Mergers and acquisitions in global government contracting (specifically the technology, aerospace, defense, and government services industries) is a market that tends to remain stable and ripe with opportunity. This sector offers many positive qualities such as revenue transparency and predictability. Strategic buyers seek products, services, sales channels, and geographical presences that broaden capabilities and make them more competitive. Companies with advanced technologies are in an especially advantageous position for acquisition.

Yet, even in an environment that consistently sees a strong flow of defense M&A deals, there is a heightened level of risk with plenty of opportunity for errors and setbacks. The business of government contracting is highly regulated and can be extremely complex, with a great deal of challenges. It is also subject to the effects of government spending budgets—and budget cuts.

Governments enforce intricate legal and regulatory requirements. Failure to adhere to these requirements can result in government actions that include contract termination, suspension, debarment, damages and penalties. Suspension and debarment, which means that a company can no longer conduct business with the government, can be a result of unfair trade practices, fraud, commission of crimes, and even a lack of business integrity or honesty. There is also a great deal of emphasis placed on conflicts of interest.

With so many possible risks, careful planning is imperative when considering a transaction in this space. It is recommended that sellers engage M&A experts with a strong reputation, transaction experience in their sector, and strong connections within the global buyer community.

It is also recommended that sellers prepare for a sale from the perspective of the buyer.  

• Determine areas of exposure. Due diligence is always important in determining an accurate valuation of a company, and this is even more so in the case of government contractors. It demands a meticulous level of scrutiny. The company’s level of compliance can directly impact the valuation. Often, many contracting companies also run commercial businesses and have less strict compliance programs versus pure government contractors, yet carry the same risks.
• Assess risk and successor liability. Serious risk mitigation strategies are necessary when it comes to proper recordkeeping regarding compliance, including cyber-security and socio-economic topics, as well as a lack of negative factors such as prior suspensions or debarments, tax violations, investigations, and claims. Additionally, what is the exit strategy that is in place, and how can it improve the quality of buyer conversations and increase valuation?
• File regulatory notices and approvals. Be prepared for the filing of government notices, regulatory approval prerequisites, and post-M&A integration. These filings should be identified in the agreement, and the parties should preemptively agree to a process for securing government approvals.

Other important considerations regarding government contracts mergers and acquisitions that any seller should anticipate include:

• Analysis of existing and prospective government contracts held by the entity to be acquired and assignment of contracts to the buyer
• Any potential socio-economic impacts as a result of the transaction
• The transfer of facility and top-secret clearances, as well as intellectual property rights
• Assessment of conflicts of interest that could exclude the buyer from future contracts
• Whether the target company is compliant with specific government regulations
• Any existing subcontracts and teaming agreements
• Past performance of the target company and its impact on the buyer’s ability to win other government contracts

Foreign transactions may face additional challenges in completing M&A transactions in the government-contracting sector. These include more stringent due diligence processes, export law compliance, security clearances, cultural differences, and foreign investment scrutiny. This applies even further regarding higher risk regions, such as Africa.

In the case of cross-border deals, there are key concerns as to:

• Whether the seller is considered an inverted domestic corporation and no longer eligible for future government contracts
• If there should be inclusion of a board of directors as part of a mitigation plan to allow continuation of the seller’s facility clearance

Proper due diligence can identify risks in a transaction, create accurate representation and certifications, confirm that the adequate disclosures and indemnifications are obtained, and secure necessary government approvals, resulting in a successful and profitable acquisition.

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If you are interested in making a move in this sector, please consult with our international M&A specialists, as we have the desired experience in transactions involving government contractors and companies that support them.

The inverted yield curve is a situation that occurs when the interest rates on short-term bonds are higher than the interest rates paid by long-term bonds. It basically means that there is enough concern about the near-future markets that people move their money into less risky long-term investments. Any time this scenario arises, investors get nervous because it typically warns of a recession.

Short-term vs. Long-term Bonds

In thriving economies, bondholders demand a higher yield (profit) for longer-term bonds versus short-term bonds.

• Short-term bonds mature in less than five years and carry a lower interest rate risk. These funds do not yield large returns. They give investors a safe way to earn higher yields than they would with extremely low-risk investments and do not require money to be tied up for a long period of time.
• With long-term bonds, there is a much longer maturity period and people are required to invest their money for greater lengths of time. While these types of bonds yield higher returns, there is also an increased risk that higher inflation could reduce the value of payments, and that higher interest rates could cause the bond's price to drop. A longer-term bond also carries a higher risk of default.Basically, the longer it takes to be repaid, the greater the risk that inflation will swallow your investment.
• Most investors choose to have a mix of both short- and long-term bonds.

Treasury Bonds

Government debt securities are known as Treasury bonds or T-bonds. These types of bonds are considered to be virtually risk-free. They earn fixed interest until they mature (a period of 10-30 years). Once they mature, the owner is also paid the face value of the bond. Treasury bonds make interest payments semiannually and the income earned is only taxed federally.

The Inverted Yield Curve

Treasury bonds help to form the yield curve, which includes the full range of investments offered by the United States government and diagrams yields by maturity. It usually curves upward, with longer-term bonds having a higher yield. The yield curve becomes inverted when long-term bonds are in high demand and the rates are shown to be lower than those of shorter-term bonds.Essentially, in this scenario, investors expect that they will make more money by holding onto a longer-term bond than a short-term one.

The yield curve inversion can also point toward expectations by investors that the Federal Reserve will cut short-term interest rates in an effort to boost the economy.

A Predictor of Recessions

Although it can happen months or years before a recession begins (usually an average of 18-22 months), the inversion of the yield curve has been a consistent predictor of every recession since the 1960s. For that reason, any time it happens, there is heightened anxiety and anticipation of slowed economic growth.

The last time the yield curve inverted was in 2007, prior to the financial crisis and recession of 2008, which was the worst recession since the Great Depression. The yield curve also inverted prior to the recessions of 2001, 1991, and 1981.

In this latest case, the yield curve first inverted in December of 2018, and inverted even further in March of 2019. Then, the 10-year yield hit a three-year low of 1.65% on August 12, 2019.On August 15, the yield on the 30-year bond closed below 2% for the very first time in history. Fears of the ongoing economic effects of the trade war between the United States and China are fueling the market concerns around the world. 

The science of forecasting financial futures is never a 100% certainty, and while the inverted yield curve has proven to be a reliable indicator of things to come, it does not necessarily guarantee that a recession will happen. As of August 2019, the Federal Reserve has said that there is only around a 35% chance of a recession.

What It Means for M&A

An inverted yield curve can have implications for mergers and acquisitions, especially if you are aiming to grow your company.

For example, let’s say that part of your growth strategy requires funding for building expansion or new equipment. Under an inverted yield curve, short-term interest rates become higher than long-term interest rates. Some businesses may find this to be good news because they can lock in a good rate for the long term.

It may be impossible to predict financial futures, but enlisting the help of experience M&A advisors can help you formulate growth and risk management strategies for your company that make the most of available capital for expansion and lower your risk in all yield-curve situations.

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Are you ready to make a move? Call our M&A experts at Benchmark International to start the conversation about your growth strategies and future opportunities.

The trillion-dollar technology industry is inherently subject to massive growth, disruptive mega-trends, and voracious corporate and investor appetite. Companies such as Internet software and services, e-commerce, telecom, financial tech, cybersecurity, data analytics, social, travel tech, and auto tech are the world’s major players.

The main drivers for M&A in this sector are the creation of revenue growth, improved efficiencies, acquiring key talent, and staying ahead of competitors. It can be more efficient for a big tech firm to buy a smaller technology company in order to gain new functionality or services without creating them itself. It also serves as a pathway to ease into newer areas, as non-technology companies look to acquire technology companies to avoid disruption.

Mergers and acquisitions are commonly used as exit strategies for businesses in the technology industry. Company owners tend to prefer to cash in through M&A versus IPOs because IPOs can take longer and involve more regulatory authorities. 

The Software Sector

Enterprise software and software as a service (SaaS) companies comprise a major segment of the technology industry. IT, data and cloud-based services have permeated every field of business in the world. Traditional and legacy software providers are using M&A in order to remain relevant. Healthcare, financial, and customer relationship management services software are continually in high demand. And digital marketing deals play a key part in the software M&A landscape.

Tech Company Valuations

Technology businesses that garner the highest company valuations for M&A typically share the same set of qualities:

• Reliable growth metric performance
• Good product/market fit
• Above-average margins
• Strong and predictable cash flows
• Positive key performance indicators
• Low owner involvement
• Streamlined operations
• A formulated exit plan

Additionally, investors are usually willing to pay more for businesses that have well-built brands because they are able to focus on long-term growth strategies without worrying about being eclipsed by intense competition while changes are being made.

Due Diligence

In the technology sector, careful due diligence is especially important to coordinating a successful deal. In an industry where lifecycles can be short and technologies can change quickly, there is great risk. Understanding the future relevance of the product or service is key. If a company is profitable today, it does not mean it will be tomorrow, making growth potential a larger motivating factor for M&A than current profitability. Therefore, in addition to financial due diligence, there needs to be a high level of technical and commercial due diligence. There are intellectual property issues, and due diligence must fully assess patents, copyrights, trademarks, domain names, trade secrets, and mask works

Cross-border M&A

Technology has completely blurred global borders, which greatly increases opportunities in M&A. While acquirers can expand their worldwide reach, this can also make the processes more complicated and time consuming for several reasons.

• Countries have varying and evolving regulations regarding technology and privacy, as well as tax and labor-related factors.
• Integration becomes more complex because of cultural differences, language barriers, and variances in corporate philosophies.
• The geographical distance between the companies can also make coordination difficult when trying to communicate in opposing time zones.
• Geopolitical factors can cause uncertainty and influence the feasibility of deals.

All of these circumstances change the implications for M&A strategies and calls for heightened expertise in dealing with cross-border transactions.

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If you are considering a merger or an acquisition, you will love the way we do things at Benchmark International. We are motivated to achieve all of your aspirations and will never present you with a deal that we think will fall even the slightest bit short of your wants and needs. Count on our industry experts to use their global connections to deliver the right options for you.

