Posted 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
Categories: Amazon, Automation, Business Acquisition, Business Sale, Economic Growth, Economics, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Globalization, IIoT, Industries, Innovation, Internet of Things, Internet Retail, IoT, M&A, Mergers, Mergers and Acquisitions, Robotics, Software
Tags: Tags: Automate, Automation, Business Acquisition, Business Financing, Business Sale, Business Survival, Economics, Employment, Entrepreneurs, IIoT, Internet of Things, IoT, M&A, Mergers, Robot, Robotics
Permalink | | Comments Off on Is Industry 4.0 the New DotCom Boom?
Posted 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
Permalink | | Comments Off on Money Matters But Your Heart Health Matters More
Posted 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.
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
Permalink | | Comments Off on Transformation: The Onrushing Digital Age Will Change Everything
Posted 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
Categories: Axial, Banking, Business Acquisition, Business Sale, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Innovation, Interviewees, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Peter Lehrman, SaaS, Software
Permalink | | Comments Off on INTERVIEW WITH AXIAL CEO PETER LEHRMAN
Posted on September 23, 2014
In the next ten years, technology will transform virtually every industry in the world. There will be big winners and big losers. In order to stay competitive, middle market business owners must preempt these changes to their competitive positions and sustainability with smart timely action. Just look at the newspaper publishing industry to see how dramatic the impact can be.
Is the middle market M&A industry exempt from the winds of change? My partners would answer that this is a people business: nothing happens until someone makes a sale. That’s clearly right. Bringing the sale of entrepreneurial business to a successful close involves far more than numbers; human emotions often overrule financial logic. An understanding of psychology is as essential to the success of an intermediary as auctioneering and financial analysis.
The role of the deal professional will not disappear. Nevertheless, the way he or she applies professional skills to reach the ultimate goal of the transaction will be dramatically shaped by the technological revolution now underway in our industry. The successful investment banking firm of the next decade should have access to resources unimaginable to today’s practitioners. In addition to great people skills and financial knowledge, investment bankers will need to be adept at using numerous advanced technologies that will eliminate a great deal of drudgery and that will also accelerate the speed of transaction processes. In that hypercharged environment, the race may well go to the swiftest practitioners with access to the best of data and toolsets.
When I started my investment banking firm in 1985, the most advanced technology was my Compaq luggable (38 pound) computer and a magical program that enabled me to produce both written documents and spreadsheets from a single device. Over time we added desktop computers, a Microsoft network and access to quarterly CD-ROMs with data about … read the rest
Permalink | | Comments Off on Will a Robot Close Your Next Deal?
Posted on July 17, 2014
Since the 1970s, many of us have feared the threat of inflation looming just around the corner. Within the past year, economists and central bankers have led us to believe the inflation dragon has been permanently relegated to a dark hole, never to rain fire on the kingdom of men. We’re told that deflation is the real threat and that governments can continually run large deficits without reawakening the dragon. Recently, reality has intervened, however, to remind us that economists and central bankers aren’t infallible. U. S. Core CPI and global consumer prices have taken a sharp turn upward.
While this rate of price increase will have profound implications for business owners if it continues, that’s a story for another day.
Categories: Andy Greenberg, Banking, Business Acquisition, Business Sale, Economic Growth, Economics, Federal Reserve, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Inflation, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Monetary Policy, Monetary Stimulus
Tags: Tags: Business Financing, Business Owners, Business Ownership Transition, Business Sale, Business Survival, Economic Stimulus, Economics, Federal Reserve, Inflation, Money Supply, Private Equity, QE2, QE3, Quantitative Easing, Small business, Transition Planning
Permalink | | Comments Off on A Whiff of Inflation – M&A Valuations Lead the Way
Posted on August 24, 2013
In this article I will review the book “The End of Competitive Advantage,” by Rita Gunther McGrath, published by the Harvard Business Review Press in 2013.
I like to think of myself as a “value investor.” That is, I believe that I invest in quality companies that are underpriced. In terms of the quality of the organizations I like to invest in, I look for firms that have established a competitive advantage in their industries and are earning at least a 15% return on equity, after taxes. To judge the quality of management and its staying power, I look for those organizations that have a sustainable competitive advantage, defined as earning a 15% return on equity, after taxes, for a period of five to eight years. And, to capture the fact that a stock may be underpriced, I look for a low price/earnings ratio.
Other factors that have been important in my analysis are the industry share the company achieves and protects and the stability of this share over time. Of course, these are the quantitative factors and must be supplemented by other factors, such as an examination of management, industry make-up, and governmental factors that might contribute to firm performance.
Well, starting right here, Dr. McGrath starts to eat away at this picture. For one, she argues that industry boundaries are no longer that important. She argues that “arenas” are more crucial in the modern environment. The important thing in today’s world is that there are connections between “the outcomes that particular customers want (the jobs to be done)” and “the alternative ways those outcomes might be met” (page 10). Industry lines are not the determinants of what products one should be producing and what markets they should be sold … read the rest
Categories: Amazon, Banking, Business Survival, Business Turnarounds, Distress, Economic Growth, Economics, Energy, Entrepreneur, Financial Services, Global Corporate Venturing, Innovation, Internet Retail, IT Services, Robotics, SaaS, Small Business, Small Business Investment Company, Software
Permalink | | Comments Off on Investing In An Age Of Transient Competitive Advantages
Posted on July 2, 2013
(Click on Picture to Watch Video)
Last month Chairman Bernanke spoke and the markets reacted by dropping more than 5% in a few days. Clearly he must have shared some very bad news for business owners.
