Venture Capital & Investment Advisory

Strategic Financing Business Recapitalization Management Buyout
Strategic Planning & Assessment Services Business Plan Development Proposal Analysis & Negotiation
Initial Public Offering Services Positioning & Valuation Services Ongoing Management Services

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Strategic Financing

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In the search for capital to execute their business plans, entrepreneurs often find themselves on unfamiliar ground. The identification, presentation, negotiation and successful completion of proper financing arrangements can be a time-consuming, frustrating and confusing experience. Business Sense helps to simplify and optimize the process.

With key relationships across a wide variety of capital sources, Business Sense assists 40 to 50 growth companies to access alternative forms of financing, including traditional bank financing (asset based lending, lines of credit, etc.), subordinated debt, mezzanine financing, high yield bonds, various stages of venture capital, and public equity through initial public offerings (IPO) and secondary offerings. Business Sense maintains substantial relationships with public and private capital sources throughout the world that specialize in funding growth companies.


Business Recapitalization

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Management Buyouts (MBOs) are similar in all major legal aspects to any other corporate acquisition. The particular difference of the MBO lies in the position of the buyers as managers of the company. As such, the due diligence process is typically limited as the buyers have full knowledge of the company available to them. This fact also results in most MBOs having very low transaction risk due to the fact that there is typically little to no change in management, which makes these types of transactions extremely attractive to investors.

In a MBO, business owners and/or management decide it is in the best interest of the company for the management (or its minority shareholders) to buyout the existing majority owners. The typical financing structures utilized to accomplish this consist of either seller paper or are configured as Employee Stock Ownership Programs (ESOPs). Both of these financial instruments rely upon management buying out existing owners over time and does not allow for the existing owners to fully cash out. As a result, a potential conflict is created between owners and management because the seller still possesses a substantial stake in the company through either a personal guaranty or reliance upon future cash flows to pay off the seller note. However, from the new owner’s perspective the conflict and burden these types of structures create is also significant, as every decision going forward has the potential to be questioned and criticized if the former owner perceives risk to their payment stream.

Prospective management or minority acquirers are often reluctant to enter into an MBO type transaction because they are simply unfamiliar with the procedure or believe they will not qualify for financing. Business Sense specializes in helping clients through the Management Buyout process and creating leveraged buyout alternatives. These alternatives provide sellers the ability to either fully or partially liquidate their ownership positions based on their goals or enable the new owners to operate the business on a truly independent basis. Further, once the original owner is either fully or partially cashed out from the transaction, there always exists the ability to re-invest capital in the business if desired. This is especially beneficial when transferring ownership to younger generations as part of a succession-planning scenario.

In summary, whatever the specific transition and liquidity goals may be, financial institutions eagerly seek these types of investments as transition risk is significantly reduced or eliminated because it is the current management team they are backing as the acquirer.


Management Buyout

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Management Buyouts (MBOs) are similar in all major legal aspects to any other corporate acquisition. The particular difference of the MBO lies in the position of the buyers as managers of the company. As such, the due diligence process is typically limited as the buyers have full knowledge of the company available to them. This fact also results in most MBOs having very low transaction risk due to the fact that there is typically little to no change in management, which makes these types of transactions extremely attractive to investors.

In a MBO, business owners and/or management decide it is in the best interest of the company for the management (or its minority shareholders) to buyout the existing majority owners. The typical financing structures utilized to accomplish this consist of either seller paper or are configured as Employee Stock Ownership Programs (ESOPs). Both of these financial instruments rely upon management buying out existing owners over time and does not allow for the existing owners to fully cash out. As a result, a potential conflict is created between owners and management because the seller still possesses a substantial stake in the company through either a personal guaranty or reliance upon future cash flows to pay off the seller note. However, from the new owner’s perspective the conflict and burden these types of structures create is also significant, as every decision going forward has the potential to be questioned and criticized if the former owner perceives risk to their payment stream.