The financial industry is an ever-evolving industry dealing with constant regulatory adjustments, scrutiny, competition, etc. The financial industry is also one of the first industries to look toward for a current health report on an economy as well. Numerous factors impact the financial sector, such as changing customer behaviors, macroeconomic cycles, data protection legislation, political climate, etc. 

M&A activity in the banking and finance industry has been on the rise in the last few years. This trend looks to continue as we head towards the end of 2019, and begin to take a peek around the corner in 2020.

Key Industry Trends

Look for M&A activity in the finance industry to continue to place a major focus on improving technology, product offerings, and overall customer satisfaction. 

• At the base of much of the M&A activity, we currently see a technology arms race in the finance industry. Banks and financial institutions have identified a strong need to enhance their technological features, and this has become a focal point for M&A activity in this industry.

• One interesting factor to watch for as we move forward is the continued entrance of non-traditional players into the finance industry, commonly referred to as fintech. The fintech group is an emerging group that heavily utilizes technology to deliver financial services, unlike their more-traditional counterparts. Fintech disruptors are the technologically innovated companies that are competing head to head with the traditional financial methods we have grown accustomed to for years. As this relates to M&A activity in the finance industry, one might assume a combination of financial services and technology would make for an attractive acquisition or merger opportunity.
   
• Customer service remains a high priority for all banks and financial institutions. However, customer service can theoretically split into two parts: The first part involves people and relationships, which smaller banks tend to tout as an advantage over larger banks. The second part is more strategic, involving product offerings that will better keep customers satisfied. Larger banks tend to win out with more product offerings over their smaller counterparts based on economies of scale, and access to significantly more resources. M&A opportunities allowing a bank to enhance its product offerings is an attractive feature as well as acquiring talent and relationships through acquisition.  For smaller banks and financial institutions that find it harder to keep up, being acquired by a larger bank may be an attractive strategy to explore as we look toward the future. 

Debt Financing and Interest Rates

Lastly, M&A transactions typically involve some form of debt financing, which a lot of times will make up the majority of the cash at close. Interest, which is the cost to borrow money, can severely impact an M&A transaction from a funding perspective, and certainly an economy for that matter.  Though they are trending higher, interest rates remain reasonable for the time being, and not far above historical standards.

It appears a significant portion of private equity firms are financing a large percentage of their M&A transactions with nonbank debt. In comparison, other groups are using cash reserves, which end up lowering the dependency on debt financing.  A movement in valuations, rates, and funding could cause a shift either way in M&A activity, though for now, the environment appears stable.  Should interest rates continue to rise, eventually causing equity market volatility, one would assume this would force buyers to focus on consolidating their strategic positions more than pursuing opportunistic acquisitions.

Author
Neal Wilkerson
Senior Analyst
Benchmark International

T: +1 615 924 8607
E: DWilkerson@benchmarkcorporate.com

The animal pharmaceutical market isn’t as heavily regulated as human pharmaceuticals, and as a result, is a more attractive industry. Traditionally the market was dominated by divisions of large pharma companies. However, this has changed over the last few years. The sector has seen significant changes following Pfizer’s 2013 spin-off of its animal health business, now known as Zoetis. This helped inspire the spin-off of Eli Lilley’s animal health business and then later in the year, Bayer announced it would leave the industry.

Because of these changes, we have seen substantial consolidation in the animal health space, with the number of transactions in the industry more than doubling since Pfizer’s spin-off in 2013 to 2018 – and due to the number of deals already completed this year, we expect another increase in deal volume.

Furthermore, the global animal health market was valued at $45B last year, and industry experts expect to see a compound annual growth rate of 5% leading to 2026. The market is being driven by a rise in food-borne diseases, and as result companies are making more of an effort to control these diseases. Furthermore, this prevalence has led to businesses producing more advanced vaccines and pharmaceuticals.

Additionally, the market is being driven by a significant increase in pet ownership - with pet owners over the last few years spending more than ever. The number of companion animals increases with income levels and the percentage of smaller families. This is a result of pet owners, particularly millennials humanising their pets, and becoming more willing to invest heavily in their pet's health and well-being.

Key Industry Trends

·     Better Surveillance of Disease: Through portable devices and technologies, such as smartphone/tablet apps and ‘smart ear tags.’

·     Emphasis on Animal Welfare: Owners are putting more emphasis on both pets and livestock to maintain health and quality of life. 

·     Public and Private Collaboration: Recent prevention of the bluetongue and Schmallenberg diseases in animals are prime examples of collaboration between the two sectors.

·     More Treatments Available: The range of treatments has increased over recent years, with a range of treatments for even minor species, such as fish.

We Are Ready When You Are.

Call Benchmark International today and speak with one of our analyst about your company's exit or growth strategies.

Global media and entertainment conglomerates and their subsidiaries distribute mass media to the public such as television, gaming, radio, amusement parks, Internet, and publications. It’s in the nature of these types of companies—of all sizes—to continually pursue avenues for growth.

Over the years, we have seen just how much reinvention occurs in the global media industry. Consider how drastically the landscape has changed. In 1983, the media industry was dominated by 50 major companies. By 1987, that number was down to 29. In the early 1990s, the figure reduced to 23. By the end of the 1990s, there were only ten major conglomerates. In the 21^stcentury, mega-deals starting taking place, causing the largest media groups to decrease in number but grow in size.

Key transaction areas for pursuing mergers and acquisitions in this global industry include:

• Horizontal-scale deals: Companies consolidate within their own sector to increasing earnings and improve operations.
• Cross-sector deals: Companies look outside their core sector to add products and services and integrate vertically across the supply chain.
• Cross-border deals: Companies target growth into different global markets that offer favorable long-term fundamentals.
• Portfolio optimizers: Companies use divestitures to streamline diversified asset bases and allocate capital to the most favorable opportunities.

Competition to Innovate

It is common in this sector for the attractive opportunities to draw a great deal of competition for acquisition. The landscape is rapidly and constantly evolving as new technologies emerge and key players are always seeking ways to be the one to introduce the next big thing. Streaming service and cord cutting have been the most recent significant drivers of change. Big tech firms such as Apple, Amazon and Netflix continue to ramp up the pressure on the conventional stand-alone media model, bringing content consumption to the forefront and making the need for differentiation and integration more critical to strategies for media companies.

Unique Due Diligence

In an industry where content is king, there are very specific due diligence challenges for M&A that require meticulous attention if the goals of the transaction are to be fully achieved.

• Copyright and Intellectual Property: Entertainment assets are subject to intellectual property protections that vary on regional, national and global levels, such as copyright, trademark and naming rights. Due diligence needs to dive deep into these rights, their usage and how they impact all parties involved, which can be extraordinarily complicated. The results of such a careful examination can directly affect valuation, so it must be conducted as thoroughly as possible.
• Large Volumes of Content:M&A transactions in the media and entertainment industry involve massive amounts of content that can be owned by a target company. There can be millions of individual items of content that could have been created decades ago and are now owned as a result of prior acquisitions. There should be prioritization of the most valuable content, especially if there are competing acquirers and a deal must be made quickly.
• Contractual Agreements:The production and distribution of entertainment content involves many different agreements and contractual arrangements. Careful due diligence will uncover key information regarding financial obligations, royalties, residuals and other contingent payments. How are royalty amounts determined and recouped? How do they compare with revenue and expenses in other financial documents? Does the transaction include agreements that expect the acquisition of more content in the future? Are there any unusual provisions or clauses regarding talent? These kinds of issues require solid understanding of how this industry operates.

Integration Challenges

Integration has been proven to pose a unique challenge for M&A in the media industry. One cannot simply plug and play a typical M&A process that works for other sectors. To win out, leadership needs to carefully evaluate the possibilities for value creation through integration, as well as any risks. This requires fastidious due diligence and effective communication. There must be a set of clearly defined goals. Cost and revenue synergies need to be properly valued. And retention of management is often critical to a successful integration strategy. When there is awareness of the potential integration pitfalls in media M&A deals, a plan can be formulated to help guard against them.

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Are you planning on selling your company? Give us a call at Benchmark International to start the process. Our M&A experts can provide you with a comprehensive market analysis for your specific industry and arm you with exclusive information that will help you get your maximum value for your business.

The global print market is shrinking in volume but growing in value. Output measured in billions of A4 prints was 49,973 back in 2014 but is forecast to decline very slightly to 49,654 by 2024. In value terms, print output is expected to grow from a total of $767.4 billion in 2014 to $862.7 billion in 2024 – a CAGR of 1.18%.

The role and dynamics of the print industry are changing, with the main factor being the impact of the internet and mobile connectivity on the way both businesses and individuals communicate and access information. This affects every segment of the traditional printing business, changing expectations of what is acceptable to speed, relevance, and degree of interactivity of data, irrespective of the medium used.

You’ve decided to sell your company, but when is the right time to tell your employees? And what is the right way to tell them? The conversation may not be easy, but if you follow a few simple guidelines, you can ensure that you handle it to the best of your ability.

Have a Plan

You should already have an exit strategy in place when you are selling your business, but that is your own personal exit plan. You should also think about how the process will affect employees. Develop a clear timeline of how you expect the deal to progress and when you will meet with your staff about it. You do not want to come across as confused and unsure about the process. The more confident you are in explaining it, the more confident they will be about it being a good plan for them as well. You may also want to consider when to introduce the new owner. By having the staff meet the new boss, you can dispel a great deal of anxiety. The best time to do this is AFTER the deal is done, in the event that the deal falls through. Otherwise, you are introducing them to someone irrelevant, adding confusion and instability. 

Wait Until the Deal is Done

It can be tempting to share your plans with employees early in the process. But if you disclose your plans too soon, you are opening yourself up to risks that can tank a deal. Employees can get scared into finding another job. Vendors and clients can get nervous and jump ship. These are all scenarios that are not in your best interest, as the health of your business is an essential aspect of a sale. By waiting until a deal is in place, you can avoid telling your employees false information when things are still subject to change.

Tell Management First

Depending on the size of your business, you will likely want to inform key management before telling anyone else in the organization. They are going to need to fully understand the transition because you are going to need their support. They can help you maintain clarity when employees go to them with questions. If management is clear on what is going to happen, they can keep employees calm and properly informed.

