gift Taxes
- Corporate Dissolutions
- Family Limited Partnerships
- Recapitalization and Reorganization
- Fairness Determination
- Securities Design
- Partnership Dissolution
- Expert Witness Testimony
- Employee Stock Ownership Plans (ESOP)
- Impairment Testing (ASC 350)
- Warrants and Stock Options
- Incentive Stock Option Plans
- Acquisitions, Sales, Mergers, Divestitures
- Shareholder Buy/Sell Agreements
- Litigation Support
- Solvency and Capital Adequacy
Strategic Equity Group incorporates sophisticated valuation techniques and utilizes detailed research resources. SEG works closely with management to evaluate historical financial data and assists the company in the preparation of a projection of future performance. A thorough understanding of the company’s financial history, as well as its potential for growth, is instrumental in determining the value of the business.
With years of operational and contract negotiation experience, Strategic Equity Group is uniquely qualified to assist companies who are in distressed situations. The breadth of SEG’s capabilities in this area extends to:
- Assessment of business and financial risk
- Analysis of income generation to determine where changes need to be made, such as pricing, products, and marketing
- Evaluation of financial and management controls
- Identification of specific areas to reduce or control various costs
- Development of a formal, workable plan of reorganization
- Advisory services to unsecured creditors
Strategic Equity Group frequently works with other professionals, including insolvency counsel, assisting in both judicial and non-judicial reorganizations. The result is an economical and efficient solution to the Company’s financial problems.
Strategic Equity Group has a great deal of experience raising capital to meet client needs. After assessing a company’s requirements, SEG will use its thorough understanding of the capital markets and market conditions to deliver a financing on the best terms available.
Typical placements range in size from three million to fifty million dollars, and often cover multiple layers of the capital structure. This can include preferred or common equity, subordinated debt with warrants, convertible debt, and senior debt. SEG’s goal is to create the best possible capital structure for the client. This structure must both meet the needs of the business as well as provide the optimal mix of pricing and flexibility.
Strategic Equity Group can secure capital for its clients to achieve a number of objectives, including:
- Leveraged Buyouts
- Management Buyouts
- Growth Capital
- Acquisition Financing
- Going Private Transactions
- Private Placements in Public Equities (“PIPEs”)