Made in America: The 33 Cent Chinese Arkansas T-Shirt

Posted by John Slater on October 3, 2017

Recently my colleague Marco Chan shared an extraordinary story that puts a new slant on the public discussion about robotics, China, outsourcing and the future of jobs.  According to this Bloomberg Business Week story,  a Chinese manufacturer, Tianyuan Garments Co., is investing $20 million to open a plant in Little Rock that will utilize robots developed by a Georgia company, Software Automation, to manufacture T-Shirts at a cost of 33 cents per shirt.  Each SEWBOT™ workline is capable of spitting out a T-Shirt every 26 seconds.  Human workers don’t stand a chance against such competition, no matter how low a wage rate they are willing to accept.

We’re in a period of profound change as digital technologies promise to transform virtually every industry globally.  In manufacturing this rapidly accelerating transformation will impact employers and employees alike.  PWC recently estimated that 38% of U.S. jobs could be taken by robots by 2030.  Futurists like Martin Ford and even well-known industrialists like Elon Musk have begun to argue that we need to consider adoption of a Universal Basic Income to address a world in which machines and artificial intelligence have replaced human beings in a large part of the economy.

For those that fear the consequences of automation, the connection has been broken between technological advance and the creation of new higher skilled jobs categories to replace the old lower skilled jobs.  I have more confidence that a dynamic economy will continue to provide opportunities for our citizens, creating currently unimaginable job categories for those willing and able to adapt.  Lifetime learning has become a survival skill in our society, opening up new business opportunities in education and training and likely creating hundreds of thousands of jobs in the process.

At the FOCUS Investment Banking Advanced Manufacturing & Automation Team we spend our time addressing … read the rest

Is Industry 4.0 the New DotCom Boom?

Posted by John Slater on April 3, 2017

Fear stalks the land.  The Robot Apocalypse is nigh, destined to steal our jobs and our future.  Worse yet the machines are made elsewhere (Germany, Japan, even China) and America is being left behind in the race for manufacturing prowess.

We’ve heard this story before.  In the late 1980s, the U. S. computer memory industry had been decimated by Japanese and Korean competition.  To the Cassandras, this meant that the U.S. had forever lost the global economic race and was destined to become a second-rate power.

Nothing could have been further from the truth.  The prerequisites for U.S. global dominance of the technology world were already in place.  Within a few years, U.S. prowess in personal computers, microprocessors, and digital networking would lead to a capital investment boom and a stock market bubble not experienced since the 1920s.  Stock market fluctuations notwithstanding, the global growth of the Internet has not abated since.

For all its impact, the Internet has touched only a relatively small portion of human existence, focused primarily on media, entertainment, telecom and more recently retailing and finance.  The larger world in which we live, the world of things and physical interactions has, until now, been only lightly touched.  But that is going to change – and change in a huge way.

Imagine Amazon on Steroids

The world of digital automation is at the same stage as the internet in 1993, when the Mosaic browser was introduced and we first discovered the wonders of the World Wide Web.  The technologies are in place for a boom that will transform the global economy and, in the process, create new opportunities for better jobs and better lives.  And once again the U.S. is asserting its leadership role in developing the critical technologies.

Today Amazon utilizes highly advanced predictive analytics and automation tools that plan … read the rest

What Really Matters in the Long Run

Posted by John Slater on January 4, 2016

The holidays tend to be a time for reflection, time spent with family and friends and time spent with ourselves contemplating the future.  This year has been no exception. Friday was our first Christmas with our new daughter-in-law and we all look forward to future holidays with grandchildren and the noise and excitement to come.  We have much to be thankful for.

This was also a holiday season that included three funerals.  Two were for adult children of long-time friends.  It’s impossible to imagine the pain they feel.  We share their grief.  Burying a child is not in the natural order of things and events like these remind us that we are not in control of the future.