Be Accessible

Once you’ve made the announcement, you must remain proactive in answering employees’ questions. It can also be important that they hear any news directly from you versus rumors around the water cooler.

Provide Written Communication

By creating a document that outlines pertinent points about the deal and the transition, employees can reference it following the announcement if they do not recall something. It also provides them with something concrete so that you are not leaving details up to their imagination.

Do Not Overpromise

Once you sell the company, you will no longer have control over what happens in the day-to-day business operations. It is important to express to your employees that you care about their futures and that you took the proper steps of protecting them when brokering the deal with the new owner. However, you want to avoid making promises that you will not be around to honor.

Renewable energy transactions are on the rise as the demand for clean, sustainable energy grows around the world. Europe in particular has seen a surge in investments into wind power as big oil and gas companies try to shift to renewables. And there is significant competition in North America for high-priority assets. Both offshore and onshore wind investments are relatively safe as far as mergers and acquisitions because demand continues to rise in emerging markets as the worldwide weaning off of fossil fuels is certainly not going to happen overnight.

The wind energy industry is still relatively young to the world. There remains plenty of opportunity for technological and design advancements, as well as how they relate to financial possibilities. 

Offshore wind in particular has inherent benefits. Because it is located out at sea, the visual impacts are minimized. Also, wind tends to be stronger and more consistent at sea then it is on land. It is highly sustainable and highly predictable. Floating turbine foundations for deep-water locations are emerging and have already been successfully implemented in countries such as Norway, Japan and Portugal. 

Wind and Large-Scale M&A

Wind power transactions dominate large-scale renewable mergers and acquisitions because of the sector’s economy of scale. The larger a windmill is, the more efficient it is. So, one big windmill is more efficient than two smaller windmills. This translates into large construction projects—an attribute that the industry likes to see. Large corporations with bold goals for renewable energy are buying an abundance of wind power.

Innovations in wind energy make it more affordable, setting the stage for demand and growth, especially for large corporations that need a great deal of power and are looking to save money. (Think about Amazon’s huge wind farm in Texas that has 100 turbines and can power 90,000 U.S. homes). This corporate need calls for large projects and contributes to why wind power dominates large-scale M&A.

The Role of Tax Equity Investments

The wind energy industry is also subject to tax equity investing—a very important part of financing in the sector and popular in the United States. Tax equity deals for renewable energy projects are common with private energy developers seeking to extend capital, and financial institutions wanting credits to ease their tax liability.This can make the environment more competitive.

How it works:

• A tax equity investor and a developer create a holding company that owns the project's assets. The financial institution provides capital and in return gets tax benefits and cash distributions within the first 10 years of the project’s operation.
• This allows the investor to recoup and earn on their investment.
• Once the investment is recovered and tax credits captured, the ownership structure is reversed.
• The developer is now the majority owner and can have the right to buy out the investor's remaining stake.
• Therefore, the developer built a wind project for a small part of the installed cost in exchange for relinquishing the tax credits and cash distributions to the investor.

Clean Energy M&A Expertise

Any energy M&A transaction requires a specialized level of expertise in order to avoid pitfalls that can blow a deal. Finding the right company broker is advised.

• Knowledge of the industry and the nature of the markets are key
• The ability to identify areas of risk is imperative with painstaking due diligence
• Complex regulatory issues must be firmly understood. Laws and regulations in the energy industry go beyond the energy regulatory governance to include environmental, health, safety, tax, employee benefits and property issues
• Cross-border transactions require global and local understanding of the market and the regulatory differences and how it plays into the company valuation

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Ready to make a move? Schedule a consultation with one of our M&A geniuses to see how we can help you sell a company, buy a company, create growth, or conduct exit planning.

You’ve decided to sell your business. Congratulations! Whether you are retiring, looking to embark on a new business adventure, or wanting to hand off the reins and take a different role in the company, the process of selling a business can be a trying one without the correct preparation and support. Fortunately for you, you can learn from other entrepreneurs who have been in your shoes and have shared the five things that they wish they had known before selling their business.

1) Neglecting to perform pre-transaction wealth planning can result in you potentially leaving a lot of money on the table. Before you sell, consider your family members’ wishes and concerns. Communicating with family members before the sale can help ensure smooth sailing through the deal negotiations. Effective tax-planning to support family members’ needs, philanthropic plans, or creating family trusts can help increase the value gained from the transaction.

2) Don’t underestimate the importance of a good cultural fit with a buyer. While the price is always at the forefront of a sellers’ mind, cultural fit can mistakenly be pushed to the back burner. One of the many things that you have worked hard to create in your business is the employee culture. Most likely, you want to see the close-knit “family” that you have built continue when you are no longer working there. Benchmark International understands that and will help you find that partner. We remain committed along with you to your goal of finding a buyer who will carry on your legacy.

3) Skimping on your marketing materials does not pay off in the long run. With confidentiality being of the utmost importance, how can you engage buyers without them knowing who you are? Preparing a high-quality, 1-2 page teaser that provides an anonymous profile of your business is the tool used to locate a buyer confidentially. This is followed by the Information Memorandum, with an NDA that is put in place for your protection. Benchmark International will prepare these high-quality documents and put your mind at ease.

4) Sellers wish they had known how detail-oriented the process would be, how many documents would be needed, and how labor-intensive each phase would be. One of the most crucial pieces of advice that the majority of sellers wish they had known is that you need to have a team. Sellers need to continue running their business as they were before, or operations can really start to slow. The last thing you want is for the value of your company to take a nosedive because you are investing all of your time into a transaction. With the team at Benchmark International as your partner dedicated to the M&A process, you will be free to continue to focus on the growth and operations of your business. We will handle the details for you.

5) Finding a like-minded partner can give a seller a false sense of security that the transition from two companies to one will be easy. You need a trusted advisor that will help you navigate the complexities of integration, giving you insight on some of the other intangibles that need to be negotiated. Those intangibles include the details of your role after the sale, employment contracts, earnouts, etc. With Benchmark International’s vast knowledge and experience in M&A deals, we know what is usual and customary to request throughout the negotiation process and will bring more value to your transaction.

Congratulations again, this is an exciting time for you! With the right partner, it can be a smooth and profitable process as well. Benchmark International has a team of specialists that arrange these types of deals every day. We can answer your questions and help you determine what is best for you, your business, and your exit plan. A simple phone call or email to us can start the process today and move you one step closer to accomplishing your goals.

Author
Amy Alonso 
Associate
Benchmark International

T: +1 615 924 8522
E: alonso@benchmarkcorporate.com

What is private equity?

Private equity (PE) is medium to long-term finance provided in return for an equity stake in a company. The objective of the PE company is to enhance the value of a company in order to achieve a successful exit (i.e. sale).

Where do PE firms get their money?

PE firms generally invest funds they manage on behalf of groups of individuals, pension funds, and other major organisations.

What types of companies do PE firms invest in?

PE firms look for companies that can offer a lucrative exit within three to seven years. Therefore, the company has to be large enough to support investments from the PE firm and have the potential to offer large profits in a relatively short timeframe. This means that PE firms buy companies with strong growth potential, or companies that are currently undervalued because they’re in financial difficulties.

• To PE or not to PE – Is a Private Equity Firm the Right Type of Buyer for my Company?

How are PE fund managers compensated?

PE fund managers receive their income via two channels – management fees and carried interest.

A management fee is paid by the limited partners (the people who provided money to invest) to the PE firm to pay for their involvement. The fee is calculated as a percentage of the assets to pay for ongoing expenses such as salaries.

Carried interest is a percentage of profits that the fund gains on the investment. This compensation helps to motivate the PE fund managers to improve the company’s performance.

What is a platform company?

A platform company is the initial acquisition made by a PE firm in a specific industry. Typically, a platform company has a strong management team to drive the company forward and a proven track record in a specific industry. This company is the foundation for subsequent companies acquired in the industry.

What is a bolt-on company?

A bolt-on company is in a trade which the PE firm has already invested and is added on to one of its platform companies. The fund will look for bolt-ons that provide competitive services, new technology or geographic footprint diversification, as well as companies that can be quickly integrated into the existing management structure. Typically, a bolt-on company is smaller than a platform company and has minimal infrastructure in terms of finance and administration.

When business owners begin the process of selling their business, they may have expectations about the sale process. These expectations can be based on what they have read, what their friends have told them, and what their own needs are. However, the reality of selling a business can be very different from the expectations.

Timing

Sellers tend to think that a buyer will appear at their doorstep ready to transact a deal when, in reality, that is not the case. The sale of a business is a very time-consuming process. M&A transactions can take anywhere from 6 months to a few years to complete, pulling a seller away from the company, which can affect the financial performance and valuation of the business. Hiring an M&A advisor can help take some of the time burdens off of the seller.

Buyers

In our experience, it never surprises us who the buyer is at the end of the day. However, many sellers believe that their perfect buyer is international or a larger company. Again, this is not the reality of it. The ideal buyer may be right down the street or even a member of the seller's management team. When considering selling a business, a business owner needs to seek an advisor or sale process which will provide them with options when it comes to buyers. Not only does this drive up valuations, but it also allows the seller to choose the buyer that is the best fit for their company.

Business Condition

Sellers often assume that their business needs to be in the perfect shape to sell it. Sellers will typically share that they want their business to show year over year growth or a more diversified customer base. While these changes might make the business more attractive to the market, buyers buy companies for different reasons. For example, if a buyer is seeking to acquire a company to gain a relationship with a particular company, then that buyer will see a concentrated customer base as a good thing. Also, sellers will work hard to groom their business and miss out on opportunities within the open market. They work for years to grow their business, only to have the market shift and have their business not gain any additional value. The best tie to sell a business is now. We understand what's going on in the market, both from a micro and macro level, and we are not trying to predict the future.


Answer to Questions

The sale process can be very nerve-racking for sellers because of the unknowns. Sellers often expect their advisors and or buyer will be able to answer all of their questions. However, this is not the case. The sale process is just that, a process. Business owners need to go through the process to discover all the answers to their questions. Buyers are eager to get sellers comfortable with deals, integrations, and any other areas of concern for sellers. An M&A Advisor will be able to guide sellers on when they should have answers to their questions. If the answers are unknown, the M&A advisor can help guide the seller to provide comfort based on the advisor's experience.