Prospective management or minority acquirers are often reluctant to enter into an MBO type transaction because they are simply unfamiliar with the procedure or believe they will not qualify for financing. Business Sense specializes in helping clients through the Management Buyout process and creating leveraged buyout alternatives. These alternatives provide sellers the ability to either fully or partially liquidate their ownership positions based on their goals or enable the new owners to operate the business on a truly independent basis. Further, once the original owner is either fully or partially cashed out from the transaction, there always exists the ability to re-invest capital in the business if desired. This is especially beneficial when transferring ownership to younger generations as part of a succession-planning scenario.

In summary, whatever the specific transition and liquidity goals may be, financial institutions eagerly seek these types of investments as transition risk is significantly reduced or eliminated because it is the current management team they are backing as the acquirer.


Strategic Planning & Assessment Services

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Entrepreneurs of growth companies are rarely short on ideas on how to expand their business. However, they often limit such thinking to include only those strategies that can be funded with internal working capital or modest amounts of external financing.

Strategic Planning and Assessment Services include a comprehensive analysis of a Company's core competencies and the subsequent development of a growth plan that is developed without regard to current capital constraints. That is, we ask our client's, 'What would you do if you had all the money necessary to grow your business to its full potential?' Clients have termed this process 'value creation.' Through this process Business Sense lends its experience in accessing the capital markets so as to develop a growth plan that is correctly positioned given the capital markets current prospective on a given client's product or service, industry and growth prospects. Elements of growth plans designed to maximize growth potential often include one or more of the following growth initiatives:

  • Strategic Acquisitions, Joint Ventures and/or Alliances
  • New Product or Service Developments
  • Implementation of Aggressive Marketing Strategies and/or New Channels for Distribution
  • Greater Geographic Expansion
  • Additions to Equipment and Human Resources

Business Sense works closely with our client's to analyze, critique and document each growth initiative, seeking to optimize the long-term performance and value of the company while at the same time establishing notable barriers to entry.


Business Plan Development

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With a clear understanding of a compelling business case for growth, the information produced through the strategic planning phase is then assimilated to create a thoroughly documented, well-supported growth plan that optimally positions the company in the institutional capital markets. Positioning becomes critical to the Capital Sourcing and Negotiation process because investor focus is shifted from the historical results of today's business to the growth potential of tomorrow's opportunities. By presenting a well-supported, viable growth plan, the company gains strong leverage to effectively negotiate the best possible financing terms given the needs of the company and its potential. Essentially, a sound business plan serves as the blueprint from which the future growth of the Company will be built on and the document institutional investors utilize to gain confidence and comfort with an investment decision.


Proposal Analysis & Negotiation

Business Sense is a unique intermediary because the firm does not include term sheets in its business plans submitted to institutional investors. The firm's strategy is to leave determination of value up to the financial markets. By eliciting interest from not one institution, but rather a multitude, the institutions themselves serve to keep each other honest and produce a true valuation for Business Sense's client. Often, the institutional market provides a range of valuations and proposed financial structures, which allow the client to select the best proposal and institution for funding.


Initial Public Offering Services

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Business Sense has assisted clients in developing public offering transactions with investment underwriters. The process for such an engagement begins with the creation of a Business Plan that is specifically written for the public markets and highlights the key financial statistics and positioning elements that will be utilized by industry analysts to market the Company to public institutional investors.

The willingness to provide capital is only the beginning of a long-term relationship with an underwriter. The underwriter will, in may cases, be able to provide additional value through introductions to key strategic relationships and/or advice and guidance on the company's overall mission based on their depth of specific industry expertise.


Positioning & Valuation Services

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How a company is positioned in the market with respect to the industry and comparable companies it will be compared to for valuation purposes will have a significant impact on the value of the entity. In many cases, how a company is positioned and valued varies substantially between underwriters based on the opinions of each firm's analysts. These differences become critical because they can have a substantial impact on the multiple to be assigned to the company and management's ownership dilution. With 'proper' capitalization as a primary objective, Business Sense aims to optimize the positioning and valuation of its clients' companies by establishing introductions and securing proposals from multiple underwriters with respect to the positioning, valuation, and recommended structure for a proposed public underwriting.


Ongoing Management Services

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Recognizing that our strategic guidance may serve as a strong influence on the future of our clients, the firm also offers ongoing management services. Participation such as seats on boards, execution of follow-on financings and facilitation of on-going strategy development helps to ensure our clients maintain their focus and meet their growth objectives.