The third funeral provided a different perspective, that of a life well lived.  We had the opportunity to celebrate the passing of an extraordinary entrepreneur, who made the most of the days he was given.  This was a man who lived each of his 91 years to the fullest.  He was a talented engineer, who, together with his wife of fifty years, also a highly talented engineer, created a vital technology still used around the world to bring light to places where it didn’t exist before.  He created a still thriving business and successfully transitioned its ownership to a new generation of management.  If the story stopped there, we would consider his life to be a great success.

But the story does not stop there.  This entrepreneurial couple also lost their son, their only child, who had been burdened with a challenging learning disability.  The pain of that loss would have been crippling for many of us.  Not for this remarkable couple.  Out of their personal tragedy they had the vision to build and support a remarkable school that equips dyslexic children and young adults with read the rest

Categories: Focus Investment Banking

Tags:

Permalink | Comments Off on What Really Matters in the Long Run

Interview – The Exit Plan Show

Posted by John Slater on December 11, 2015

Technology is rapidly transforming numerous industries previously considered impervious to change.  Earlier this year I shared my thoughts with Financier Worldwide and with Axial as to how these trends are going to affect the middle market M&A industry in which we operate.

As further proof that change is coming, I recently had the pleasure of being interviewed by a new Internet based “television” network focused solely on how business owners can successfully exit their firms.  The Exit Plan Show interviews professional advisors to private business owners, including estate planners, valuation experts, tax advisors, etc. in addition to M&A advisors and investment bankers, and broadcasts these interviews in a weekly online “show”.  My interview can be found by clicking on the photo below:

 

Share Buttonread the rest

Categories: Investment Banking, M&A, Mergers and Acquisitions, Middle Market

Tags:

Permalink | Comments Off on Interview – The Exit Plan Show

Taking the Pulse of Middle Market Investment Banking

Posted by John Slater on December 3, 2015

Gabe Galvez is the Founder and CEO of CAPTARGET, an innovative service provider to middle market investment banks, M&A intermediaries and private equity firms. CAPTARGET is in daily contact with a large number of M&A industry participants and has created a comprehensive directory of M&A Intermediary firms, giving Mr. Galvez unique insight into the Middle Market Investment Banking and Transactional Intermediaries Industry.

In a far reaching interview Galvez shared with us his views on the current state of the industry as well as future trends.  Among the most interesting takeaways:

  • Five or six years ago the average middle market boutique M&A firm had five dealmakers
  • Today that number is a bit over two
  • In the same period the number of intermediary firms has grown from 3000 to about 4600
  • Of these more than half have not closed a deal in the past twelve months.

Gabe paints a picture of an industry ripe for radical change starting with a sharp contraction in the number of competing firms over the next several years back down to about 3000, leading to larger firm sizes and higher close rates.  He also draws a roadmap for what he sees as the successful M&A intermediary firm of the future.

While I would readily agree that the middle market intermediary business is far more competitive than when I entered it thirty years ago, there is more to the story.  Since the Great Recession, numerous parties, including real estate brokers, small business brokers, lawyers, accountants and consultants of all stripes have hung their shingles, claiming expertise in middle market M&A.  Websites are inexpensive and FINRA and the SEC have recently walked back regulatory requirements requiring securities registration for middle market intermediaries.  However, in our experience it takes far more than a flashy website to qualify a professional to represent business owners … read the rest

Categories: Gabe Galvez, Interviewees, Investment Banking, M&A, Mergers and Acquisitions, Middle Market

Tags:

Permalink | Comments Off on Taking the Pulse of Middle Market Investment Banking

Are You Looking to Exit? The M&A Market is Ready for You.

Posted by John Slater on June 16, 2015

Matt Porzio, Vice President of Strategy & Product Marketing for Intralinks has a unique perspective on the M&A market. Intralinks maintains the leading due diligence secure data room service in the world and, as such, has a window on a high percentage of global M&A activity as deals are being made.  Additionally, Intralinks offers a global deal networking service, DealNexus, through which thousands of buyers are provided a window on available offerings, particularly in the middle market. Using this unique position Intralinks publishes quarterly its Deal Flow Predictor gauging future M&A announcements based on the trends its sees in the usage volume of its services.  Matt’s observations on the current M&A market are presented below.