Actually not! Coming into the year many observers thought that the federal budget sequester would put the economy at risk of stalling at best and dropping back into recession at worst. Instead the Fed now foresees annual economic growth at 2-2.5% this year, moving to as much as 3.5% by 2015. And it’s the private sector that’s carrying the load, not government programs.
Let me say that again. The Fed now believes that growth is going to accelerate over the next several years. As a result the economy may not need so much artificial stimulus (QE) going forward. The economy is no longer digging a hole; we’re back to building a foundation of real economic growth.
What does this mean for the deal business and for private companies considering M&A or corporate finance transactions? Bottom line: there is going to be much more demand for capital to fund growth. Unless the banks step up to the plate, which we believe is unlikely, this capital must come from private lenders and equity providers.
The good news is that there is a great deal of financial market capital available to meet this need. We just closed a mezzanine financing that gave us a good window into the market’s current appetite. Over the past few years, major investors have made significant financial commitments to entities designed to fill the void left by banks which have abandoned their commercial lending franchise. As a result today there are numerous private debt providers seeking opportunities to provide senior, hybrid and mezzanine capital to private companies. Where equity capital is needed, private equity groups are … read the rest
Categories: Alternative Financing, Asset Based Loans, Bank Credit, Bank Loans, Banking, Banks, Business Acquisition, Business Sale, Commercial Loans, Community Banks, Economic Growth, Economic Stimulus, Economics, Federal Reserve, Fiancial Regulation, Financial Services, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, M&A, Mergers, Mergers and Acquisitions, Monetary Stimulus, Private Equity, Revenue Based Loans, Shadow Banking, Tranche B Financing
Permalink | | Comments Off on What Does the Fed’s Prediction of Increasing Growth Mean for Business Owners?
Posted on May 16, 2013
Michael Drury, Chief Economist, McVean Trading and Investments LLC – Reprinted with Author’s Permission
Perhaps the question we are asked most frequently is when things will get back to normal, meaning in most investors’ eyes the way they were before Lehman. Unfortunately, our answer is “That bird has flown” and we are now dealing with, and will continue to deal with for many years, a very different environment. The mainstay of that difference is a lack of trust between those that have money to invest and those that want to use it for risky undertakings, and, in particular, a lack of trust in the banking system that used to intermediate between these two groups. The result is a glut of savings available to “safe” investments driving risk-free yields to very low levels. However, the central banks, by buying bonds and manipulating long term interest rates lower, are introducing a significant risk of capital loss into even “risk-free” assets. Investors are both moving and driven out the risk and yield curves, and returns on riskier investments are falling. The decline in returns at the precise time many investors want to start spending investment income has pushed up prices for proven existing income flows. Meanwhile, a combination of distrust and a reduced pool of money that will wait long periods before income is produced have generated fewer green-field investments in physical plant and equipment, resulting in a slower potential growth path for the economy.
We are neither monetarist nor Keynesian, but rather institutionalist and a storyteller. We see the current situation as the culmination of a long path where growing reliance on banks and the central bank to maintain economic growth has run aground. Both re-establishing trust and balance in the old system or building a new one will take time – likely many years … read the rest
Categories: Alternative Financing, Asset Based Loans, Bank Credit, Bank Loans, Banking, Banks, Bonds, Commercial Loans, Community Banks, Derivatives, Economic Growth, Economic Stimulus, Economics, Federal Reserve, Fiancial Regulation, McVean Trading and Investments, Michael Drury, Monetary Policy, Monetary Stimulus, Revenue Based Loans, Shadow Banking, Tranche B Financing
Permalink | | Comments Off on Living in a Low Growth World
Posted on May 8, 2013
The timing of this last leaving is raising questions. The latest major departure is Frank Bisignano, the co-chief operating officer. The questions are about the status of Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan, the “persistent executive turnover,” and the up-coming board meeting where a debate is raging about whether or not Mr. Dimon should hold both top positions.
To me, there are two reasons for the recent departure events. First, Mr. Dimon is in control and he does not like what has happened inside JPMorgan over the past two years or so, with “the London Whale” and other events that have tarnished the “bravo” image of Mr. Dimon and his bank. The activity going on inside the bank remind me of a “turnaround” operation!’
But, there is a second reason for the things that are going on. Mr. Dimon is moving JPMorgan into the future.
If this is true, then this whole effort is to move JPMorgan into the future in the face of the “hostile” regulatory environment that exists, in the face of the changes that information technology are forcing on the banking industry, and the changing nature of the financial industry.
If I were Mr. Dimon, my feeling would be that the current regulatory environment “sucks”!
Being John Mason, my feeing is that the current regulatory environment “sucks”!
In either case, the basic feeling is that I really don’t want to run a bank. I want to run something different.
Second, whatever is being done in the financial industry, the future of commercial banking…of finance … read the rest
Categories: Alternative Financing, Asset Based Loans, Bank Credit, Bank Loans, Banking, Banks, Commercial Loans, Community Banks, Derivatives, Economic Growth, Economics, Fiancial Regulation, Focus Investment Banking, Focus LLC, Industries, Inflation, Innovation, Investment Banking, John Mason on Banking, M2, M3, Monetary Policy, Revenue Based Loans, Shadow Banking, Tranche B Financing
Permalink | | Comments Off on Winds of Change: Banking