Deal Structure

A lot of sellers assume that the majority of deals are structured as all cash transactions. All cash transactions mean when the sale closes, the seller will receive his or her money, and the buyer gets the key to the operations, allowing the seller to leave immediately. However, this scenario is a rare occurrence. Typically, a seller is required to remain with the company for 3-5 years to help with transitioning the business. Sellers in lower middle market deals tend to be critical to their company because processes are rarely formalized, and the relationships that sellers hold are key. Given the time frame for a transaction, the buyer will want to incentivize the seller to remain motivated post-closing. To achieve this goal, the buyer will want to structure the deal so that the seller has an interest in the smooth transfer and future success of the business.

Author
Kendall Stafford  
Managing Partner
Benchmark International

T: +1 512 347 2000
E: Stafford@benchmarkcorporate.com

The global oil and gas industry is expected to remain relatively stable in 2019, even amid oversupply risks and volatile pricing, as oil demand continues to increase. Oil usage is expected to grow by more than 3.5 million barrels per day.

 Key Industry Trends for 2019

• Natural gas remains a major player as a generator of lower-carbon power, especially in North America. Over the next decade, it is expected to surpass coal to become the second-largest source of fuel worldwide.
• China and India are leading the way in overall energy demand growth. India is projected to have the largest additional oil demand and fastest growth through 2040.
• U.S. sanctions on top exporters such as Iran and Venezuela continue to affect the global oil industry, as a retraction in the oil supply leads to inflated global oil prices.
• Improvements in infrastructure are becoming more critical because production and the physical ability to move products directly impacts pricing.
• The oil and gas pipeline market is predicted to grow at more than 6% by 2024.
• Sustainability is becoming a more central issue as renewable energy draws more investment from oil companies, and both consumers and companies wish to mitigate methane emissions.
• The industry is focusing on how digital technologies can improve capital productivity. Robotics, artificial intelligence, blockchain, and data analytics are being implemented to enhance efficiency and production.
• The oilfield services sector will see a 10 to 15 percent increase in earnings, with a positive outlook for offshore oilfield services. There are more than 100 new projects planned for 2019 approvals and $210 billion earmarked for offshore oilfield services worldwide.
• After years of limitations, deepwater exploration and production activity is likely to resurge this year with a spike in investments in deepwater projects.

Increased Drilling Activity

2019 is experiencing increased activity in global oil and gas drilling, led by the United States due to shale production. Outside the United States, global drilling activity is expected to rise by 2.5 percent. Across the world’s eight major oil and gas producing regions, each is predicted to see a higher number of wells drilled.

2019 Forecasted Percentage Increase in Drilling Activity by Region

Africa: 8.7 percent

Saudi Arabia: 5.4 percent

North America: 5.1 percent

Western Europe: 3.9 percent

South Pacific: 3 percent

United Arab Emirates: 2.5 percent

Far East/South Asia: 2.6 percent

South America: 1.7 percent

Eastern Europe/Former Soviet Union: 1.4 percent

Iraq: 1 percent

The most growth in the overall global drilling market will be in offshore oil and gas drilling, with expected growth at around 6 percent. The most active offshore drilling regions are Brazil, Canada, Norway, Angola, Nigeria, Saudi Arabia, Abu Dhabi, China, and India.

Rystad Energy has reported that global deepwater liquid production is set to reach a record high of 10.3 million barrels per day in 2019. This is a result of new fields in Brazil and the Gulf of Mexico. Other leading deepwater producers include Angola, Norway, and Nigeria.

Ready to Move Forward?

Contact us at Benchmark International if you are interested in exploring your options and embarking on the next chapter of your business.  

We often say here at Benchmark that signing an LOI is the 10% mark of a transaction.  While it’s difficult to support that quantitatively, it’s certainly anecdotally true. Due diligence is an arduous part of the closing process that will either substantiate the terms outlined in the LOI, call for different terms, or reveal such material differences that the deal craters altogether.  Financial, operational, and sales diligence are all givens, but one component that isn’t always conducted is environmental due diligence. While the former three, as examples, are customary and a part of every transaction, environmental is not always a necessity.  If the business is purely a service business, it is increasingly unlikely that a purchaser will seek to conduct environmental due diligence.

However, there are many reasons a purchaser may decide to conduct environmental due diligence. Perhaps, real estate is included in the deal, or maybe the target entity is a manufacturing business that uses various chemicals in the production of a product. Ultimately, the purchaser is seeking to become aware of any pre-close conditions and limit any post close liability. This is a necessary step in the process as finding and assessing potential issues affecting the facilities is imperative to the facility’s overall health and safety for its future employees and customers.  The environmental due diligence audit ensures future regulatory compliance and reduces potential issues as well as future energy and waste costs associated with the property. 

Traditionally, purchasers have sought to go straight to a Phase 1 ESA (Environmental Site Assessment) which we will discuss further below in this article. However, environmental due diligence can be very costly and time intensive. Many environmental consulting firms now offer an Environmental Desktop Report.  This is the most cost-effective tool for evaluating the risk of future property, as it is done without a visit from the environmental consultant on-site to the property.  This assessment is limited and is used as an initial screen of the property to understand the potential environmental liabilities better.  Different types of environmental desktop reports consist of Historical Records and Database Review, Records Search with Risk Assessment, Environmental Historical Reports, and Environmental Database Reviews.  If any documented contamination has been identified from the past and the purchaser feels more comfortable with further inspection of the property’s existing state, the process expands to the previously referenced on-site Phase I ESA. Many times, the Desktop Report is packaged with the Phase I process to streamline.  The Phase I ESA includes a site visit by the Environmental Professional to document the potentially hazardous materials that could exist. Phase I ESA uses historical resources such as local, state, and federal records to identify any past uses and occupants of the property.  Additionally, the purchasing party will conduct interviews with tenants, government officials, as well as nearby businesses. Once all research is complete, the group will prepare a records review to determine if the next steps may be applicable.

If contamination is detected, the viable next step is a Phase II ESA. Phase II ESA is essentially a field investigation that evaluates the impact the hazardous waste had on the property.  Phase II ESA includes Soil Sampling, Groundwater/Surface Water Sampling, Geophysical Testing for Tanks, Drums & Waste Materials, among other tests.  The most frequent substances tested are petroleum hydrocarbons, heavy metals, pesticides, solvents, mold, and asbestos.  After proper testing and concise reporting, a Phase III ESA may be completed to remediate any contamination based on recommendations made during Phase II.  Phase III ESA includes identifying the extent of contamination, determining the amount of material that was impacted by said contaminants, and assessing options available for all parties involved.    

Regardless of the findings, it is very rare that a buyer walks away after conducting and concluding environmental due diligence.  If it makes it past the Phase II ESA, evidently there will be some remediation.  In the very off chance that the contamination is beyond safe and capable remediation, Phase IV ESA will be conducted. Phase IV ESA is quarantine and closure of the site. Think of Chernobyl. It’s not an often occurrence, and one we haven’t seen here at Benchmark.  All in all, it’s helpful to understand this part of diligence, its importance, and level of detail associated with it. Buyers and sellers alike should be as informed as possible, heading into the due diligence.

If you’ve decided to embark on an MBO, you might have asked yourself, how is this funded? Generally, members of the buyout team are required to invest a sum of personal money into Newco but it would be unusual for them to fund the whole transaction. The equity provided by the management is necessary to demonstrate their commitment to the transaction, therefore it needs to be meaningful, yet it does not have to be too vast – typically representing 6-12 months salary. So, how is the remainder of the MBO funded?

Seller Financing

A common option to fund an MBO, seller financing is where the management team asks the seller to help fund the MBO. This is also known as deferred consideration, as the seller is deferring a proportion of their payment of the purchase price until after completion. While the seller would more than likely prefer the consideration paid in full on completion, often lenders may request that a portion of the sale is financed by the seller, as it demonstrates that the seller has confidence in the management team and the company going forward.

What Is Buy and Build?

When private equity acquires a well-positioned platform company to acquire additional smaller companies, using the developed expertise in a specialized area to grow and increase returns, it is considered a buy-and-build strategy. This strategy is common with private equity firms with shorter holding periods of about three to five years.

Why It Is An Effective Growth Strategy

If a buy-and-build strategy is executed correctly, a great deal of value can be created when smaller companies are combined under the control of a new company.

• This type of acquisition saves time regarding the development of specialized skills or knowledge, allowing for growth and expansion to other markets more quickly and successfully with lower production costs.
• Creating a larger, more attractive company offers a path to exploit the market’s inclination to assign larger companies higher valuations than smaller ones.
• It provides a clear plan when deal multiples are at record levels and there is a need for less traditional strategies.
• Buy-and-build deals generate an average internal rate of return of 31.6% from entry to exit, versus 23.1% for standalone deals.

Getting It Right

The buy-and-build acquisition is not simple to execute. The process demands meticulous planning and due diligence for the strategy to work. The best deals usually employ multiple paths to create value.

• Synergy between the acquirer and the acquired is important to the outcome of the deal. Companies should target existing firms that will be a good fit as a team both tactically and culturally. The human element should always be considered.
• The management team must be an appropriate fit and have experience with these types of transitions.
• There should be a vision in place for where the company will be five years down the road.
• The platform company must be stable enough to endure the process regarding operations, cash flow, and infrastructure (IT integration in particular).
• Sector dynamics should also be considered. Avoid sectors that are dominated by low-cost rivals or mature, stable players. Focus on sectors with many active smaller suppliers and service providers. Consolidation should result in cost savings and improved service.
• While no two deals are the same, there are patterns for getting it right. Those experienced with buy-and-build strategies are more likely to lead to a successful deal.
• It can be difficult to identify private equity firms because of the nature of the way they do business. It helps to have an experienced M&A firm with extensive connections and a proven track record of negotiating successfully with buy-and-build-focused private equity firms.

These reasons are among several as to why it is a sensible decision to enlist the help of an experienced M&A firm such as Benchmark International for your vision for growth. Count on us to help you get your buy-and-build strategy done right.

Selling a company is a momentous life event for any business owner. You have worked hard to build it and want to achieve the highest acquisition value possible when you are ready to sell. To do this, you should be fully prepared for any prospective buyer to conduct rigorous due diligence, which means you should be prepared to do your own.

