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CEO Advisor® Newsletter
October 2017

Strategic Acquisitions for Accelerated Growth

For CEOs or owners of closely-held companies, the fourth quarter is the time for strategic business planning. One of the most important decisions to be made during this planning process is how to best grow your business in the new year. Growth can be a complicated process involving multiple facets of your business and requiring specialized expertise.


Some of the key questions to consider are:

How quickly do you want to grow your company? How to best achieve your desired growth goals? Organic growth by selling and adding more clients? Creating new product/service offerings? Expanding into new verticals or new geographic markets?


For a closely-held business, growth is often achieved through all of the above. And while organic growth is an integral part of the plan, aggressive growth goals typically mean a strategic acquisition strategy, which can benefit you in many ways.


Strategic Acquisitions
The most common acquisition strategy is to buy another company with cash, seller financing, stock, an Earn Out or a combination of these four. Regardless of the structure, an acquisition is meant to create synergy that makes the value of the resulting company greater than the sum of its original parts or be accretive.

Through the strategic acquisition of another company, the acquiring company can achieve economies of scale, obtain key talent and intellectual property, efficiencies and enhanced market visibility. The acquisition can also increase the company's client base, add substantial revenue, expand into new markets, and increase shareholder value and other benefits.


Strategic acquisitions are attractive to CEOs and business owners of closely-held businesses whose companies are strong financially. Growth companies with a strong management team are effective at integrating acquisitions, and are better able to manage the accelerated growth. It allows them to expand their core capabilities and product offerings.


Strategic acquisitions can yield tremendous benefits, but there are five important criteria for you to consider:


1. You Must Have a Solid Business Model
A solid business model including Gross Profit Margins of 70 - 80% for software companies or 50 - 60% for service companies with recurring contracted revenue, need to have (versus nice to have) products and services and 15 - 30% Pre-tax Net Profits in a very large and sustainable market of identifiable prospects and customers.


2. You Must Have a Strong Corporate Management Team
You need to surround yourself with a strong management team; seasoned managers who know your business and can build on your company's corporate culture. They should understand the marketplace in which you operate and key drivers as to why customers buy. Having the right management team will make for a smooth transition during and following an acquisition.


3. Your Business Needs to be Financially Strong
If your business is financially solid with a proven track record for success, you are well positioned to take advantage of acquisition opportunities. Company strength can be characterized by your company's financial assets, lack of debt, recurring revenue, client base, equity in equipment, depth and breadth of talent, etc. Your business must be prosperous now and be well positioned for the future with a solid, strategic growth plan.


4. You Must Have Access to Capital
You will need to make sure you have access to capital and the borrowing capacity needed to complete your acquisition. Regardless of the state of the economy, access to capital can vary by region and by provider. Often as the owner of a closely-held business, you can look to regional and community banks for your borrowing needs. Seek out lenders who are knowledgeable of your business and plan ahead for all the capital you will need.


You can also partner with a private equity firm as an equity investor that can provide additional capital for acquisitions provided you meet their criteria. Seek help from an M&A advisor such as CEO Advisor, Inc. if your planning involves growth capital from a private equity firm.


5. You Must Have Expertise in M&A or Access to M&A Expertise
Throughout the acquisition process, it is important to work with a trusted advisor. Detailed planning with acquisition experts makes for improved decision-making and helps you avoid pitfalls, such as over paying or lacking to properly conduct Due Diligence.


For companies looking to grow through acquisition, an M&A advisor, such as CEO Advisor, Inc., should explain the acquisition process upfront and help you to understand the financial consequences of your acquisition options. In addition to discussing the risk factors, the M&A advisor should also explain the potential benefits to your company.


A strong M&A advisor will manage the entire acquisition process from preparation, to creating your target list of companies, to drafting and negotiating the Letter of Intent, Due Diligence, collaborating with your corporate transaction attorney and tax advisor.


Strong companies with aggressive growth plans, strong management teams, a good business model and access to capital can take advantage of acquisition opportunities, provided you have the needed expertise to guide you through the process.


Contact CEO Advisor, Inc. has the expertise and experience to help you make the tough decisions and execute your plan to turn your company around. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.

5 Ways That CEOs Improve Their Performance
5 Ways That CEOs Improve Their Performance

For over a decade, CEO Advisor, Inc. has improved the performance of companies by working directly with CEOs, presidents and business owners of small and mid-size companies. Here are five ways to ensure you will improve decision-making, performance, profits and the value of your business.

1. Meet with Seasoned, Trusted People
As a CEO, it is your job to find professionals from outside your company who can bring expertise and experience to plan, solve problems and help you in execution. Seek out a trusted business advisor, corporate attorney and tax advisor to ensure you have the professional help and hands-on advice you need.

2. Learn from Experience
Effective decision making is paramount to your company's success. Your ability to review and assess past actions for ways to improve distinguishes great CEOs from good CEOs. Learning from others who 
are trusted and seasoned professionals, such as other industry CEOs or a seasoned, hands-on business advisor, is critical to improving performance and success.

3. Gather Feedback
Gain valuable feedback about your performance. It is not enough to just ask for feedback and hope it comes to you. You should actively solicit feedback both from your employees, as well as others, such as a board member or a seasoned business advisor or consultant. Feedback from a trusted business advisor should be on a regular schedule (weekly) to ensure real benefit and follow through.

4. Seek out Mentors
Reach out to those who have gone before you to gain from their experience. The CEO job is difficult, so make sure you have business professionals and/or a trusted business advisor in your circle who have been in the CEO chair and knows the challenges of the job.

5. Plan and Execute
As soon as you engage with a professional that can help you,  formulate goals together and prioritize these goals with target completion dates. Then, focus on each goal to ensure that progress is being made on a weekly and monthly basis. October, November and December are the best months to plan for the new year, so be proactive and seek out help today.

CEO Advisor, Inc. can help you achieve these five critical traits and help your business become a high performing company. We work with CEOs, presidents and business owners of small to mid-size companies to grow your business to the next level.

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc., for a free initial business consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us today at www.CEOAdvisor.com for more information.

CEO Advisor, Inc. has the expertise, coupled with hands-on advice, to help you increase sales, profits, value and to grow your business to the next level. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc., for a free initial business consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us today at www.CEOAdvisor.com for more information.

Testimonial  


"My company has been working with Mark for the past month and we have already experienced tangible benefits from his advice and recommendations. He brings energy, experience and a high degree of professionalism as an advisor to our company. The value of having such an experienced consultant at our side at a very important point in our company's history aided us in improving our overall value. His input has been a worthwhile investment".

President, Technology Company

Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc., provides a broad range of services and Mark is there for the CEO every step of the way."
Partner
Haynes & Boone, LLP


"Mark Hartsell and CEO Advisor, Inc. provide a unique advisory service for CEOs. He not only tackles high level strategic issues to assist CEOs navigate through challenging times, but Mark also gets very involved in actually addressing important issues head-on by performing the work to achieve tangible results.


Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way."

 


Partner

Haynes & Boone, LLP

Words of Wisdom


"We are what we repeatedly do. Excellence, therefore, is not an act but a habit."

Aristotle
Greek Philosopher




"Yesterday does not equal tomorrow. Forget the past and move towards your goals."

Tony Robbins
Motivational Speaker

"Yesterday does not equal tomorrow. Forget the past and move towards your goals."
Tony Robbins
Motivational Speaker
"Yesterday does not equal tomorrow. Forget the past and move towards your goals."
Tony Robbins
Motivational Speaker



Prime Minister of the U.K.