There comes a time in the life cycle of every company where owners must consider a transition to a new owner, to other existing stakeholders or to family members. These can be very complex considerations that can be emotional and require owners to realistically assess the available alternatives. Owners benefit from an independent outside perspective that can guide the business as they make challenging strategic decisions.

What can an owner do?

• Keep the business and grow
• Transition the business to either a new owner, other existing owners or to family
• Bring in a new management team and retain ownership for current owners or family
• Execute a recapitalization of the company to make a large shareholder distribution while retaining existing ownership control

SYMPTOMS

• Aging, perhaps second-generation or third-generation owners
• Tax issues
• Owners that do not want to own or manage through another financial or pandemic crisis
• Engaging with an unsolicited outreach from a potential buyer

HOW GHJ CAN ASSIST

To arrive at the best answer, GHJ:

• Assesses the future plans of the business or assembles one with the owners and management, including a two or three year forecast under a variety of scenarios to test assumptions and expose risks and opportunities
• Overlays that forecast and growth plan with the ownership alternatives described
• Considers the positives and negatives from each proposed course of action
• Provides guidance as to the best available alternative(s)

The results provide clarity of direction for shareholder succession and an action plan to implement that direction.

Clients come to GHJ asking many questions about why their business is not growing as fast as the market they operate in or the reasons why the plan they have in their head is not working out in financial performance. In some cases, they have no plan at all and recognize the need to develop one.

SYMPTOMS

• Owners are too busy working in their business to work on their business: GHJ’s Growth Planning and Strategic Advisory Team thinks like a buyer, not as an owner. This perspective allows GHJ to see things that those close to the business are unable to see.
• Not having a clear plan with articulated action steps: Businesses that operate with a plan perform better than those that do not have a plan.

HOW GHJ CAN ASSIST

GHJ assists clients in creating a forward-looking strategic plan or plan to rebuild their business.

The Growth Planning and Strategic Advisory Team’s comprehensive approach to servicing clients:

• Analyze company financials and metrics and interview management teams
• Create a two or three year metrics-driven forecast that reflects the plan developed with consensus by the ownership and management team
• Test how the forecast might play out under a variety of scenarios to identify risks and opportunities
• Develop granular actions steps to bring the plan to life
• Assemble an advisory board to hold accountability to the plan and offer outside ongoing guidance

The planning process:

• Creates immediate enhanced profitability as we analyze operations
• Focuses scarce resources (capital, time, management, staffing)
• Improves business enterprise value
• Provides benchmarks to measure performance and both instill and maintain discipline in execution

When it is time to go to market to sell a business or raise capital, GHJ finds that many owners seek guidance on the best approach, timing and investment banking selection.

SYMPTOMS

• Many owners are not ready for the journey through a transactional process
• Need a plan: Taking time up front to review corporate governance, business model and financial forecasts and make improvements to management team members or reporting systems will improve likelihood of close and create value
• Most owners have never interacted with an investment banker and can be intimidated by them

HOW GHJ CAN ASSIST

GHJ:

• Creates a timeline for a transaction plan that might span as short as a couple of months or as long as years – timing is everything when transacting
• Develops a forecast to be used in the transaction process; more deals fail because the forecast used during the process is not achieved while in the process
• Advises on other pre-transaction activity that will create value during a transaction process, such as:
  • Management team improvement
  • Business model fixes
  • Corporate governance
  • Story-telling for agents and the market
• Identifies and select the best fit investment banker for any individual transaction

There are several ways GHJ adds value to clients:

• A smoother and faster process that identifies and fixes value and deal destroyers before going to market – investment bankers love when GHJ brings them prospective deals
• Avoid the “wrong fit” investment banking advisor which will negatively impact market value
• Save clients’ money on their investment banking arrangements

Many middle-market companies do not have the availability of an in-house corporate advisory team that larger enterprises have built. GHJ’s experienced team of former investment bankers provides this advice to clients as they consider the following challenges:

• When additional liquidity is required to grow their businesses, GHJ can help companies identify the appropriate place in the capital structure to provide the greatest flexibility at the lowest cost of capital. GHJ will also help identify sources or agents to secure such capital requirements.
• Creating an acquisition strategy to buy other companies as part of the growth plans
• Evaluate individual acquisitions as they might come along

SYMPTOMS

• Need transaction guidance: Some companies want to grow, in part or in whole, by acquisition and do not know how to start or engage in the process, often times not having the experience analyzing potential purchases
• Poor business unit or division fit or performance: we have advised clients on business unit performance, guiding with perspective improvements to those units or assisting in deciding to keep, sell or close down such units

HOW GHJ CAN ASSIST

Performance improvement, such as:

• Profitability analysis
• Analyzing low margin revenue to assess the desirability of continuing serving such customers
• Benchmarking overhead expenses against peer group businesses to rationalize cost structures
• Evaluating underperforming product lines or business units to create alternatives for improvement or consider closing or selling such products or business units

Acquisition considerations:

• If a client wants to explore an acquisition strategy, having an acquisition plan in place before approaching targets minimizes costly time and capital resources in focusing on only those targets that meet criteria fitting the strategic plan
• GHJ can assist in developing these criteria for clients to execute their acquisition campaign

• Personal
• Professional

• Leadership team
• Financial statements
• Analyze or develop business metrics
• Opportunities and risks

• Sales strategy
• Operating strategy to support
• Process development

• Forward looking financial statements
• Consider scenarios

• Requirements of plan
• Timing of such requirements
• Regular monitoring