What is due diligence? A comprehensive appraisal of your business to establish its assets and liabilities and evaluate its commercial potential. 

If you carry out thorough due diligence before putting your company on the market, it will be primed and ready for the buyer to conduct their due diligence process. By being sufficiently prepared, your business is going to appear more attractive to buyers.

Planning Ahead is Crucial

First things first: plan ahead and plan early. Give yourself enough time to optimize the company’s value before putting it on the market. A carefully planned sales strategy is sure to garner better value than what appears to be a hasty fire sale. It is best to wait to sell until you have done everything that you can to maximize your company valuation. When you take the time to position your business attractively for the marketplace, it reduces the odds of a negative outcome.

Start by identifying the key value drivers for your business and how they can be improved. This will help you find obstacles to a sale before a buyer does, and give you time to address any issues. These drivers include:
• Skilled, motivated workforce
• Talented management team
• Strong financials and profitability
• Access to capital
• Loyal and growing customer base
• Economy of scale
• Favorable market share
• Strong products/services and mix of offerings
• Solid vendor relationships and supplier options
• Sound marketing strategy
• Product differentiation and innovation
• Up-to-date technology and workflow systems
• Strong company culture
• Research and development
• Protected intellectual property
• Long-term vision

It is common for buyers to be especially concerned with company culture and existing customer relationships. Make sure your employees and your customers know what to expect and share your vision. If there is misalignment in these areas, it can unfavorably impact the post-sale performance of the company.

Why Documentation Matters

Having all your documentation in order, ensuring its accuracy, and putting it all on the table is going to make you a more trusted seller and increase the value of the business. It will also help you avoid constant back-and-forth requests from a buyer, which can be a distraction for you while you’re trying to run a business.

Creating a secure and efficient virtual data room (VDR) for storage and review of documents offers major advantages. A VDR is a secure online document repository that enables efficient collaboration between parties in any location so they may share information at any time during the pre-deal phase. A VDR also makes it easier to compile and verify every document internally and avoid duplicating efforts. Plus, it offers exceptional security to safeguard against confidential information ending up in the wrong hands. Once you have your VDR completed and vetted internally, you can open the files up to outside partners. Overall, the VDR is your secret weapon in making sure all of your documentation is centralized and that you are presenting your company in the very best light.

You can learn more about the documentation you will need to compile here.

Timing is Everything

You want to sell at the right time based on the market, which is always changing. Being adequately prepared to sell means being ready to act when the time is right. And selling at the right time means getting more value for your business.

Something else you must consider is if you are truly ready to sell. This is not the time to be emotional. Once you’ve initiated the sales process, the last thing you want to do is change your mind when buyers are already involved in the conversation. This will give you a reputation of being disingenuous and not being a serious seller, scaring off potential buyers in the future and devaluing your company.

Professional Help is Key

If it sounds like preparing for the sale of your company is an exhaustive undertaking, that’s because it is. But you do not have to do it alone. If you enlist the expertise of a reputable mergers and acquisitions firm, they can lead the way and help you get the most value for your company. A good M&A Advisor will know better than anyone how to steer you through the due diligence process.

They will also know when the market is in the right place for a sale, and give you access to quality buyers that you can trust. It is also important to note that buyers are going to take you much more seriously when you have partnered with a highly regarded M&A firm.

At Benchmark International, we’re here for you. Our experts are ready to partner with you to exceed your expectations and make great things happen.

The global logistics market is anticipated to register a CAGR of 3.48% from 2017 to 2022 to attain a market size of around $12.256 billion by 2022. These statistics are extremely encouraging for the longevity in relation to value in global logistics. Reasons for such financial increase has been pointed towards the increase of the technology sector and related systems, helping logistics to be more streamlined and efficient. Perhaps the biggest reason for growth is the increase in international trade agreements and policies which directly affect the industry, with these new trade agreements this gives existing vendors more room for expansion and also benefit from less restrictions geographically allowing for increased capacities.

Another reason for the growth concerning the logistics trade is the increase in the E-commerce industry. E-Commerce Logistics Market is expected to reach $535.895 million by 2022, supported by a CAGR of 21.2% a staggering projection about the importance of E-commerce to the logistics sector. With highly popular online retailers and stores such as Amazon, eBay, and clothing outlets bringing in high volumes of buyers thus increasing the movement of goods. This looks like the biggest global logistics markets revenue, with the increase of demand from E-commerce this will allow the logistics market to expand and continue to develop more efficient systems to increase productivity.

Logistics trends expected to transform global logistics:

• Blockchain technology is enabling logistics companies to failsafe digital contracts, the technology allows to seamlessly track logistics, assets, and merge all documents related to the logistics of the company
• Digitalization of the logistics industry, this is expected to reduce procurement and supply chain costs. The more complex the digital channels become and the more people who are aware of these channels, this is expected to result in a more efficient logistics
• Emergence of 3PL (Third-party logistics) and 5PL (fifth part logistics), these services offered to consumers has increased logistics contribution on a global scale. Projections in terms of value of these kinds of services are also expected to increase until 2025 by 7%
• Recent years in logistics have seen a trend on using data to anticipate busy periods, supply shortages and other insights to allow the business to make better decisions and run more efficiently

A big challenge for logistics in recent years is the political effect of Brexit, specifically the trade agreements between the UK and Europe. However, this will affect the sector in multiple countries. As a result, with the uncertainty of such political matters the coming years will tell how this affects logistics. Statistics show Brexit is already affecting trade flow between the UK and Europe, resulting in less movement of goods and as a result directly effecting the logistics. When trading with other countries outside Europe (America) this could result in further bottlenecks about outdated trade deals, directly the affecting the logistics industry.

We Are Ready When You Are.

Call Benchmark International today and speak with one of our analyst about your company's exit or growth strategies.

Once you have decided that the time has come to sell your company, you will want to be as prepared as possible for the endeavor. Being adequately prepared will pave the way for a smoother process, avoid unnecessary delays in the sale, and increase the value of your business. Use this cheat sheet as a guide to get your business ready for what lies ahead.

Know Why You’re Selling

An important part of selling your company is having a clear understanding of why you are doing it.

• Do you want to exit the business completely and retire?
• Do you wish for it to be under control by family or an existing employee?
• Do you hope to retain a stake in the business as part of the sale terms?
• Do you plan to sell the business to facilitate its growth?
• Do you aspire to sell the business to fund other ventures?

These questions should all be considered so that you have a clear answer before initiating the sale process. By knowing why you are selling, you can look for the right kind of buyer to suit those needs and establish a clear plan of action.

Compile the Proper Documentation

Any buyer is going to expect to see the facts and figures on your business. The more prepared you are to provide detailed documentation, the more likely they will be to trust you. Items you should compile and have ready for review include:

• Current and recent profit & loss statements
• Balance sheets, income statements, and tax returns for at least 5 years
• Leases and real estate paperwork
• A business plan
• A marketing plan
• Accounts payable and client lists
• Inventory and pricing lists
• Insurance policies
• Non-disclosure/confidentiality agreements
• An executive summary and detailed profile of the business
• Employee, customer, vendor, and distributor contracts
• Outstanding loan agreements and liens
• Organization chart
• Letter of intent and purchase agreement

Inventory Your Assets

Your assets are a key factor in determining the value of your company, so it is important to have a clear picture of what they are and what they are worth. Create a record of these assets, including:

Physical assets:

• Business furnishings, fixtures, and equipment, inventory, real estate, automobiles

Intellectual property assets:

• Trademarks, patents, licensing agreements, trade secrets, and proprietary technology

Intangible assets:

• Brand equity, business name, and brand identity
• Processes and strategies
• Trained employees
• Loyal clientele
• Supplier and distribution networks

Enlist the Help of an Expert

Selling a business is a complicated process, and it is not as simple as just gathering the items listed above. This is why most business owners opt to partner with a mergers and acquisitions firm to organize a deal. They do all the work and tend to all the details so that you can focus on running your business and keeping it thriving in the wake of a sale. This includes finding the right buyers, creating a competitive bidding environment, and making sure you get the most value for your company.

Advisors such as our experts at Benchmark International have specialized tools at our disposal that are proven to maximize value for our clients and get desired results. Give us a call and let us put our connections to work for you.

The HVAC industry is considered to be very stable at this moment in time. Many experts believe the outlook for both buying and selling parties will remain positive. As public interest and government regulations continue to push for energy-efficient designs and products, deployment of more advanced cost-effective HVAC systems has increased. This is expected to drive consolidation of HVAC organisations as they look to increase their ability to scale and grow in both commercial and residential markets. Despite uncertainty surrounding a possible recession, there has been no signs of slowing in the M&A industry amongst HVAC businesses.

The global HVAC market is projected to grow at a compound annual growth rate of 5.7%, to reach a value of $183bn by 2025. The growing commercial sector and rapid urbanisation worldwide are driving the demand for HVAC services and equipment. Furthermore, even manual industries such as HVAC must change with the times, and as a result they are being integrated with next-generation technologies such as IoT sensors, remote control systems and hybrid HVAC united, as a way to further reduce energy consumption - this is another factor which is anticipated to contribute to the global market expansion.

Key Industry Trends

•        Smart HVAC: The growth of IoT has allowed us to control, monitor and interact with a range of systems and appliances like never before; HVAC systems are beginning to incorporate this technology. These advanced HVAC systems will include the likes of repair notifications that let you know when repairs or maintenance is needed, remote access that have remote capabilities, and self-regulation which feature new sensors which help the system regulate itself and determine when and where in the building it is most needed.
•        Sustainable Building Design: Sustainability is a primary consideration when designing new buildings, often referred to as green buildings design. HVAC is a key component in green buildings design as it is one of the primary energy consumers. The increased focus on sustainability has led to several advancements in the industry, such as ventilation systems using more use of natural airflow to lower the energy consumption of the facility. HVAC systems using alternative power sources and using new building materials that help to maintain a more constant temperature in the buildings where a powerful HVAC system isn’t necessary.
•        DeVAP HVAC: DeVAP (Desiccant Enhanced Evaporative) is changing HVAC as we know it. These systems provide cooling by using an evaporating cooling system which turns water into evaporation and causes the surrounding air to cool down. DeVAP systems also remove humidity from the surrounding air. They provide the same dry, cool air offered by traditional air conditioners. However, DeVAP systems consume considerably less energy and contain no harmful refrigerants.
•        Geothermal HVAC: These take advantage of consistent temperatures underground to cool and heat buildings. Using water running through underground tubes, these tubes are either heated or cooled by the temperature of the ground. This water then travels to an indoor unit, where a fan, pump, and compressor are used to deliver cool or hot air to other parts of the building.

