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.

 


 

 

 

Walmrt buys Flipkart

Walmart Gearing up in its Rivalry with Amazon

This article was originally posted on Recode.net by 

Walmart announced on Wednesday that it will buy a majority stake in India’s Flipkart e-commerce company, setting off a new chapter in its rivalry with Amazon, which has identified the world’s second-most populous country as the emerging international market of the future that it must win.

Walmart will pay $16 billion for a 77 percent stake in the company and says it will support Flipkart’s goal of eventually going public as a majority-owned subsidiary. Some Flipkart investors — including co-founder Binny Bansal, Tencent and Tiger Global — will continue to hold stakes in the company.

In its most recent fiscal year, Flipkart net sales grew more than 50 percent to $4.6 billion, but the company registers heavy losses as it battles Amazon for supremacy in the fast-growing e-commerce market.

If the deal were to close in the second quarter, Walmart said its earnings per share would be negatively impacted by 25 cents to 30 cents. Walmart expects that negative impact to grow to around 60 cents per share in the next fiscal year as it ramps up investment in the company.

 

walmart-flipkart-deal
“With the investment, Flipkart will leverage Walmart’s omni-channel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe,” Walmart said in a release.

Flipkart was founded in 2007 and for many years was the leaders in India’s small but fast-growing e-commerce market, raising north of $7 billion in total to fund its growth. But Amazon’s entry into the country in 2013 has led to a fierce, cash-burning fight to become the dominant player in India.

Amazon has publicized investments of more than $5 billion into its India business as it supplants China as its most important long-term international market. Amazon has said that more people joined Amazon Prime in India in its first year of availability there than in any other new Prime-eligible country.

Between the Flipkart and Jet.com acquisitions, Walmart has now agreed to pay more than $19 billion combined for unprofitable businesses in order to become more competitive in online commerce in the U.S. and India. That’s the price the giant brick-and-mortar retailer must play for treating online sales as a side hobby for so long.

Walmart’s stock was down 4 percent in morning trading.

17- Dec2015
Posted By: Vanessa
204 Views

Digital Disruption: How It Changes A Business

Today digital technologies are essential parts of successful businesses, it is not more digital technology as the side kick in the business world, it’s now digital technology as the core, the heart of the business.

 

What exactly is Digital Disruption?

Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.

It shows how much the digital world has changed the business side of things.

We found this internal slide from IBM from a presentation about entrepreneurship, the slide mentions some examples of how digital disruption has already happened and will continue happening changing the way business interact with customers and each other.

 

• Most popular media owner creates no content (Facebook)
• Worlds largest taxi company owns no taxis (Uber)
• Largest accommodation provider owns no real estate (airbnb)
• Largest phone companies own no telco infrastructure (Skype, WeChat)
• Worlds most valuable retailer has no inventory (Alibaba)
• Fastest growing banks have no actual money (SocietyOne)
• Worlds largest movie house owns no cinemas (NetFlix)
• Largest software vendors don’t write the apps (Apple & Google)

Digital Disruption

So tell us what do you think about digital disruption?

 

Check out this video
Digital Disruption: Unleashing the Next Wave of Innovation

29- Oct2015
Posted By: Vanessa
190 Views

NewGate’s Business Newsletter, October 2015

 

October Business News

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Welcome to our new monthly newsletter. The third Thursday of each month, we send out a couple of current projects and updates related to the goings-on at NewGate Capital, our partner companies and our clients. We realize you are busy, so we promise to keep it brief.


We hope you are enjoying the beginning fall! For those of you fellow Floridians, you’re probably also relieved that the weather has finally dropped into the frigid 70s.With football season in full swing, we thought we would highlight one of our partner companies who has developed some new technology to be used at some upcoming live football games. We’ve also got a great business for sale for any of you who might be interested in turning over a new leaf.As always, please let us know if any of the companies below are of interest to you. We’d be happy to make an intro!

Congratulations to imediaReach!

They have entered into a three year agreement with Florida Citrus Sports for their new product LiveEventTV (http://liveeventtv.com/). The product, which allows attendees at live events to stream television feeds to their mobile devices while at the game, will be in commercial service at the Russell Athletic Bowl on December 29th and the Buffalo Wild Wings Bowl on January 1st.

They are also working on closing deals with the PGA TOUR, MLB, MLS and SEC for use at this year’s SEC Championship game in Atlanta, Georgia on December 5th.

They are having their first Live Event TV Investor Conference on Tuesday, October 27th at 5:30 PM EST at the Orlando Citrus Bowl — and you’re invited!! Hors D’oeuvres and beverages will be served. Guest Speakers include Steve Hogan, CEO of Florida Citrus Sports, and David Saphirstein, immediate past Director of Creative Technology for ESPN.

If you are interested in attending, please RSVP by replying to this email by October 22nd so we can let them know to plan for your attendance. Be sure to include the total number in your party. Following your RSVP, you will be provided with complete conference directions.

Glass, Window and Door Company for Sale

NewGate Capital Partners is representing the sale of a glass, window and door installation and replacement company headquartered in Central Florida.  The company has been in business for over 30 years and maintains a loyal client base.

They have received the reader’s choice award within their community for the last 12 years and have received both the highest industry rating from several of their suppliers as well as an A+ rating with the Better Business Bureau.

The company has 25 employees with senior management in place. Sales have been increasing and they are projecting ~$4.5 million by 2015 year end. There is a 12,000 sq. ft. building comprised of office area, show room and warehouse space sitting on approximately 3/4 acre of land — all included in the sale.

Expressions of interest can be directed to Monte Mitchell, Associate at NewGate Capital. Monte can be reached via email at mmitchell@newgatecapitalpartners.com or on his cell at (407) 408-9635.

Did you like this newsletter? Was there anything of interest to you? Feel free to reach out to us or share with your network through email or any of the social networks below. We’d love to hear from you!

If this monthly newsletter isn’t for you or you think we’ve made a mistake by adding you to this mailing list, feel free to unsubscribe below. Of course, we hope you hang around =)

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