What We're Reading About the CARES Act

President Trump just signed the $2 Trillion CARES Act into law, and everyone's inboxes are being flooded with emails reacting to it and explaining it's provisions. Rather than attempt more of the same, we'd like to share what we've found to be some of the most informative resources:

The briefest - Creative Planning's take on Implications for Small Business Owners.

Slightly longer - The National Law Review's piece titled Small Business Relief in the CARES Act.

The most detailed - Barnes & Thornburg wrote a lengthy but excellent article titled Specifics of CARES Act and Implications for Businesses and Individuals.

These are just some of a number of well-written pieces. We will, however, provide our advice.

If you think you qualify for any of the SBA loans being made available, start preparing to apply. Calculate your monthly payroll, health insurance, rent/mortgage, and utilities expenses, and gather any supporting evidence you have of these expenses. Prepare to also provide recent tax returns and other financial statements, for both the business and yourself personally.

Banks aren't accepting applications yet, and it may be up to two weeks before they can. You, however, can begin contacting banks now, building relationships with key decision-makers and educating yourself on the process and your likely eligibility.

If you would like some guidance specific to your business or industry, give us a call. We're happy to share our perspective on the CARES Act and the market more generally.

Lastly, we are offering a limited number of pro bono hours to help businesses with cash flow modeling and decision-making around the types of financing available. We can also lead capital raising efforts for business owners unable to manage them on their own. Reach out to your Caber Hill contact or email us at This email address is being protected from spambots. You need JavaScript enabled to view it. to learn more.

Your Business in Survival Mode - How Caber Hill Can Help

These are unexpected and unprecedented times. We have so many friends whose companies are completely shut down for the foreseeable future, employees furloughed, and worried about where cash shortfalls will be made up. All of us are faced with tough decisions and big challenges in the weeks and months ahead.  The more we can all help each other, the better.  Taking care of yourself, your families, friends, neighbors, and communities is more important than anything at this moment.  That is priority number one and we are trying to help in every way we are able.

Unfortunately, the Covid-19 pandemic has altered the M&A landscape as well. Some transactions are still closing but the majority are on hold as buyers take a wait-and-see approach. Lenders are focusing on their existing books of business and deprioritizing new opportunities. There are some immediate actions you can take:

  • If you have an outstanding business loan, call your relationship manager now and ask for help. Many will.
  • If you have a line of credit, pull down the entire outstanding amount. Guarantee that you have access to the cash regardless of whether or not you'll need it.
  • The SBA is also providing disaster relief loans of up to $2 million per business. Read about that here.
  • New government programs are being introduced daily, both nationally and locally. Consult your advisors to determine which are best for you.

 In addition to our traditional deals, we help clients navigate tough times in many ways, including:

We are also constantly communicating market activity and the current sentiment among capital providers. If we can help in any way, by our services, our guidance, or simply our perspective, please give one of us a call.

Eventually, we will reach the end of this crisis and return to normal. M&A activity will rebound. Private equity firms are still sitting on record levels of cash that they need to deploy, and the investors and companies that believe acquisitions are core to their growth strategies will need the acquisition engines running on all cylinders once things return to normal. If your near-term plans called for selling your business, rest assured that you will still be able to, likely as soon as later this year. If you are in growth mode, ensure that you can weather this storm and position yourself to be even stronger once we reach a recovery.

We wish you the best in these challenging times.

Sincerely,

The Caber Hill Team

Financial Support in Tough Times

In response to the Covid-19 pandemic and the resulting financial distress on numerous small and middle marketing companies, we are adjusting our service lines to support clients where they most need our help. In addition to our traditional services, we are offering the following:

Debt Restructuring & Re-Financing

You may be able to consolidate multiple loans into one, reduce your interest rate, extend payment terms, increase the amount of financing available to you – or all of the above. We can assess your options and arrange for new or restructured debt by creating an offering memorandum and making the market for lenders to bid on your business.

Short-Term Financing

Several short-term financing options exist, including factoring (the sale of accounts receivable or purchase orders) and bridge loans (short-term loans designed to be refinanced in under 12 months). These loans inject liquidity into a business to provide for short-term cash needs.  We can evaluate your business, recommend options, create a presentation for lenders, and make the market for lenders to bid on your business.