The M&A market for 2015 is looking bright – kicking off with a stellar start. According to Thomson Reuters, Q1 2015 saw over $854 billion in activity – the strongest quarter since 2007. Mid-market (deal valuation up to $500 million) deal volume was at $188.4 billion, with a year over year increase of 6.2 percent. From all indications, M&A will continue to be a leading growth strategy for companies, with rich exit multiples.

Multiple deal drivers are contributing to this rich environment, including activist pressure on strategics to tighten up balance sheets/refocus on core business lines.  Distressed sectors such as oil & gas are bringing a sizeable number of mid-cap deals to market, and the strongest volume of Q1 cross border activity since 2007. Financial sponsors, with plenty of dry powder, are also out to market in full force. According to Thomson Reuters, Q1 saw $171.3 billion in sponsor-backed deals – again the highest volume since 2007.

With financial sponsors coming in with plenty of dry power, deal-makers entering this space must have deep pockets and creative earn-out mechanisms in place in order stay competitive in any M&A situation. … read the rest

Categories: Business Acquisition, Business Sale, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Private Equity, Valuation

Tags:

Permalink | Comments Off on Are You Looking to Exit? The M&A Market is Ready for You.

IS THE M&A BUBBLE ABOUT TO POP?

Posted by John Slater on April 20, 2015

(Originally Published on Axial Forum)

The answer may surprise you, but first a bit of background. There have been signs of financial bubbles throughout global markets: US price/earnings multiples are relatively high, the Chinese equity market is on a tear notwithstanding signs of an economic slowdown, M&A valuations remain near record levels and so on. But, that’s not the whole story.

What is a bubble anyway, you might ask? The simple answer is a bubble occurs when the price of an asset class is bid far beyond its real economic value, typically as a result of mass hysteria, delusion, or misinformation. Bubbles tend to last longer than rational investors anticipate, which is why most short sellers don’t wind up billionaires.

You don’t have to look hard to find recent examples of burst bubbles. Oil is down more than 50% from its 2014 peak. Its drop was even sharper in 2008-2009 when it dropped 65% from peak to trough. Gold, the sure fire inflation hedge, is down almost 40% from its 2011 peak and could still be in a downtrend. These were big events reflecting what has been called the end of the commodity super cycle. Yet both the global and U. S. economies continue to grow.

Many claim that the U. S. equity markets are in a bubble. Yet there is little evidence of any large-scale delusion that is typically associated with market highs. On an inflation-adjusted basis, the S&P 500 has only now returned to its peak level reached 15 years ago at the height of the Dot Com boom and the inflation-adjusted NASDAQ remains almost 28% below its 2000 peak.

While excess leverage can potentially cause future pain, I would argue that the current M&A leverage and resulting high valuations are a realistic response to the “new normal” of very low … read the rest

Categories: Economics, Federal Reserve, M&A, Mergers and Acquisitions, Private Equity, Valuation

Tags:

Permalink | Comments Off on IS THE M&A BUBBLE ABOUT TO POP?

Money Matters But Your Heart Health Matters More

Posted by John Slater on February 9, 2015

Transformation encompasses not only the use of digital technology, but also incorporation of new systems and advancing scientific knowledge to solve seemingly insuperable problems. If we are going to transform the U. S. healthcare system, there is one overwhelming problem that must be solved: prevention of the chronic illnesses, the treatment of which consumes the vast majority of our healthcare dollars. Prevent or reverse arterial disease, diabetes and stroke and you have solved the Medicare financial crisis.

The FOCUS Healthcare and Life Sciences Team recently published its Winter 2015 Healthcare and Life Sciences Report, which includes an article below outlining my personal journey into the world of chronic disease prevention. I’m republishing the article on Capital Matters at the beginning of Heart Month because a high percentage of our readers (Type A business owners, investment bankers, lawyers, et. al.) are at a risk for heart disease, America’s number one killer. I’ve had my wake up call; hopefully, by sharing my experience, I will help a friend or two avoid the damage of these preventable and perhaps reversible conditions.

