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What Working Capital is Not!

1 – Working Capital is Not Cash!

First and foremost, let’s be clear what working capital is not, it’s not cash! In fact, all things being equal, when working capital goes up, cash goes down, and vice versa.  You'll often hear the expression, "the business needs to fund working capital for growth", when what is actually meant is that the business needs extra cash to finance the increase in working capital that accompanies growth. Businesses that try to grow without sufficient working capital are said to be 'over-trading'. 

In most businesses, the basic components of working capital are stock, plus trade debtors, minus trade creditors. This working capital will have built up over time as the business has grown and, generally speaking, the longer a business has been trading, the more complex the components of working capital will have become. To explain this, we can consider a company that starts trading on Day One, wholly in cash and without holding any stock. After its first year of trading, all profits will be in the form of cash, so its balance sheet will be 100% cash, and there will be no working capital – i.e., no stock, debtors, or creditors. However, as the business starts to give credit to its customers (that become trade debtors), take credit from its suppliers (that become trade creditors), and invest in the stock, the constitution of the balance sheet will change such that its assets are cash, trade debtors and stock, and its liabilities are its trade creditors.

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M&A Activity During A Recession

With discussions of a recession looming, business owners may display concerns about the timing of going to market to sell, asserting that the economic downturn will not be beneficial if they were to go to market. In fact, acquisition opportunities present a significant value creation prospect for private equity groups, which tend to increase mergers and acquisitions during a recession for various reasons.

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Benchmark International Successfully Facilitated the Transaction Between S&R Eisenmann GmbH and a private investor

Benchmark International is pleased to announce the acquisition of S&R Eisenmann GmbH by private investor, Marcel Brinkwirth.

The seller, S&R Eisenmann, based in Hemmingen, Germany, is a well-known brand in the automotive and tuning sector, manufacturing exhaust systems, catalyzers and roll over bars for sports cars in series and individual production. The company provides both to aftermarket customers and to Germany’s premium OEMs.

In January, private investor and MBI-candidate, Marcel Brinkwirth, took over 51% of the company’s shares and now serves as managing director. Mr. Brinkwirth has extensive experience, working for over 10 years in the automotive, consultancy and private equity sectors. He worked not only as an executive freelance consultant for Germany’s premium OEMs but also had several management positions during his career.

Post-acquisition, Mr. Brinkwirth is planning an intense growth strategy, measuring top-line growth and improving gross margins to further improve profitability levels. 

Ready to explore your exit and growth options?

Commenting on working with Benchmark International, Rolf Eisenmann, founder of S&R Eisenmann, said: “Benchmark International as lead advisor made this deal possible. The highly dedicated team backed me up, while I focused on the daily business. I always felt well advised by Benchmark and I am confident that my successor, Marcel Brinkwirth, will do a great job.”

Mr. Brinkwirth added: “Benchmark International pushed as hard as they could to pull the deal through. I want to thank the whole team for their assertiveness.”

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Benchmark International Successfully Facilitated the Transaction Between Speak First Limited and LTD Group B.V.

Benchmark International is delighted to announce the acquisition of Speak First by LTD Group, trading as Lepaya.

Speak First is a global consulting, leadership and communication training specialist, working with large organisations to develop strategies enabling long-term sustainable business growth, while simultaneously enhancing individual staff development.

Founded by René Janssen and Peter Kuperus in 2018, Lepaya is a rapidly growing Amsterdam-based company with a global reach. By combining hard skills with soft skills, offered together as ‘Power Skills’, the company has made itself a strong challenger in the growing European edtech market, in which the demand for reskilling and upskilling continues to increase.

Ready to explore your exit and growth options?

The acquisition of Speak First showcases immense scalability and allows Lepaya to further intensify its investments into both cutting-edge companies and technologies, such as VR and AI-coaching, to further consolidate the learning and development industry.

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The Role Of Timing In M&A Deals

Several important factors play into the deal-making process if you are a business owner considering a merger and acquisition for your lower- to middle-market company. Timing is often one of these factors.

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How Is Intellectual Property Valued?

Intellectual property (IP) is a non-physical creation of the mind or the product of a company's work or reputation. It is essentially ideas that are executed to become successful business assets and are often copyrighted, under patent, trademarked, or considered trade secrets, to protect from unauthorized use. Technology is a key IP type in our largely digital world and is a major driver of change and progress in nearly every industry. As a result, IP is a very important aspect of the valuation of a company. In our modern global economy, some countries recognize more IP types than others, as circumstances vary.