Cash Management & Budgeting

Cash flow is the biggest concern when business slows or is forced closed altogether. You need to make quick decisions about your team - can you keep making payroll or will you announce a furlough? You need to triage monthly bills, separating essential and non-essential vendors. You may need to alter your full-long forecast and communicate any changes to lenders or investors. We can help you budget for these turbulent times and provide an objective perspective on your tough decisions. We can also aid you in creating new forecasts and developing any lender and shareholder presentations so you can spend your time on more critical tasks.

Sell-Side Readiness

If you originally planned to sell your business in 2020 or 2021, now is the time to double down on your sale preparation efforts. We typically work with our clients for months, and in some cases years, to improve their companies and their ability to receive maximum value in a sale. Our guidance generally revolves around financial reporting, business analytics, organizational structure, and capital structure. These areas become increasingly important when you’re preparing to emerge from a crisis in sell-mode.

Happy Holidays! Thanks for Making 2019 Great!

We at Caber Hill would like to thank all of our clients, business partners, and friends for helping us make 2019 our best year ever. Here are some of our highlights:

- Closing nearly $200M worth of transactions (read about all publicly announced deals here)

- Welcoming William George and Kurt Harvey to our team.

- Actively supporting our community and and over 20 charitable organizations, including those featured below:

We're looking forward to working with you again in 2020 and wish you a healthy and prosperous new year!

19 Things Every Business Owner Should Do In 2019

We’re now one month into 2019. How well are your resolutions holding up?

A new year brings opportunities to improve our businesses as much ourselves. At Caber Hill, we came up with a list of 19 items every business owner should consider checking off their list in 2019. These apply equally to the $100M business as they do the $2M business. 

1. Set Specific 1, 3, and 5-year goals

As you review last year and set the course for the year ahead, set specific, measurable objectives for your company and then break them down by business unit, manager, and/or individual contributor. Establish a longer-term vision with goals to match. Any timeframe can work, but we recommend 3- and 5-year goals.

2. Involve your team in goal setting

Give somebody a target and they’ll find a way to call it unfair. Ask them to create it, and many will be more aggressive than you’d ever expect. Your team will feel a stronger sense of ownership of the company goals that they help set.

3. Seek CFO-level guidance and implement a more strategic financial plan

Read more...

U.S. M&A Activity Remains Strong

M&A activity has remained strong in 2018. According to PitchBook, in the first half of the year U.S. private equity investors completed 2,247 deals that totaled a combined 263.9B in value, marking a 2% increase in volume and a 6% decrease in value compared to 1H 2017. The median buyout size is up 31% compared to last year, suggesting that the decrease in overall deal value reflects a lack of mega deals rather than a softening of valuations.

Overall, global M&A deal value rose by 64% compared to the first half of 2017, according to data from Thomson Reuters, although volume declined by roughly 10%. In the U.S., total deal value was up 79% but volume declined by 14%. This is largely due to a big increase in corporate acquisitions valued at $5B or higher, as private equity transactions only represented 8-10% of global M&A.

A few key trends suggest this white hot deal market is sustainable. First, corporations and private equity firms continue to sit on incredible levels of cash - private equity alone had amassed $1.8 trillion of dry powder by early 2018, according to a McKinsey report from earlier this year. Private equity firms also set new fundraising records in 2017, and although fundraising is down considerably thus far in 2018 there is no reason to believe PE firms will do anything but continue to invest at their current pace.

Finally, baby boomers dominate the ranks of business owners. Numerous sources estimate that baby boomers own between 59% and 67% of privately held companies in the United States, suggesting that several million companies will change ownership in the next 10-15 years. Further, a recent survey on business owner demographics reported that 32% of small business owners plan to sell their business in the next two years. 

When you pair an abundance of sellers with cash-rich, deal-hungry investors, deals are bound to happen. 

How to Find the Most Logical Buyer for Your Business - Part 4

To conclude this series, I’d like to highlight three things every owner should do before attempting to sell – have your business valued; implement a de-risking initiative; and, create a life after ownership plan. Checking these boxes will not only establish a solid foundation for your exit plan but will also enable you to more clearly envision the most logical buyer and position your business accordingly.

Valuation

First, it’s imperative to understand the value of your business. Many owners think they know what their business is worth, but most have never had it formally appraised. Instead, they rely on gossip from friends and colleagues and articles touting rules of thumb or describing publicly announced transactions. These source typically provide incomplete information that in the best cases is not applicable to the reader and risks being completely false.

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