Prevent the Event: Make Lifestyle Changes for Lifetime Cardiac Health


As an investment banker to middle-market business owners, I spend lots of time with people who’ve reached a point in their lives the marketers refer to as “mature.” They’ve worked hard all their lives, experienced their fair share of stressful events, and may have picked up “a few pounds” since they were high school sports stars. A cardiac “event” can be a life altering experience. It may even precipitate an unplanned decision to sell a business.

Heart disease is the number one killer of men and women in the United States. According to the Centers for Disease Control (CDC), almost 600,000 Americans died of heart disease in 2010. That’s 28.5% of American deaths attributable to … read the rest

Categories: Healthcare

Tags:

Permalink | Comments Off on Money Matters But Your Heart Health Matters More

Transformation: The Onrushing Digital Age Will Change Everything

Posted by John Slater on December 15, 2014

The modern era has witnessed two great periods of transformation that radically changed the global economy and the very nature of human existence.  The Industrial Revolution of the 18th and 19th centuries and the shift to a postindustrial economy over the past fifty years are old news.  Today, the Global Economy is undergoing a third period of transformation into a new Digital Age that promises to be even more dramatic in its impact.  In this article, we will address some of the forces driving this change and provide our predictions as to which industries and economic sectors will be affected first.  For a video discussion of the topics covered in this email click here.

Manufacturing dominated the American economy for almost 100 years commencing in the late 1860s, but, beginning in the 1960s, manufacturing was rapidly eclipsed by a new services and trade based economy.  A quick look at the chart below demonstrates how overwhelming that trend has been. From 1850 to 2010, primary and secondary manufacturing in the United States dropped from approximately 80% of the US economic output to its current level closer to 20%. Tertiary industries, Clark’s name for what we would today call services, finance, retail, and distribution grew from approximately 17% of the economy in 1852, to 70% today, with the most important portion of this transition occurring since the 1960s.  While the Industrial Revolution took almost 150 years to fully play out, the shift to a services and trade based economy happened in less than half that time.

 Source: Wikipedia

We have now entered a new era that will impact most sectors of the global economy.  This new transition promises even more radical change.  We are only in the early innings, but this game will play out far more rapidly than its predecessors.  Driving this … read the rest

Categories: Banking, Business Survival, Financial Services, Healthcare, Industries, Technology

Tags:

Permalink | Comments Off on Transformation: The Onrushing Digital Age Will Change Everything

INTERVIEW WITH AXIAL CEO PETER LEHRMAN

Posted by John Slater on November 10, 2014

We recently interviewed Peter Lehrman, CEO of Axial, one of the most energetic and innovative companies providing advanced technology solutions to M&A and corporate finance professionals operating in the middle market. Speaking from the “Roosevelt Room” in Axial’s headquarters in the Flatiron District, Peter covers a good deal of ground and I highly recommend you listen.

We began with a discussion of the current M&A market and Peter shared with us some highlights of Axial’s recent Concord event in New York: a packed crowd listened to various Axial members and panelist experts on the middle market, but for some of them the main event took place outside the lecture hall.

Highlighting this heightened market activity, Peter shared some of Axial’s internal data showing a rapid rise in new deal submissions. In September over 1000 new deals were submitted to the Axial site, compared with a recent average of 750 submissions a month.  Just-released data shows that October submissions grew again to more than 1200.  No word yet on whether this will bridge the imbalance between buyers and sellers.

Axial recently completed an $11 million capital round with Comcast Ventures. Peter envisions this capital helping Axial become the go-to meeting place for all participants in middle market M&A.  Their target community includes private and public companies as well as the professionals who advise them with regard to strategic relationships and transactions.

Although Peter was reluctant to share too much about his new product pipeline, he did share Axial’s vision for the role of technology in our industry.  He firmly rejected the idea that robots and intelligent systems will replace smart and creative deal professionals in the M&A industry.  Instead, he believes new systems and apps will make M&A professionals more effective by eliminating many of the more burdensome administrative tasks we now endure. My

read the rest