S-18 JANUARY 19-25, 2015 CORPORATE GROWTH & M&A Advertisement M&A TRANSACTIONS Many growth paths open to businesses Today’s low rate environment has created countless options for middle-market businesses looking to grow. Whether they want to access cheap debt or take advantage of the frothy M&A market, it JONES is an ideal time to focus on growing your business. The low rates won’t be around forever, so if you want to acquire a competitor, expand geographically, boost sales, improve production or otherwise invest in the growth of your company, you need to act quickly. Rates are expected to rise in 2015, and today’s favorable financing environment will soon be history. Companies that cannot access debt through traditional channels or that want greater access to capital and operating resources might consider finding a private equity partner. Private equity offers flexibility because a company can sell any portion of itself to access growth capital. Whether seeking a minority partner, majority owner or a total sale, there is likely to be a PE partner right for your company. The right private equity investor brings much more to the table beyond quick access to capital. Look for a partner that has the experience and expertise to add meaningful value to your business. Before agreeing to work with a firm, think about specific goals for your company and determine if this partner can help achieve them. For example, if you’re looking to build a new production facility, acquire a competitor, or expand internationally, can the firm demonstrate effectiveness in these key areas? Once you’ve found a few candidates, judiciously vet them. Talk to people who have worked with the firms. Study their track record in your company’s industry and with similar growth strategies. Evaluate their scope and capabilities, and ensure you see a good fit from a personal perspective. If it all checks out, chances are good that your partnership will lead to growth for your middle-market company that might have been impossible to achieve without the private equity firm’s involvement. By carefully shopping around as you seek a partner, you’ll help ensure the right fit and a successful next chapter for your business. We may never see a better time to grow middle market businesses, so explore your options and don’t let the opportunity to cash in slip away. Chris Jones is a Partner with The Riverside Co. Contact him at 216-344-1040 and cjones@riversidecompany.com. Don’t forget the human side of human capital department”). The consultants failed to understand the debilitating impact the process would have Having worked on the human on the culture and morale of those capital side of hundreds of M&A who remained. transactions over the past 30 Once completed, the consulyears, I’ve learned it’s essential tants were just as quickly gone to have a clear understanding of (presumably to be unleashed onto employment and employee benefit a new transaction). Left in their obligations and liabilities wake was a workforce associated with the compaunable or unwilling to nies involved. This requires move forward. Needless careful due diligence and to say, the post-merger negotiations, and thoughtcompany continued to ful planning for the lose valuable employees integration and transition and underperformed. It steps necessary to ensure a took years to repair the successful transaction. Let’s damage caused by the face it, you will not have cost-cutting exercise. WIRTSHAFTER a happy and productive In retrospect, several workforce if your leaders lessons can be learned are not engaged and your benefit from their failure. plans are not smoothly functioning r You can’t always determine following the closing. But, there the value of your employees from is more to ensuring a successful a spreadsheet. Not enough attentransaction than simply managing tion was paid to understanding plans, reducing risk and ensuring who the real leaders and influenclegal compliance. ers were that drove the success A number of years ago, I of the companies prior to the worked on a transaction where transaction. two similarly sized multinational r Use surgical strikes rather than companies were being “merged.” carpet bombings. Employees know The employee and benefits issues who is not “pulling their weight” and involved were significant. No generally can move on when those question, redundancies existed employees are eliminated. between the two organizations. r Where possible, communicate The economies of scale created by directly and honestly; both with merging operations represented the employees being terminated a significant opportunity for cost and the ones being retained. savings and profit improvement. r Be fair. With this in mind, high-priced r Focus on creating/retainconsultants were engaged to ing the kind of company culture identify the cost-saving opportunineeded for success. ties. A horde of young consultants r Implement effective incentive descended on the companies and plans that focus key employees on reviewed every major function of moving forward. the operations. After considerable I relate this story not to pick on study, a report was produced with consultants but to remind those ina series of boxes showing where volved in mergers and acquisitions cost savings could be attained. The to never forget the human side of bigger the box, the more people human capital. that would be severed and the more savings attained. Surely, John Wirtshafter is an attorney in much thought went into who the Cleveland office of McDonald would be retained and who would Hopkins LLC and a Member of the be terminated. However, in some Executive Compensation and cases, the decisions were political Governance Practice. Contact him at compromises rather than strategic jwirtshafter@mcdonaldhopkins.com or (e.g. “If you let us keep our legal staff, you can keep your payroll 216-348-5833. BY JOHN WIRTSHAFTER Reason says: M&A is the right growth strategy. twitter.com/grantthorntonus linkd.in/grantthorntonus youtube.com/grantthorntonus Instinct says: buying smart is the right path to growth. At Grant Thornton we specialize in helping dynamic organizations execute transactions successfully. We bring a real, competitive advantage of a broad perspective, senior staff attention and short decision-making chains that our clients truly value. To help unlock your potential, visit grantthornton.com/deals “Grant Thornton” refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. Please see grantthornton.com for further details. Crain’s Cleveland Business Custom Publishing