We Are Ready When You Are.

Call Benchmark International today and speak with one of our analyst about your company's exit or growth strategies.

When selling your business, receiving offers is a big hurdle to overcome so, when this happens, it might seem like plain sailing from here. Unfortunately, there is still quite a way to go with the transaction, the first being to analyse the offers on the table, to make sure they suit your exit or growth strategy.

This might not seem difficult, but there are many ways to structure a transaction. Therefore, depending on what you want to get out of the sale of your business, this will influence the type of deal you take. For example, are you planning to retire and need to live off the proceeds of the sale? Or do you want to remain involved in the business?

Consider the below list of ways to structure a deal to find out which is right for you:

There is a vast range of different types of acquirers a seller can go to when selling their business. From trade to private equity, national to international buyers, there can be a large pool of potential acquirers to approach.

One of the many options available is selling to the current management team – otherwise known as a management buyout (MBO). This is a transaction where a company’s management team purchases a majority or all of the shares from the existing shareholder(s) to take control of the company. This requires the management team to pool resources to fund the acquisition, but there are various funding options available such as private equity financiers and seller financing.

There are different reasons as to why a company might opt for an MBO rather than look to sell to an outside company – for example, it might particularly appeal to a shareholder who is looking to retire. If the company is run by its management team and the shareholder(s) are no longer involved in the day-to-day then an MBO can allow the shareholder(s) to fully retire.

While an MBO may appeal more to a shareholder looking to retire, it can be an attractive succession plan for any company. One of the reasons being is that there is no need to disclose confidential information to outside parties such as competitors. Another reason is it ensures a smooth transition as the management team has the skills and experience to take the company forward and continuity is ensured for customers, suppliers and employees.

Nevertheless, there can be pitfalls to an MBO which must be treated with caution. If both the management team and the shareholder(s) are spending a lot of time working on the MBO, then this could be detrimental to business performance and, as MBOs require a lot of specialist knowledge in structuring and financing the deal, a lot of attention is required.

However, these pitfalls can be avoided – a good corporate finance team can assist in executing a successful MBO, without compromising business performance.

What were the reasons you started your own business? Most likely you wanted to pursue a passion but there are a multitude of other benefits that would tempt anyone to start their own business – from flexible working times to calling the shots. But, have these benefits actually become a reality?

If not, then it might be time to look at your work-life balance. Do you find yourself having no time to spend with your family and doing the things you love? Even worse, do you find that it’s having a detrimental effect on your health? For example, if you are stressed, being overworked can lead to a number of health problems such as stress induced insomnia and heart disease – something that needs to be remedied straight away.

1. No one can control the market.

You can know it. You can be smart about what it will do, how it will react. But you cannot control it. The nearer into the future you look, the more of a feeling of control you can have. But the longer a business owner wants us to look into the future, the less valuable the insights. Things change. Interest rates move. Sectors fall in and out of favor. If you want me to try to control the market, please act quickly so that we are dealing with the current market, not some future version of the market.

2. There is no perfect buyer (or seller).

Everything in life involves tradeoffs. Your business, like the ones we will bring to you, has imperfections. I’m here to convince buyers to take a favorable view on your business – to trade off its defects against its outstanding features in a way favorable to you – AND to help you uncover and evaluate the buyer’s defects and favorable features. So … please don’t expect your business to be perfect and don’t expect us to bring you perfect buyers. One of the main reasons our business exists is because buyers – and sellers – are imperfect. If that were the case, you’d not need us.

3. Your priorities will change over the course of the company sale process.

This is not a bad thing. It’s a marvelous occurrence that is very satisfying to observe. It is an unintended consequence that will be of great benefit to you. What makes it problematic is when you don’t realize its happening AND when you don’t tell us its happening. As your broker, we are out there trying to achieve your objectives – as you’ve explained them to us. If we don’t know what you’re after, we’ll be after the wrong thing.

4. We’ll give you plenty of feedback but we need feedback also.

We will start by proving you some feedback from our internal knowledge base and experience. We will then give you feedback from specific buyers and the market in general. In order to get the best result for you, we need that feedback loop to be a two-way street. We want to know what you think of each buyer, of our service, of your own business, of the market in general, and of the process. Both our process and the market are highly flexible and changes can be made to meet your needs and expectations, but only if we know they need to be made.

5. It’s a marathon, not a sprint.

Too many clients come out of the blocks at full speed. Many also tend to think the signing of a letter of intent is the beginning of the end but it is just the end of the beginning. Running out of gas is a big problem when it comes to getting deals closed. Some parts of the process require significant time and energy from you and others do not. In order to hit your goals, we’ll need you well-prepared for those stages where your input is crucial. The deficiency we most often see emerging during the process is not one related to energy or time but rather emotions. This is understandably a stressful process. It should be and we build our service model around that fact. And that emotional aspect of the process is the hardest one to deal with over the course of the lengthy process.  

If you’ve received an offer for your business, you have three options – the first being take the offer and sell your business. This is possibly something you have been considering, or it seems too good an offer to refuse; however, you should be cautious in such an event and, if you do want to pursue the offer, make sure you do the following:

Keep the Business Sale Confidential

Confidentiality is very important when it comes to the sale of your business. If it gets out that you are selling your business then this could potentially lose you staff, customers, and suppliers as they could get nervous about an impending sale and the changes that could be in store for them. Therefore, do not discuss anything until a non-disclosure agreement (NDA) has been signed, including whether you are prepared to sell the business.

Make Sure you Stay Focused on Your Business

One of the dangers of the sales process is that it is very time-consuming at the point where you really need to focus on maintaining a good business performance – if business performance dips, then this can give a buyer an excuse to lower their offer.

In fact, this is not the only situation where a buyer might decide to lower their initial offer. The buyer is under no obligation to actually pay this price for your company until you both sign the Sales and Purchase Agreement (SPA) and there are several reasons a buyer might try and chip away at the offer to try and get your business for a bargain price.

For example, when you have accepted the offer and signed the subsequent Letter of Intent (LOI), the buyer can commence the due diligence process, providing them with access to confidential information such as financial documents and contracts for a specified period of time, typically 30-60 days. There are two related problems with this. Number one is the fact that the due diligence process is time-consuming and a resource drain, which could lead you to take your eye off the business. Number two is the buyer can now look at re-negotiating now they have had a thorough look at the ins and outs of your business.

Therefore, after this huge resource drain, you now have an offer on the table that does not meet your expectations as the buyer has chipped away at the price. Either you still take this less than favourable offer, or you turn away from the deal. While it is your prerogative to do so, you have lost time and valuable resources, you have given information about your company to another party, and you have not had your full focus on the business.

So – what are the alternatives to accepting an unsolicited offer?

Retirement is a significant decision that you have waited your entire life to make. Most people retire between the ages of 60 and 70, but everybody faces a different set of circumstances that dictate when they can retire. So how do you know if you are ready?

The most important factor in retirement is whether your financial situation will allow you to do so with security and peace of mind.

• Do you have enough money saved? You want to live comfortably and maintain the standard of living to which you are accustomed. The last thing you want to do is retire and then realize you don’t have the means to live the way you are used to and end up having to downsize your dreams.

• Are the markets in the right place so that you maximize your investment returns? Maybe your portfolio took a little bit of hit recently. Giving it a little time to recover can be a wise strategy. Consider where the markets are and where they are forecasted to be in the upcoming months. If you time it right, you can make the most of your decision.

• Are you debt free? It may not be the smartest move to retire if you still carry debt you must pay, especially if it is significant. Retiring when you are debt free means retiring when you are worry free.

• Do you need a plan to cut down on potential expenses? If you have a strong desire to retire but feel that you are not as financially confident as you would like to be, you can devise a plan to reduce your monthly expenses and ease some of the burdens.

Of course, there is more to the decision than just financial factors. You must consider whether you are mentally and emotionally prepared for retirement.

• Are you no longer interested in pursuing career opportunities? If you are still hungry to attain work-related goals or you feel that you haven’t achieved everything you set out to achieve, then maybe retirement is not for you just yet. You do not want to retire and then feel that you are missing out or that you didn’t reach your full potential.

• Do you find yourself thinking about recreational and social activities more than you are thinking about work? If you find yourself standing on the golf course, wishing you could spend more time there, then it may be a good time to consider retirement. Sometimes getting out before you are completely checked out is in the best interest of you and your business.

• Do you have a plan for how you want to spend your time? It is not unheard of for people to retire only to become overwhelmed with boredom and a lack of purpose. Having a plan in place can help you stay busy and feel that you are achieving a new set of goals in life.

• If you are retiring with your spouse, are you equally ready and on the same page when it comes to how you will spend your time? If you are in this together, make sure your plan is truly in sync. If one of you wants to travel the globe and the other one just wants to spend time with the grandchildren, there could be a conflict that you didn’t even realize you would have to address. Plan your vision for retirement together.

These are all critical questions to ask yourself when deciding if you are ready for retirement. But there is one more crucial question that you must address.

• Do you have an exit strategy for retiring from your business? An exit plan is essential because it ensures that your business will make a successful transition into its next phase of ownership. Also, an exit plan will help you boost the value of your business so that you are prepared to sell at the ideal time.

A proven strategy for success regarding exit planning is to partner with a trusted advisor, such as Benchmark International. We can help you find the right buyer, maximize value, and craft a dream exit that leads to a happy and satisfying retirement.

