Insights from Milwaukee’s Smartbusiness Dealmakers Conference: Key Takeaways
By: Brady Paschke
The Milwaukee Smartbusiness Dealmakers Conference is an annual event that brings together professionals from different industries to discuss trends, challenges, and opportunities in mergers and acquisitions. This year’s conference featured a range of speakers across seven various sessions who shared valuable insights and strategies on how to maximize sell-side transactions, grow businesses in a recessionary environment, build strong teams, and demystify alternative capital sources. Here are some of the key takeaways from the seven sessions at the conference:
Maximizing Your Sell-Side Transaction
One of the most important things to keep in mind when selling your business is to have a shared vision with the buyer. This means making sure that both parties are aligned on the future direction of the company. It’s also important to include trusted advisors on your team early on, as they can help negotiate the transaction and provide valuable insights into the process. Additionally, it’s essential to ensure that your management team can speak intelligently about your business’s trajectory and pipeline to maximize its value.
Growth in a Recessionary Environment
In today’s challenging economic climate, businesses must find ways to grow or risk falling behind. While there is no one-size-fits-all solution to growth, the speakers at the conference emphasized that people are the most important part of the equation. It’s important to listen to feedback from within the company and develop a workforce with a family atmosphere. Additionally, advisors must be mindful that not every client has the same capabilities and skillsets, and they should avoid becoming too institutionalized. The key is to develop individual growth for employees and all stakeholders.
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Building a strong team is critical to the success of any business. When going through a transaction process, it’s important to involve key people in the process early on and to create a transition plan to maximize value. Communication is key, and it’s important to inform employees of the transaction as soon as possible following the closing of the deal. Critical employees will typically look for a financial incentive-based retention program that lasts 1-3 years. It’s also essential to inform customers and suppliers of the transaction and work with the sales team to communicate and excite them about the new developments.
Demystifying Alternative Capital Sources
Alternative capital sources such as venture capital and private equity can provide access to funding for businesses looking to grow. However, it’s important to approach investing these asset classes with caution and curiosity, especially if you’re new to the field. Participating in a fund of funds can provide transparency into various venture capital strategies and direct investment opportunities.
Business Complex Capital Stacks
Capital stacks can be complex and challenging to put together. One of the key takeaways from this session is that relationships are critical in building capital stacks. It’s important to invest in your advisors as they can help open doors to additional capital opportunities. However, it’s crucial to understand the details of your capital structure and not rely solely on your advisor team to comprehend them.
Buyer Considerations in a Changing Market
Buying a business involves predicting the future, and that can be a daunting task in a constantly changing market. Some of the significant issues that buyers face today include wage inflation, bad contracts, and workforce issues. Furthermore, the credit community is no longer supporting outlier bids for selling portfolio companies of private equity firms, leading to a holding pattern and a decrease in private equity groups actively looking to exit investments.
However, private debt groups are likely to deploy capital as they need to put their capital to work. Additionally, more third-party diligence is required in the current financing environment. It’s important to note that employees are a valuable investment, and the cost of turnover is more than the cost of paying employees a fair wage for their work. Above all else, relationships and communication endure in all environments.
Transition or Exit – How to Build Long-Term Value and Plot Out The Future of Your Family-Owned Enterprise
Strategic plans are essential, but they are just words. To take advantage of reality and opportunity, you need to be prepared for the unexpected. One of the keys to building long-term value is taking care of your people, and culture plays a vital role in this regard. As Mike Tyson famously said, “Everyone has a plan until you get punched in the mouth,” so it’s essential to be ready for a sale at all times.
Finally, it’s important to surround yourself with really smart people and let them do their job. Building a team of trusted advisors and experts can help you navigate the complexities of a deal and maximize your chances of success.
In conclusion, the Milwaukee Smartbusiness Dealmakers conference provided valuable insights into maximizing sell-side transactions, growth strategies, capital stacks, buyer considerations, and long-term value building. These sessions emphasized the importance of building relationships, investing in your people, and being prepared for the unexpected. Whether you are a buyer or a seller, having a team of trusted advisors and experts can make all the difference in navigating the complexities of a deal.
Craig Arends is a principal at CLA and is the managing principal of CLA's private equity practice. Craig brings a concentration of experience in providing accounting and transaction structuring advice for leveraged recapitalizations, purchase accounting and SEC reporting, assessing quality of earnings, and GAAP accounting. He has far-reaching experience with critiquing financial models and reviewing target companies' financial performance to identify cost reductions and/or operating efficiencies Craig has more than 30 years of experience in public accounting serving public companies, private equity groups, and companies, including a term as principal in charge of a Big Four Capital Markets Group in Moscow, Russia. He has led financial accounting due diligence projects for private equity investor groups and venture capital funds, primarily in the technology, communications, and manufacturing industries, as well as assisting with Foreign Corrupt Practice Act matters ranging from investigation of payments made, validation of compliance with corporate policies, and review of proposed transactions to ensure compliance. When not working, Craig enjoys watching any sports, but his most favorite are baseball, football and soccer.
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