May 2018 Newsletter

Early last month, there was a good piece in the Orlando Business Journal about the recent M&A activity in Central Florida and the complexities that go into those types of transactions.

More insightful, though, than the various structures and unique terms a given deal may include was the psychological toll that the sale of a business can take on its owners — especially when those folks are the people (or are related to the people) who started the business.  For many business owners, their identity, time, and much of their wealth and livelihood is tied up in their business.

The Conway Center for Family Business estimates that the average lifespan of a family-owned business is 24 years. For most of us, that represents roughly a third of our lifetime. So it’s no wonder that the idea of transitioning out of it comes with a boatload of stress. From worrying about your beloved employees to you and your family’s financial and personal future, there’s a lot of emotion involved.

It doesn’t help matters that the due diligence process is often arduous and chalk-full of scrutiny. So why go through the process at all? Why not pass it on to the next generation? Well, according to Bloomberg Business Week only 40% of U.S. family-owned businesses are passed on to the second generation. For third-generation, it’s a meager 13% — and those numbers are trending down. Meanwhile, the number of folks reaching retirement is at an all-time high. The U.S. Census Bureau reports that 10,000 baby boomers retire every day; many of them are business owners.

So, if the most common method of business-succession of the past is trending down while more owners than ever are looking to move towards retirement, what gives? Private Equity and strategic competitors seeking consolidation are becoming the new norms for business owners looking to move on to the next chapter of their lives. One stark proof point: deal activity in U.S.

Private Equity hit new highs in 2017 in both deal count and deal value, and Pitch Book believes a new record could be hit in 2018. Due to low-interest rates and an influx of money into PE funds, there’s more capital than ever that needs to be put to work. How does that affect business owners? Higher valuations! Monetarily, it’s one of the best times ever to be the captain of a profitable private business with your eyes on the exit door.

That doesn’t erase the fact that the sale process comes with the aforementioned challenges. But like all great outcomes, the obstacles are there to be overcome and if you’re working with an experienced team of advisors, it can make the journey much more palatable (and profitable).

 

If you or anyone you know is considering raising growth capital or selling/buying a business, please let us know. We’d love to chat.

 


Portfolio company that just closed out its seed round

 

Rentivity.com

Rentivity, a Florida based real estate technology company, successfully completed a fundraising round with NewGate Capital Partners of an undisclosed amount. Rentivity is launching the first end-to-end digital marketplace for single-family home rentals. Their solution integrates and supports all users (owners, landlords, property managers, tenants, vendors, etc.) in a single, mobile friendly, platform. Rentivity will save time and money for both renters and property owners while providing detailed reporting and a digital audit trail of all transactions.

 

You can visit them and stay up-to-date on their full market launch at rentivity.com.

 


 

Machine-Part Manufacturing Company for Sale

 

Image result for Machine-Part Manufacturing

 

NewGate Capital Partners has recently listed for sale a manufacturing company that is focused on producing machine parts for envelope, plastic bag, and notebook manufacturers. The Company was founded in 2005 and currently employs 11 people.

It is headquartered outside of Pittsburgh, Pennsylvania in a 10,000 square foot facility and mostly serves clients throughout Pennsylvania. Their niche-focus is a competitive advantage that has resulted in year-over-year sales growth of 13%. They finished the 2017 calendar year with just over $2 million in sales and an adjusted EBITDA of $600k and are expecting similar or better results for 2018.

 

The owner is currently looking to retire but has management in place that can take over post-transition.

The sale of the business includes the land and manufacturing facility.

 


 

 

 

17- Nov2016
Posted By: Joe
558 Views

NewGate Capital Partners is dedicated to improving your business.

NewGate Capital Partners is dedicated to improving your business.

Many entrepreneurs think of themselves as successful if they have formed an LLC, established their company in an office space, and possibly even reached $300,000 in monthly revenue.  These are certainly great milestones in their own right, but the business is almost surely not operating at its full potential.  Entrepreneurs often find themselves simply going through the daily motions to make the business work, but too much focus on the present and too little consideration for the future will keep almost any business owner from driving his or her business to become something special.  At NewGate Capital Partners, we offer expertise in seeing the future of your business.  Through complete analysis of your current situation followed by implementation of proven strategies, NewGate can improve the way your business operates as well as the way you look at your business.