When deciding to sell their business, sellers generally focus mostly, if not entirely, on internal factors. Revenue is growing and predictable. Earnings are improving as a result of increasing revenue and internal controls. Backlog is up. Customer concentration is low. This fictitious company paints a very compelling picture and is no doubt an attractive candidate for acquisition. However, while those are all important aspects and contributors to value, there are other factors that are beyond the seller’s control that not only impact the value of the business but also impact how sellable it is. In this piece, we will discuss some of the external market factors that impact M&A transactions. These factors are in no way comprehensive. The research wasn’t exhaustive. The intent here isn’t to create a definitive list of external influences. Instead, it is to demonstrate how important factors that are well beyond our control impact M&A deals. As a result, sellers should consider moving quickly if the factors within their control are positive.

Interest Rates

Interest rates, while still hovering around historical lows, will rise over the coming 18 months. Why is this important? Buyers, both financial buyers like Private Equity Funds, Independent Sponsors and Family Offices, and strategic acquires alike, use leverage to fund their deals. Many buyers will fund 40-60% of the cash at closing by way of debt in some combination of senior and junior debt instruments. When the cost of debt increases, buyers are faced with two options: 1. Use more equity, either out of their fund or from the corporate balance sheet to fund the transaction; or, 2. Lower the multiple they use to value the company. Given that the cost of debt is far cheaper for most buyers than their cost of equity, they generally favor using as much debt as is practicable. Most Private Equity funds are averse to using more equity and will instead, lower the valuation multiple. Compression of transaction multiples is coming, after a historic run. It is simply a matter of when.

Regulatory Environment

While we are in a much-publicized period of regulatory retrenchment, some industries are facing increased regulation. Many more are facing a changing regulatory environment. Whether there is more regulation or simply shifting regulation, the changes create both risk and uncertainty for buyers. Risk and uncertainty can impact the desirability of a company/industry and certainly can affect valuation.

Global Economic Concerns and Geopolitical Issues

Global economic issues can impact the M&A environment both generally and for specific industries. At the moment, we face a great deal of uncertainty related to trade with our largest trade partner, China. Tariffs are impacting companies across sectors by increasing manufacturing input costs, reducing the speed to market, and decreasing the demand for their products. Unrest in the Middle East, uncertainty in North Korea, Brexit, Russia, and all the alike contribute the geopolitical risks that impact M&A.

Industry Consolidation or Convergence of Industries

Industry consolidation can have a considerable impact on valuations. If you are in a fragmented industry that is in the early days of consolidation, this can have a very positive impact on the value of your business. However, if that consolidation began years ago, you may have missed the window. That doesn’t mean you can’t sell your business, but it will be more difficult to identify the buyer and may have an impact on valuation. The same can be said when industries converge. For example, the manufacturing and technology sectors have converged. Convergence of industries, depending upon where we are in that cycle, can create either risk or opportunity.

Changes in the Workforce Dynamics/Millennials/Gig Economy

The ready availability of a talented workforce can significantly impact industries and businesses. Due to workers having very little switching costs to move from one company or industry to another, construction and landscaping businesses have found it increasingly difficult to attract and retain talent. Specific industries that require talent to be aggregated in the same room for the entire workday face different challenges. The Great Recession, coupled with a generation of workers that place a premium on their time, has led to an enormous gig economy. It is not out of the question that the gig workforce overtakes the traditional workforce in the next decade. This shift will impact every business in ways we couldn’t possibly understand yet.

Political Trends and Risk/Elections

The constantly changing domestic political landscape impacts the M&A environment in numerous ways. We have uncertainty around healthcare. Any provider of healthcare or any business dependent upon reimbursement faces at least a measure of uncertainty. Immigration has become a hot button issue in the US. Wherever you fall on the issue, there is little doubt that American businesses rely on non-citizens to supplement the citizen workforce. Buying decisions are often postponed with looming elections. Tax planning is difficult when an administration change could entirely change the tax code…again. Political unrest creates uncertainty. Uncertainty is interpreted by buyers as being the equivalent of risk and manifests itself in the form of lower multiples.

Dry Powder in PE Funds/Excess Cash on Corporate Balance Sheets

An economy on an unprecedented run of success has created enormous cash reserves in the corporate coffers. Strong performance by private equity funds has made raising subsequent funds easier. Also, outsized multiples have reduced the number of investments many PE funds have made, so they too have tremendous stores of dry powder to deploy. Abundance of capital to deploy into transactions certainly should help with valuations. PE funds, in particular, have only one mandate: buy businesses, grow them, and sell them 3-5 years later for a meaningful return. As such, there is no risk of them using their capital for other projects. The same can’t be said, however, for strategic acquirers. Corporations have many competing uses of their cash. If the environment for M&A turns unfavorably, businesses may pursue growth through organic initiatives. For example, they may opt to forego M&A deals in favor of greenfielding new territories, launching new products, building out new technologies, or exploring alternative revenue models. Alternatively, some may view the best use of their cash is to distribute it out to owners in the form of a dividend.

In summary, there are many outside influencers on the M&A market that simply cannot be controlled. While companies can put mitigation strategies in place, they cannot exert control over external market forces. When the key factors within a potential seller’s control are favorable, it behooves them to seek out a talented M&A advisor, like one from Benchmark International, to assist them. We can help them to ride the tailwinds, overcome the headwinds, and navigate the obstacles.

1. Most M&As Fail
According to collated research and a recent Harvard Business Review report, the failure rate for M&A is between 70 and 90 percent. To effectively complete a deal, there must be a clear strategy and open communication among all parties.

2. Expect Due Diligence
Experienced buyers conduct meticulous due diligence. They want to know exactly what they are taking on, and that includes factors such as obligations, liabilities, contracts, litigation risk, and intellectual property. As a result, sellers should be prepared to provide very thorough documentation.

3. Priorities Change
Your company may be a good strategic fit today, and in a year from now. But people are fickle, and priorities can change, so a good offer today could be a non-existent offer later.

4. Employees Will Have Questions
In any sale of a business, employees are going to have questions about how the transaction will affect them. Also, the buyer will want to know how specific issues are handled. Will there be layoffs? Have confidentiality agreements been signed? What about any stock options? How will management be changed? These are just a few questions that should be anticipated.

5. Don’t Overlook Technology
These days, virtually every industry is impacted by technology. In the M&A process, it is important to think about how IT platforms will be consolidated or integrated, how technological changes can affect inventory, and how cloud management will be used, among many other factors.

6. M&As Are Often Funded by Debt
Low interest rates on loans encourage M&A. In 2015, acquisition-related loans worldwide totaled more than $770 billion, the most since 2008.

7. Competition Will Result in the Best Deal
The more bidders there are on a sale, the more favorable the conditions are for the seller to negotiate a higher price and better terms. Even if there is only one serious bidder among several, the perceived level of interest can lead to brokering a better deal.

8. Synergy is a Must-Have
For an M&A deal to succeed, vision and strategy need to be synergized at the executive level and communicated to all management. M&As can fail due to a misalignment of vision for the culture, the industry, each company’s role, and more. The cultural fit of two companies can be crucial to how successfully they meld.

9. It Can Take Awhile
From beginning to end, most mergers and acquisitions can take a long time to be completed, usually in a period of around 4 to 12 months. The length of time depends on how much interest the seller has generated and how quickly a buyer conducts due diligence.

10. You Need an M&A Advisor
An experienced M&A advisory team can help ensure that the complex process of selling or buying a company goes smoothly, addressing all of the issues mentioned above on this list.

The global industrial wastewater treatment market was valued at $10.6B last year, and industry experts expect this figure to reach $16.6B by 2026 – at a compound annual growth rate (CAGR) of 5.8%. The global market is propelled by factors such as diminishing freshwater resources and stringent regulations related to emissions and treatment of industrial waste. Industries such as food, petroleum refining, textile dying, and power plants are some of the main contributors to industrial wastewater. 

Over recent years, new water recycling and process technologies have begun emerging, some include membrane bioreactors, wastewater monitoring and control systems, and granular sludge treatment processes using engineered microbial structures. Increasingly stringent wastewater discharge controls and tighter water quality requirements, nutrient removal, trouble maintaining complicated systems while keeping prices down are the major hindrances for the industrial wastewater treatment market. 

Key Industry Statistics

• North America (35.5%) is expected to be the largest player in the industry, owing to the presence of huge infrastructure in the oil and gas sector, mining and strict regulations against wastewater treatment. Europe is the second largest accounting for 31.2%.
• The largest segment of the wastewater treatment industry goes to power generation, which accounts for 62% of the total market share. Mining holds 30.6%, while chemicals hold 7.4%. 
• Elsewhere, coagulants are anticipated to register the highest growth rate in the industry, at a rate of 6.4% through to 2026.

Water infrastructure has experienced several ups and downs. While the majority of market stakeholders were interested in business collaborations, natural disasters created a range of problems for water treatment manufacturers. Most of the top players have become focused on integration of advanced technologies to develop smarter and more effective solutions for water treatment and management.

The value chain for water and wastewater treatment equipment market is expected to witness changes in terms of investments, innovations, advancements and business opportunities. New technologies, business models and technologies are expected to be introduced, especially to support the changing requirements for water treatment. 

We Are Ready When You Are.

Call Benchmark International today and speak with one of our analyst about your company's exit or growth strategies.

Are you considering buying or selling a privately held business? Below are a few stats that you might find surprising:

As a business owner, have you given any consideration to your succession plan?

It is important to note that a succession plan is not the same as an exit plan, but rather an element within an exit plan. Succession planning is focused on the interests of the business when an owner departs and another takes over. Exit planning is focused on the interests of the business owner, with succession just being one aspect in the overall plan.

It is actually quite common for small business owners to not have a succession plan, or even an exit plan, in place. Regardless of whether you have no plans of retiring anytime soon, the future is unpredictable, and having a solid, documented strategy in place can be crucial to the health and fate of your business. You will want to be ready for any scenario or opportunity that comes along.

The global corporate training market is projected to grow at a compound annual rate of 9.8% and reach $114 billion by 2022, according to industry experts. Furthermore, a combination of economic, regulatory, demographic and technological forces is reshaping the labour market and forcing employers to increase the speed and efficiency with which they train employees. Meanwhile, ongoing changes in how people consume information and engage with educational content have unlocked new opportunities for innovative training companies to significantly enhance the learning experience. These factors have led to a strong interest in training firms, with much of the interest over the last few years coming from players outside the industry, who wouldn’t traditionally be linked with training.