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2023 Global Logistics Industry Report

The global freight & logistics market is forecast to grow to $18.69 billion by 2026 at a compound annual growth rate (CAGR) of 4.4%. When looking solely at logistics, the global logistics market is expected to reach $6.55 trillion by 2027, growing at a CAGR of 4.7% between 2022 and 2027.

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Are Headwinds Coming For Buyers Seeking An SBA 7(A) Loan For Acquisitions?

The flagship of The Small Business Administration's programs to support small businesses is the SBA 7(a) loan guaranty program. The program was designed to encourage lenders to provide loans to borrowers that might not otherwise obtain financing on reasonable terms and conditions. Under this program, the SBA will guarantee 75% for loans greater than $150,000 with a maximum loan amount of $5 million with reasonable interest rates. This is a viable option for the average person looking to acquire their first business or an existing business looking to grow through acquisition. This loan is so popular that in 2021, the SBA approved 51,856 7(a) loans totaling $36.5 billion.

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2023 M&A Outlook

Back in 2021, the M&A market enjoyed record-level activity. But 2021 was an anomaly because it followed 2020 when so many deals were put on hold due to the COVID-19 pandemic. 2022 seemed like a slower year, but it was actually a return to normalcy. 2023 is expected to be strong for the middle market, as buyer focus shifts from public markets to private markets. While interest rates have been going up, both strategic and financial buyers are still sitting on record levels of cash. 2023 could actually signify a return to normal for the market and be a great year for business owners looking to sell their companies. 

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Benchmark International Named Best Global Middle Market M&A Specialists

Benchmark International has been awarded Best Global Middle Market M&A Specialists 2023 by the prestigious M&A Today Global Awards, which recognize excellence in business on a global scale.This honor is a testament to our achievements and places us among the best in the industry.

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Benchmark International's Kendall Stafford Named Among Top 50 M&A Investment Bankers

Benchmark International’s very own Kendall Stafford has been named to the Top 50 M&A Investment Bankers (Americas Dealmakers) by the Global M&A Network’sM&A Atlas Awards. Kendall is the managing partner of our Austin, Texas, office. You can learn more about her impressive background here.

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Benchmark International Successfully Facilitated the Transaction of Nationwide Express to Jones Logistics

Benchmark International is pleased to announce the transaction of Nationwide Express to Jones Logistics.

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Benchmark International's Kayla Sullivan Honored Among America's Rising Star Dealmakers

Benchmark International’s Kayla Sullivan has been named one of America’s Rising Star Dealmakers by the Global M&A Network. Their 5th Annual Networking Recognition Ceremony was held in New York City at a luncheon on January 19, 2023.

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Road Trip!

If you have ever taken a family road trip, you understand the necessity of planning in advance. Navigation systems and GPS have made it easier, but advanced planning will make the journey more enjoyable. The most important decision is what is the intended destination. Once that is determined, there are a whole series of decisions that must be made, either in advance or along the way, to reach that ultimate vacation spot. The questions include which car we should drive, what roads we should take, how fast we can drive, whether we should pack a cooler or eat at restaurants along the way, what our budget is, and where we will stay.

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Benchmark International Named Best Global Middle-market M&a Specialists 2023

Benchmark International has been named Best Global Middle-Market M&A Specialists by the Global 100 for 2023. We are proud to say that we also won this award in 2022.

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Benchmark International Named International Mid-market Corporate Finance Advisory Of The Year

Benchmark International has been named International Mid-Market Corporate Finance Advisory of the Yearby the Gamechangers™ Global Awards 2023. This year’s awards are especially significant because it is the 20th anniversary of the Gamechangers Global Awards.

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Benchmark International Has Successfully Facilitated The Transaction Between Boiler Industrial Plant (Pty) Ltd And Entruevest Holdings (Pty) Ltd

Benchmark International is pleased to announce the acquisition of Boiler and Industrial Plant (Pty) Ltd by Entruevest Holdings (Pty) Ltd - A Diversified Investment Holding Company.

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Benchmark International Facilitated The Transaction Of E-vergent.com To Tahoe Network Infrastructure

Benchmark International is pleased to announce the acquisition of E-vergent.com by Tahoe Network Infrastructure.

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Benchmark International Wins Logistics Deal Of The Year

Benchmark International was awarded Logistics Deal of the Year for the sale of X Caliber Container, LLC, to LongWater Opportunities at this year’s M&A Atlas Awards from the Global M&A Network.

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