January 2012 

 In This Issue:
  1. Practice Management: Creating Great Strategy for Your Firm
  2. Baird PE Adds Two New OP’s to Oversee Deal Sourcing
  3. Ernst & Young Says M&A Will Top Boardroom Agenda in 2012
  4. H.I.G. Adds Marc Cramer to Drive Middle-Market Acquisitions
  5. Would a Return to “Boring Banks” Help Buyouts?
  6. Exclusive Passes for MMIBA/NACVA to MWE’s 2012 HC/PE Event
  7. Sell-side Connection: Edgewater Seeks Mid-Market Materials Companies
  8. Regulatory Update: SEC to Exempt Intermediaries and Brokers?

Upcoming MMIBA Events and Training

MMIBA Board of Directors:

Dennis Roberts CPA, CVA, ABV, CMAP

Andrew Sherman, ESQ., CMAP

Parnell Black, MBA, CPA, CVA

Richard Jackim, JD, MBA, CEPA

Andy Smith, CPA/ABV, ASA, CVA, CMA

Scott D. Miller, CPA/ABV, CVA, CMAP

Editor: Joe DiPietro

Practice Management:
Creating Great Strategy for Your Firm in 2012
It Starts With Good Choices

In a wonderfully brief but insightful article, Joan Magretta, who is a senior associate at the Institute for Strategy and Competitiveness at the Harvard Business School, compares Jim Collins and Michael Porter’s work – both gurus of Business Strategy – to deduce five essential questions for you as you re-tool and button down your firm’s strategy for 2012.

You can read the article here.
Baird Private Equity Adds Layden, Robertson as Operating Partners
Bring Them Your Business Services and Health Care Opportunities
Baird Private Equity has added Donald W. Layden, Jr. and Frederick A. Robertson, MD as Operating Partners. Layden and Robertson will work with BVP's sector-focused teams in sourcing, evaluating and overseeing portfolio company investments.

Click here to learn more about them and them and the deals they want to see.
Ernst & Young Says Fundamentals and Mounting Pressure for Growth Will Prevail Over Uncertainty in 2012
Dynamics, Core Industries Will Bring M&A Back to Top of Boardroom Agendas

Strong fundamentals, led by an increased focus on growth, should generate an up-tick in deal flow in 2012, according to Ernst & Young Transaction Advisory Services.

Click here to read the detailed analysis and commentary.

H.I.G. Capital Names Marc Kramer Managing Director

He Has $1.5 Billion to Spend on Middle-Market Acquisitions
H.I.G. Capital, a leading private equity investment firm, has announced the addition of Managing Director Marc Kramer to the firm's New York office. Mr. Kramer joined H.I.G. Capital to invest out of the $1.5 billion pool of equity capital allocated to H.I.G.'s Middle Market investments.

Click here for more details on doing business with H.I.G. and Marc Kramer.
Would a Return of “Boring Banks” Help Buyouts?
A Growing Consensus Think It’s Time for a Return to Glass-Steagall
But is this Wishful Thinking?

There’s no doubt that a stable US banking system is an imperative for doing M&A – especially with respect to the necessary working capital needs the new business operator (buyer) brings to the table. There are many today who argue that that is not going to happen until banks are forced to return to their pre-bank-as-investment-house roots. And for many in this camp, that means a return to the days of strict Glass-Steagall rules. Some say that would be a disaster.

Click here to read a NY Times essay called “Bring Back Boring Banks” that takes the former of the two arguments.
Exclusive MMIBA/NACVA Member Offer:
Five Passes Are Available to…
McDermott’s 2012 Healthcare Services Private Equity Symposium
Thursday, March 8, 2012 * JW Marriott Marquis * Miami, Florida
Most of us don’t need an excuse to head to Florida in March, but here’s a good one anyway: A very special opportunity to attend McDermott’s 2012 Healthcare Services Private Equity Symposium.
It is the premier PE/HC conference and networking event addressing critical business issues specific to healthcare services private equity transactions. The outlook for healthcare investing is very positive and this an exciting time in spite of the volatility in the market.

The conference is a must for brokers, intermediaries and investment bankers seeking to build relationships (and engagements) with private equity principals, lenders serving private equity sponsors, and C-level executives from all segments of the healthcare services sectors.

Joe DiPietro, Editor of this publication, has five specially-priced passes to the event that are exclusively available to MMIBA and NACVA members for only $395 each. The passes are $795 through the event producer and will cost more as the event approaches. This is an incredible savings of $400 per pass, or $2,000 for the group of five. Please note, this is a first come first serve opportunity. You can reach Joe at, or at (815) 206-0780.

Click here to learn more about the event.

Sell-Side Connection:
Edgewater Seeks Lower Middle-Market Performance Materials Companies

Do you have a Performance Materials Company listed – or maybe a contact you’ve been working with? If so, the Midwest-based PE firm, Edgewater Capital would like to speak with you.

Investment Criteria:
  • Industries - Performance materials, defined as specialty chemicals, pharmaceuticals, and specialty materials.
  • Recurring Revenues - $10 million to $150 million. Focus is $20 million to $50 million.
  • Recurring EBITDA - In excess of $2 million with minimum EBITDA margins of 10 percent.
  • Annual Gross Margins - Exceeding 20 percent.
  • Geography - Continental United States (may consider Canada).
  • Add-on acquisitions - No size constraint but must meet margin criteria described above

Contact Information:
Chris Childres
Edgewater Capital Partners, LP
Phone: (216) 292-3838

Regulatory Update: SEC and FINRA to Exempt Intermediaries and Brokers?

Prospective Legislation and Rules Changes Gaining Traction

As most of you are aware, unless you are a licensed Broker Dealer, or have the proper licenses and work for a BD, you cannot sell the stock of a company in the sale of a business; it must always be an Asset Sale. Even on the smallest and most private transaction. Any violation of the laws regarding this could bring you substantial civil penalties and fines, possible criminal charges, and crippling legal fees. Some of you know peers that have been bankrupted for inadvertently breeching the rules regarding this. Some of you have peers that lost their entire fee at the closing table when their client’s attorney used these laws to blackmail them out of their commission. (“As licensed attorney and an Officer of the Court, I do not have to report you if you are willing to simply forgo your fee….”)

These draconian rules and penalties are actually an unintended consequence of laws passed in the 1930s to reign in unscrupulous stock brokers that were rampant at the time, not those within the private-transaction M&A and business broker sector – all of whom are now regulated under various state laws anyway. Additionally, the initial BD costs ($150K) and annual related expenses ($75K) are simply way beyond the capacity of most small intermediary practices.

For years, leaders within the business broker and intermediary community have been working together and lobbying Congress for exemptions for those who sell the stock of a company in a private business sale. And just recently it appears that there might be some serious traction in this regard. Several members of Congress have now formally communicated to Mary Shapiro, who heads the SEC, that they wish to begin rules changes and/or legislation that would provide these exemptions. The SEC has yet to reply, but it seems that the tide may finally and favorably be turning for a more sane oversight system of business brokers and private-transaction intermediaries.

Stay tuned for more reports on this issue over the next several months.

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