When it’s time for a private company to go public, or the board of directors determines that fundraising is needed on a large scale, an IPO is not the only option. There’s also a less well-known and, until recently, less-well-respected option: a reverse merger into a public shell. It is often called an Alternative Public Offering (APO).
This reverse takeover process, which can be faster and cheaper than a traditional Initial Public Offering, is growing in popularity.
Scott Jordan (no relation to InterimExecs’ CEO Robert Jordan), an investment banker and CFO who spent 30+ years working in biotech, engineered a reverse merger of a biopharma company in 2019. He says that while the coronavirus caused capital flow interruptions, investors in the private markets are still providing capital to companies with novel or scientifically validated biotechnology companies.
That means reverse mergers and PIPEs (Private Investment in a Public Entity) can still raise the money needed to complete their deals. He estimates that about 20 biotech firms debuted in the public markets last year as a result of reverse mergers and the number is on track to repeat in 2020, despite the virus.
As the incredible success of private equity over the past couple of decades has made clear to many aspiring company owners and investors, if you can find and acquire a decent company, it’s possible to earn great returns. This has fueled a new class of individuals seeking to launch their own search funds. But how to start a search fund that wins at the acquisition game?
This guide to starting a successful search fund answers the questions: What is a search fund? And, How can I start a successful search fund?
We talked to Stephen Meade, founder of TheBullsEyeGuy.com, who shared his expertise in a cryptocurrency 101 tutorial. In this beginner’s guide, he explains what cryptocurrencies are, explodes some myths about what they’re good for and helps you understand how you may use them to manage your business in the future.
Let’s dive in.
InterimExecs founder Robert Jordan learned early the tremendous weight an entrepreneur must bear: “When you own the company, it’s nothing like being an employee,” he writes in exploring the sacred trust of ownership. “You might as well compare lifting up a hundred pound weight versus a feather.”
Jordan, who founded his first small business at age 26 and “hit every speed bump you could possibly think of, and then a couple more just for creativity points,” has learned a lot along the way. Among the most important lessons: while business exit planning is critical, it is usually neglected – at the owner’s and board’s peril.
He believes that an economic downtown is coming because, he says, the way “governments have been printing money” to fight the pandemic is “just not sustainable.” That means the cash small business owners need to survive could dry up quickly.
And that, in turn, will lead to wave of mergers and acquisitions, he believes, making it all that much more important for a company’s management team to add “crafting an exit strategy” to their business goals.
Avram Miller, a well regarded Silicon Valley luminary, has recently published a memoir that chronicles his journey in the world of technology.
It is called The Flight of a Wild Duck, which is how Intel’s CEO, Andy Grove, referred to him because Miller would always chart his own course. This included founding Intel Capital, which became the most successful corporate venture group, and playing a leading role in the creation of residential broadband.
The book is full of interesting stories of key figures in the tech world and well as important lessons.
“For private equity funds, the clock starts ticking the second you sign, the second you own your new portfolio company. So the Holy Grail is: how do you add superior value?” That’s how InterimExecs CEO Robert Jordan helped kick off a recent panel about adding value to portfolio companies. Sponsored by InterimExecs and hosted by Private Equity Career News publisher David Toll and John McNulty’s Private Equity Professional, panel experts shared best practices for value creation.
On the panel were Jordan, Micah Dawson, vice president of Portfolio Support at Trivest Partners; Pericles Mazarakis, managing partner of TriSpan; and Mike Zawalski, an InterimExecs RED Team member who serves in executive chairman roles with PE-backed portfolio companies.
Here, we round up the top insights from the panelists, everything from the importance of monthly operation reports to establishing trust with the business owner and investing in human capital.
Private equity funds are entering a new phase that requires new tactics to be successful against many alternative sources of funds. With a vast reservoir of dry powder – $1.5 trillion waiting to be deployed – PE funds seeking the whip hand will build and pivot while the economy is reinventing and reviving in 2021 and 2022. But what worked in the past won’t work in the future. Moving forward, adding value will require more attention to management fit for the purpose of rapidly transforming portfolio companies.
“Every good private equity professional will tell you that the most important factor behind a successful investment is the management team,” said Eric Jones, a partner and member of the corporate and private equity groups at Detroit law firm Honigman LLP. Jones was a speaker at the University of Michigan Private Equity Conference held virtually in September 2020 and attended by InterimExecs. “You can have even market share, but without a very strong management team, it’s not going to be sustained. The business isn’t going to grow and the investment piece isn’t going to be realized,” he said.
The COVID-19 pandemic and global economic lockdown has seen merger and acquisition (M&A) activity plummet. From $3.9 trillion in global takeovers in 2019, announced deals plunged 51% in the first quarter in the US according to Refinitiv. Uncertainties in the business and capital markets have led to buyers delaying or cutting back on their acquisition plans. But with crisis comes opportunity. Those able to navigate the new risk landscape may find compelling deals on the other side of the pandemic. Now more than ever, expert help with strategic planning, modelling out “what if” scenarios when the world frees up from lockdown, and preparing better for post-acquisition merger integration can help owners succeed in acquiring or being acquired.
It might be a challenge to develop a new medical facility in the United States. But it’s nothing compared to developing one in sub Saharan Africa.
That’s what Dr. Rodney Armstead learned on his 5-year quest to open the first specialty practice and minimally invasive surgery center in Accra, the capital city of Ghana.
LuccaHealth Medical Specialty Center has two campuses in Accra. One opened in November 2019 and the other in February 2020. Together, they will offer 11 specialties and minimally invasive (laparoscopic) same day surgery when LuccaHealth is fully operational at the end of 2021:
U.S. Banks are growing concerned — if not alarmed — and are reevaluating just how lax they are when it comes to handing out commercial loans. With sour loans on the rise, that’s not a pretty picture for companies that rely too much on credit lines or commercial loans. This is, in essence, a self-imposed business risk, as they are more dependent and susceptible to any fluctuations that occur.
A recent Financial Times article reported that non-performing loans increased by 20% at ten large commercial lenders. How much of an impact is that on the bank industry exactly? According to the Financial Times analyst, that’s a hefty $1.6B in the first quarter alone, a significant shift from credit quality since 2016, an era where the dust had settled from crashes and subsequent defaults on loans. The future started looking bright. Lending portfolios and credit quality began to improve.
With merely three years of positive momentum, fast forward to present day and all that has changed and not for the better. “Since most businesses utilize a credit line or other commercial loans, any slowdown will impact all types of commercial lenders – banks, asset-based lenders and factors,” said Yoav Cohen, an interim executive who has spearheaded eight turnarounds and liquidations, each one successful in paying off secured lenders in full. Cohen has seen it all, serving in roles as varied as interim CFO, COO, and a Chief Restructuring Officer.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.
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