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
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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
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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
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Posted on October 15, 2012
Abe Garver, a Focus LLC Principal and a frequent contributor to Forbes, Seeking Alpha and other publications, was featured recently on Bloomberg TV with a big call on the Internet Retail Sector. Abe is well know for his coverage of the sector and was one of the first commentators to focus on the impending imposition of state sales taxes on Internet retail transactions that were formerly tax free.
Click on photo above to view video.
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Posted on September 25, 2012
“Republicans are heartless monsters who have no compassion for the victims of a financial crash they caused by manipulating Wall Street.”
“Democrats are committed to destroy the American system by redistributing the hard-earned products and services of America’s businesses to shiftless moochers.”
Wow, are we making progress in the current political debate!
Cyclical or Structural?
For economists the discussion revolves around a more civil discourse on whether the current high level of unemployment results from a severe cyclical downturn or from a structural change in the American economy. The Federal Reserve has forcefully adopted the cyclical downturn mantra, committing $500 billion per year to the assumption that, with more financial stimulus, the jobs will come back.
Buffalo Springfield’s insight from the 1960s is still valid:
I think it’s time we stop, hey, what’s that sound?
Everybody look what’s going down
What a field day for the heat
A thousand people in the street
Singing songs and carrying signs
Mostly say, hooray for our side
A Big Bet With Millions of Human Poker Chips
We are in the process of making an enormous bet with the American economy. The risks are not trivial: inflation, deflation, financial and social collapse are just a few. Yet what if this bet is being made based upon a misunderstanding of the problem with which we are faced.
Steven Hansen recently produced a rather depressing chart showing that, despite a period of steady economic recovery, civilian employment in relation to population flatlined beginning in late 2009, after a very sharp drop from 63% to 58% during the financial crisis.
The Robot … read the rest
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Posted on February 4, 2011
In the linked interview below George Shea, Partner and Information Technology Team Leader at Focus LLC, provides an update on the strong market in information technology deals. George shares a growing willingness in the Private Equity industry for firms to go beyond their traditional buyout structures to fund recaps that take out earlier stage investors and provide growth equity for their portfolio companies. This can be a superior option to strategic sales for management teams that want to keep control of their operations. Additionally George has found an increased willingness among the PE community to consider minority growth equity transactions and other innovative financing options for rapidly growing firms.
To see a the interview, click on the picture or link below:
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