NewGate is interested in helping you (1) formulate your growth and exit strategies, (2) attain your growth funding, and (3) implement and monitor your strategic growth plan.  In order to accomplish these goals, NewGate will conduct in depth analyses to extract crucial information that will determine how to begin to build your strategic growth plan.  A clear definition of the pain in the market as well as what your company offers as a unique solution are important results of analyses that focus on your company’s strengths, weaknesses, opportunities, and threats.  Aspects of your business that will be considered are:

  1. What stage is your business currently in? How much capital has already been invested in your company?
  2. What do your monthly sales look like?
  3. What makes your business scalable?
  4. What are your goals for your business as well as for yourself?
  5. How well does management work together? Are team member goals aligned?

Answers to these as well as other key questions will help the team at NewGate to begin developing a custom strategic growth plan for your business.  However, while we will guide you through this process, it is crucial that you as the business owner become more involved than ever to assure a successful transformation of your company.

When growing a business, it is often necessary to invest in assets such as capital equipment in order to reach a certain level of increased operation.  If you need to make a similar investment but do not have the cash needed to do so, NewGate can help you attain the funding required to take your company to the next level.  From performing routine tasks such as reforming the legal structure of your company in order to prepare it for raising a round of capital to developing complicated documents such as white papers and business plans,  NewGate’s team of seasoned entrepreneurs is dedicated to making your business attractive to investors. Once you are ready, we are able connect you to our network of angels, venture capitalists, and other investors who can provide you with the funding you need.

With the foundation strategies laid out, NewGate will be ready to help you implement and monitor your growth plan so that your business is always heading in the right direction.  Whether we are providing advisory board services or doing due diligence in preparation for a merger or acquisition, NewGate has the expertise to see your company through to the exit.  The proper exit strategy is an important facet of any company’s business plan, and such strategies differ from business to business.  The team at NewGate embodies the multi-dimensional experience necessary for positioning your company for the correct exit and/or preparing it for sale.

 

13- Aug2015
Posted By: Vanessa
205 Views

Why Hiring a Business Broker when Selling your Business is a Wise Idea

 

     

     

    Selling your business adFor starters, a broker is an independent agent whose main responsibility is to bring sellers and buyers together.  For example, if you hire a real estate broker to sell your house, the broker acts as a middleman, he doesn’t own the house, and he instead facilitates the transaction.  Just like with a house if you have a business, you as an owner can sell it yourself. However, there are many reasons why you should consider hiring a business broker:

    • Paperwork: Do you know how much paperwork you will need if you are selling? According to the Small Business Administration SBA you need to prepare a sales agreement. What else? You can invest your time doing the research on your own… OR consult a business broker. A business broker’s expertise consists of navigating through extensive paperwork and the formalities in a daily basis. Don’t forget that time is money!
    • Business Continuity: Selling a business is a full-time job as it is. The owner should maintain its focus on running the business and take it to its full potential. All of these while selling.
    • Confidentiality: If you are an owner and are selling your business how you keep the matter confidential from employees and other stakeholders. You don’t want anyone to panic. The situation can be disruptive to the normal operations of your business. If you choose a business broker, he can protect the identity of your company while on sale. They can use a blind profile, a document describing the company without revealing its identity. We are going to talk further about “Confidentiality when selling a business” in our next blog.
    • Valuation Knowledge: Brokers can help you determine the value of your business. They have access to tools such as business transactions databases. There are also other variables that affect the value of your business. A broker can guide you in the right direction in to calculate the accurate value of your business.
    • Marketing: business brokers can help you market your business. They can suggest you diverse ways to advertise and put your business out there. 

    Ultimately, the decision is yours, you should take in account the variables of time, money and resources and put on a balance and see what works better for you and your business. 

    New Gate Capital Partners is here to answer your questions, we can help you to sell your business.  Feel free to check out our business brokerage page.