Some of the high-profile acquisitions coming from adjacent markets include recruitment companies looking to use training as a way to strengthen the marketability of their talent pools and help employers bridge the skills gap. For example, in May 2018, Adecco Group announced it was acquiring General Assembly, which provides courses in web development, coding, and other digital skills. A few years earlier, LinkedIn enhanced its training capabilities by acquiring Lynda.com, an online education company. Penn Foster also partnered with EmployBridge, a large commercial recruitment company, to provide online courses to EmployBridge employees for free.

Furthermore, several factors over the last decade have given employer-sponsored training an increased share in the market. The most significant is that the ever-shortening technology is cycle is accelerating the rate in which certain skills become obsolete. As a result, employers are being driven to make investments in hiring, training, and re-training qualified workers. Increasing regulations and changes to the policy are contributing to the industry, increasing demand for regulatory and compliance monitoring training.

Key Industry Trends

·     eLearning: The increasing use of eLearning has grown to become a multi-billion-dollar market. Factors that have contributed to growth in eLearning include the rising costs of instructor-led, classroom-based training as well as the need for continuous, life-long learning. Awareness and compliance training were two of the first to use eLearning, however sophisticated platforms have made even soft skills training a practical reality for this approach. Add to that the potential for significant cost savings, and it’s not difficult to predict the continued expansion of eLearning for years to come.

·     Training being used to attract and retain employees: Training is increasingly being viewed as an employee incentive, along with perks such as healthcare and retirement benefits. Employees appreciate that access to training will help them hone their skillset – as well as developing new skills. This also helps businesses retain employees, a recent poll found that more than half of all currently employed adults are either actively searching for a new job or are at least passively entertaining other career opportunities. Using training is a way to help develop your employees while keeping them engaged and productive. 

·     Skill gaps continue to grow: According to a report by Payscale Research, 33% of employers had positions open for over six months due to a lack of skilled or qualified candidates. As such, companies must take it upon themselves to provide future employees with the training and development opportunities to meet the demand of the role.

·     Convenience: With the ever-increasing rise of technology, more people are demanding that training is easily accessible. They expect learning to happen at any time, in any place. As the vast majority of people use smart phones, this means they don’t have to wait to access training. 

·     Personalisation: Off-the-shelf training programs are on a rapid decline, employees expect training to be relevant to their unique situation. This means adapting content based on factors such as work environment, the culture within the organisation, employee experience, location, and job performance. With eLearning, there is cause for optimism and excitement in the industry that customised training will become the norm. While training improves, so will company performance.

We Are Ready When You Are.

Call Benchmark International today and speak with one of our analyst about your company's exit or growth strategies.

Timing is everything, and 2019 is the prime time to sell a business for maximum value. The conditions are extremely favorable right now for several reasons, and waiting could mean that you miss out an ideal opportunity. 

This is an intriguing time to be involved in the global food and beverage industry. 2019 remains promising for M&A opportunities for several reasons. Giant food companies are on a spree to expand their portfolios with food innovation. Food start-ups and smaller private food companies are looking to cash in on growth and exit strategies. And private equity and venture capital firms are motivated to get their piece of the pie.  

A strategic partner is another business entity with which you form an agreement to share resources with the mission of growth and mutual success. There are different types of strategic partnerships.

• Horizontal Partnership: Businesses within the same field join alliances to improve their market position. Example: Facebook and Instagram.
• Vertical Partnership: Businesses team up with companies within the same supply chain (suppliers, distributors and retailers), often to stabilize supply chains and increase sales. Example: LiveNation and Ticketmaster.
• Equity Partnership: An investor acquires a percentage interest in a business, providing needed capital and sharing in profits and losses.
• Joint Venture: Two or more businesses form an entirely new legal entity in which the profits and risks are shared, and the original companies continue to exist on their own. Example: Microsoft and NBC’s creation of MSNBC.
• Merger: Two companies agree to go forward as a single new company and the original companies no longer exist. Example: Exxon and Mobil, now Exxon Mobil Corp.
• Acquisition: One company takes over another company and establishes itself as the new owner. Example: AOL and Time Warner, now Time Warner.

Why Do I Need One?

A strategic partnership can be an extremely powerful tactic that gives your business a competitive edge. According to a study by the CMO Council, 85 percent of business owners believe partnerships are essential for business success.There are several reasons why it is a commonly relied-upon growth plan.

• Expansion into new markets
• Increased brand awareness
• Product line extension
• Access to new customers
• Improved supply chain performance
• Added value for existing customers
• Acceleration of innovation
• Strengthening of weaknesses
• Sourcing of capital

A successful partnership must be built on a solid growth strategy and make sense from a capabilities perspective. The goals, values and culture of all partners should be aligned. You also need to have the right infrastructure in place. And the timing of the venture can be critical depending on the market. A partnership is a major endeavor and you absolutely want to get it right. Unfortunately, most organizations are not armed with the proper connections, resources and management capabilities to maximize the potential of a partnership. According to a report by the Business Performance Innovation Network (BPI):

• 43 percent of business partnerships have high failure rates.
• 45 percent are unable to maintain long-term, successful relationships.
• 42 percent of partnerships are not well leveraged.
• 67 percent of companies that agree to work together lack formal partnering strategies. 

How to Get It Right

The smartest way to ensure that you are entering into a successful partnership is to seek the guidance of an advisor such as Benchmark International. We have the connections, experience, data-driven analytics, and knowledge to help you devise a carefully crafted growth strategy that is built on confidence and captures the most value. If you are a founder, an owner, an entrepreneur, or part of the leadership of an established company, we encourage you to reach out to us and start the conversation about how a strategic partnership can benefit your business.

Through the year 2023, the global higher education market is expected to grow at a compound annual growth rate of more than 12%. There are several factors driving positive growth in this sector, from the high demand for technological innovations to the surge of internationalization. 

The global real estate environment is off to a strong start for 2019. While uncertainties regarding trade, Brexit, and other geopolitical tensions linger, we have yet to see any major weaknesses in real estate markets. The sector continues to attract capital and pricing levels are holding steady thanks to strong capital flows. 

Real Capital Analytics (RCA) reports that acquisitions of income-producing commercial real estate last year rose by 3 percent to $963.7 billion. That is the third highest annual total on record behind 2007 and 2015.

The Multifamily Sector

Multifamily housing is expected to continue to attract sustained investment and debt capital. Multifamily demand remains steady and is driving up rent prices as younger generations are being priced out of home ownership and older generations are downsizing. The top three emerging markets to watch in the United States for multifamily housing this year are Phoenix, Portland, and Tampa Bay.

Workforce Housing

The growing need for workforce housing is also driving the market for multifamily housing. In fact, workforce housing has actually outperformed the overall multifamily market in each of the last four years.According to a report by CBRE, workforce housing has brought in nearly $375 billion in investment over the last five years. That is more than 51 percent of the total for all multifamily asset classes.

Tech, Retail & E-commerce

Real estate fundamentals remain strong amid trends surrounding urbanization, retail, and ecommerce. Suburban markets are adapting to technology and becoming more urbanized with added focus on community-oriented retail concepts. Retail stores and shopping malls are undergoing an identity transformation, as retailers are adjusting their real estate needs to accommodate omnichannel experiences, especially in the U.S. and Europe. Additionally, e-commerce companies are adding smaller, satellite facilities to their networks of regional distribution centers as a reaction to the demand for fast, low-cost shipping.

Tech firms and flexible space providers continue to have a major impact on the global real estate market this year. Flexible space providers are targeting their focus on larger enterprises. More and more firms are leasing shared spaces. And as employees become more mobile, companies are adapting and coworking is becoming more popular. Coworking is primarily focused in high-wage markets and cities with a large number of professional services companies. Coworking spaces in tech markets are nearly double that of other markets.

Mixed-use real estate is also going to remain a significant opportunity, with the convergence of retail, office, residential, hospitality, and community-focused spaces. This adaptation is causing a shift in the types of tenants that properties are accommodating, resulting in shorter lease agreements.

REITs and Mergers & Acquisitions

Investors are expected to continue to diversify into secondary markets in search of yield. This includes real estate investment trusts (REITs), which have recently increased valuations and pay healthy dividends. Global REITs are projected to outperform other sectors and deliver strong returns in 2019. The property sectors among REITs expected to see the most M&A activity this year are industrial, self-storage, data center, multifamily, and student housing. Experts also predict the possibilities of some deals in the hotel REIT sector.

The year 2018 outperformed 2015’s prosperity for global commercial real estate investment in the current cycle, with a five percent increase in global investment volume. The U.S. accounted for 52 percent of global transactions. A total of six investors from Canada, France and China invested a record $41 billion in U.S. entities.

The value of U.S. entity-level transactions increased threefold last year, driven in majority by cross-border investment. Toronto-based Brookfield acquired Forest City Realty for $11 billion, making Brookfield the second-largest property owner in New York City, led only by the city government, and boasting a NYC portfolio worth around $32 billion. In 2018, Brookfield also acquired the second-largest U.S. mall owner, General Growth Properties, for $15 billion. Both Forest City and GGP were publicly traded REITs. 

Global Hotspots

International property is sustaining its 2018 performances as a remarkably popular market. Some of the top cities for real estate investment in 2019 include Lisbon, Toronto, Dallas-Forth Worth, Melbourne, Singapore, Berlin, New York City, Vancouver, Raleigh, Montreal, Tokyo, Madrid, Osaka, and Sydney. Specifically, the city of Lisbon has been noted to be the 2019 investment capital of Europe. This is due to increased tourism, a growing economy, and competitively lower pricing.

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If you are interested pursuing a growth strategy or an exit plan. No matter what sector you work or invest in, Benchmark International can help you take your aspirations to the next level.

While ongoing geopolitical uncertainties could present challenges in 2019, the overall outlook for the global retail industry remains optimistic. In the world’s top retail market, the United States, retail sales are predicted to grow more than 3 percent to exceed $5.5 trillion. But for the first time ever, China is expected to outperform the U.S. in retail sales. China is forecasted to see a 7.5 percent growth in retail sales this year, reaching $5.6 trillion.

When it comes to the M&A Process, sellers often times have many questions. Here is a list of 7 frequently asked questions about the M&A process.