Overcoming Obstacles & Planting Hope in Madagascar

Helicopter or private plane is sometimes the only way to access remote villages in Madagascar, to provide supplies, medical attention and share the Hope of Jesus Christ.

In 2015, the Optivest Foundation was first led to Southern Madagascar alongside ministry partner Dynamic Church Planting International, where one particular Board member’s heart was captured by the needs of many unsupported people who live across the country's vast, rugged terrain. The ethnic group in this region is defined in church planting language as an ‘unreached people group’ because it does not have an indigenous, self-propagating Christian church movement. Other contributing factors to this definition are the remote location, absence of national support, severe drought- prone topography and little to no agricultural development.

Since 2015, members of the Foundation have traveled with DCPI annually and developed a personal relationship with local missionary and leader of the Jesus Family Kingdom ministry, Sedera Rakotoaritsifa. Together, they've developed strategic plans to access remote villages to provide clean water wells, medical and dental care, and plant churches that Sedera continues to foster.

Recession Fears and M&A

by Paul Donnelly

Premium equity valuations and rising interest rates stress our markets on a fundamental basis that high consumer confidence and low unemployment in the U.S. ultimately cannot outrun. A brutal start to this year for markets only got worse in June. The S&P 500 closed out the first half of the year down nearly 21%—the steepest first-half loss seen in more than five decades, leaving the benchmark index firmly in bear market territory.

At the time of this drafting, the Fed Funds Rate has increased from .08% in February to 1.21% in June, resulting in higher corporate debt costs. Meanwhile the inflation rate is at 9.1% for the latest 12 months ending June of this year. The big “R” word is now in full play. Although, there is a wide debate gap as to the intensity and length of the pending recession. As history often does repeat itself, the equity markets do not need a recession as an excuse to correct. However, corrections often fuel fear and caution.

So what does this mean in terms of the M&A markets? Let's take a closer look.

Recession buyers flight to quality

Deal activity does tend to decrease during times of economic turbulence. Credit becomes harder to secure and declining stock market values do spill over onto private company valuations. Many buyers take the “flight to quality” route, buying companies or assets that are perceived to be best-in-class with mission critical value propositions and operating leverage that provides opportunities to capture market share gains from weaker competitors.

Recession buyers often reap long- term rewards

While turbulence brings challenges, it also creates opportunities. Companies that are in a solid financial position can profit from downturns by seeking opportunistic acquisitions. Firms seeking to grow via the right deal will often find no better time to strike a bargain than during a recession.

However, these buyers must be disciplined to overcome short-term fears and capitalize on long-term rewards. Fewer buyers and tighter credit create an atmosphere of urgency that pushes targets to sell. Tough economic conditions can also allow strategic buyers to pick up troubled companies at a substantial discount. With strategic precision and a farsighted view, buyers can accelerate their market position and strengthen their financial profile even when broader economic conditions lag.

Recession sellers can seek a “Merger of Peers”

During a real or fear-based recession, companies that are excelling based on their current and projected revenue and EBITDA growth will continue to be met by buyers with enthusiasm and valuation premiums. Strategic buyers with big balance sheets can camouflage their own headwinds or real earnings challenges by announcing strong performing strategic acquisitions. Private equity, with an excess supply of capital, tends to put self-imposed pressure on itself to continue investing or risk returning capital to their investors. Private equity has learned that buying best-of-breed companies at premium prices still works during a 7 to 10-year fund cycle, no matter the market conditions.

Deal experience through economic cycles

Paul Donnelly and the Coil Partners team have executed over 130 transactions through all stages of market and economic volatility. We specialize in delivering corporate finance advisory and investment banking services to emerging growth and middle market firms. Thanks to our extensive industry experience, we have the expertise to close the most complex of deals. Over the years, Paul and the Coil Partners team have completed over $4.5 billion in transaction values.

Brand or Experience: How to Select Your M&A Advisor?

by Paul Donnelly

Choosing the right M&A advisor is perhaps the most critical variable in the success or failure of any deal. A good advisor has the skills, experience, contacts and industry competence to manage a successful M&A process that delivers transaction options that align with the client.

When many emerging growth and middle market firms begin this process, their decision makers are often enticed by the attention of the "big brand" investment banks. We used to refer to them as the “bulge bracket” or “super regionals.” And, if you aren't particularly well-versed in the M&A sector, attention from the “big brands” may fuel a false expectation of value.

The truth, however, is that business owners in this situation are almost always better off choosing to forego the big brand in favor of an advisor with the right experience and enthusiasm -- and here's why.

Brand vs. Experience -- and Why It Matters

The M&A sector is no different than any business space in that people often equate size with competency or quality. And while this might make sense at first glance, it doesn't pass muster upon closer inspection.

Consider this: If a middle market company seeking an advisor takes its business to a large Wall Street firm, there's an excellent chance that things get lost in the shuffle. Big brand investment banks also have big brand enterprises for clients, and it's unlikely that smaller companies and smaller deals are going to take priority.

Additionally, the big brands are going to assign their most talented staff to their largest (and most profitable) clients. While that may be good business, that's little consolation to the middle market company that gets assigned the B or even C team while the A teams are busy servicing larger clients.

Now let's consider the other side of that equation: Companies that partner with reputable and deeply experienced boutique advisories are going to receive a level of customer service from more experienced advisors that big brands are simply incapable of matching.

• Smaller advisors are often nimbler, more attuned to deal dynamics and capable of quickly changing course when conditions call for it. Businesses are much more likely to get the best a smaller advisory firm has to offer.

• When you combine these advantages with the right level of experience, you have an ideal situation for middle market firms. That equates to great customer service, access to high-quality advisors with enough experience to possess both keen insight into industries and the skill to identify and close deals.

By considering core questions such as these, business owners can ensure they are paired up with a knowledgeable and experienced partner with the deal-making chops to close.

Looking for an Experienced Partner?

Paul Donnelly and the Coil Partners Team offer corporate finance advisory and investment banking services for emerging growth and middle-market firms. We have a demonstrated record of deal-making success, closing more than $3.75 billion in transaction value.

If you have any questions about finding the right M&A advisor, we urge you to contact us today: (949) 596-7172

Is Your M&A Advisor Killing Your Deal?

by Paul Donnelly

Few business owners have the necessary experience, connections and free time available to effectively orchestrate the purchase or sale of a firm. That's why an M&A advisor plays such a key role in this process. By partnering with a professional dealmaker, business owners can minimize the risk of errors occurring and help ensure the sale or purchase process runs as smoothly as possible.

It's not enough to simply hire an advisor, however. You also need to make sure you're partnering with the right person, as the wrong one can easily kill your deal.

How the Wrong Advisor Can Kill Your Deal's Momentum

Great dealmakers share a number of the same attributes. By the same token, ineffectual advisors also tend to suffer from the same deficiencies. By identifying these characteristics early on, you can help ensure you're paired with the right partner.

Advisory Capabilities and Value Added Capabilities

Some of the key questions to consider when evaluating an advisor include:

• Does my advisor have the experience, skills and resources to run a deal process? Deal processes combine art and science. Should you run an auction or a negotiated vs. preemptive deal process? Is your advisor skilled at developing and communicating the proper set of deliverables (i.e. confidential information memorandum, management presentation, virtual data room, business analytics, financial model, et al.)? Your advisor’s ability to manage the art and science of a deal can materially affect the outcome.

• How well does my advisor know my industry? In today’s information access world, industry expertise is important but can be overvalued relative to the overall capabilities required for a deal process. As or more important is knowing how to position the client to the right buyers who will assign value to the client’s solution to a buyer’s problem, or see an opportunity the client provides the buyer that can be quantified. The right advisor should know how to tactically position your company, access buyers and quantify the overall value proposition underpinning the transaction.

• Does my deal align with my advisor’s capabilities and fee structure? The larger “bulge bracket” advisors and smaller investment banking boutiques each have different infrastructures, deal size and fee size requirements. The bottom line is this: larger transactions tend to be more process oriented which often requires more resources, while smaller deals – which do require good process skills – often rely on more relational capabilities and hand-holding of the owner operators, who may be doing their first and only M&A transaction.

Some of the value added capabilities to consider when evaluating an advisor include:

• How in tune is my advisor to the social issues of a deal? More deals lose momentum or die based on social issues. Social issues are the human, emotional and relational factors in a deal. Getting to know the client’s members and leaders is critical in helping all parties to understand each player’s value and role (or lack thereof) during and post transaction.

• Is my advisor a skilled negotiator? Dealmaking is an art; a great advisor knows precisely when to push and when to parry, when to demand and when to concede. A great advisor can jumpstart a stalled deal through skilled negotiation. A poor advisor can kill a deal that benefits all parties by alienating the other side or by being intractable, apathetic or unreasonable.

• Is my advisor willing to negotiate with me? It is rare in the deal process not to experience a gap in value between the seller and buyer. Experienced, value added advisors understand that this often requires separate negotiations with both the buyers and the client (seller) to close the “expectation gap.” Competence, experience, expertise and trust are key factors in these discussions. Do you trust your advisor to be forthright with deal expectations or will your advisor avoid the tough conversations until the final stages of the process, where you have the least leverage with your position?

By asking core questions such as these, business owners can ensure they are paired up with a knowledgeable and experienced partner with the deal-making chops to close.

Reach out and find the right M&A Advisor:

Paul Donnelly and the Coil Partners Team offer corporate finance advisory and investment banking services for emerging growth and middle-market firms. We have a demonstrated record of deal-making success, closing more than $3.75 billion in transaction value.

If you have any questions about finding the right M&A advisor, we urge you to contact us today.