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M&A: A Smart Strategy in a Down Economy

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MBDA

Not surprisingly, the pace of merger activity in 2008-09 has slowed dramatically as compared with recent years. Excluding a few megadeals, the M&A world has indeed been quiet. With a weak economy and an ongoing liquidity squeeze, most pundits expect that few significant deals will happen this year—and many think that is exactly the way it should be.

The prevailing view is that acquisitions are a luxury, to be pursued in good times and forsaken in the bad. The prevailing view is completely wrong. Deals are always risky, but doing nothing in a downtown may be the riskiest move of all.

Acquisitions and divestitures are key tools in the implementation of corporate strategy. Since corporate strategy needs to be implemented throughout the business cycle, in good economic times and bad, so must M&A. In fact, many of the most value-creating deals are done during economic downturns.

Attracting Equity Investors

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MBDA

Equity capital generally is composed of funds that are raised by a business in exchange for an ownership interest in the company. This interest can be in the form of ownership of common or preferred stock or instruments that convert into stock.

In addition to taking an ownership interest in your company, equity investors may also participate as a member of the company’s board of directors and take an active role in managing your company. However, in comparison to debt financing, or loans, which must be repaid over time, equity financing does not have to be repaid.
While equity investing can come from family and friends, it’s often raised from high net-worth individuals or from venture capital or private equity firms. Investors are looking for early stage companies that can’t yet obtain traditional financing; a return on their investment of at least 30-40 percent and a clear strategy to realize their investment within 3-7 years.

What is the basic documentation for a loan request?

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MBDA

Every lender and lending program is different. However, there is basic documentation required for a successful loan application.

Basic documentation Information required:

  1. Loan application. At a minimum, the loan application requires business and personal information, the amount, purpose and banking information (checking account). The purpose must be specific and supported with appropriate documentation.

  2. Copies of the Business and Personal Income Tax Returns for past three years (must be signed.) Be aware that the lender will confirm with the IRS the accuracy of the tax return submitted.

  3. Company financial statements for the past three years (include income statement and balance sheet.) Interim statements may be required.

  4. Personal financial statement.

Doing Business in Brazil

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MBDA

Brazilis one of the largest economies in the world, growing at its fastest rate in at least a decade in just the first quarter of 2010. Much of Brazil’s economy is driven by consumer demand with nearly 50 percent of its population under 20 years old.  Most of Brazil’s population is concentrated along the East Coast of the country with nearly 50 million people living in its densely packed cities.  While Brazil is still considered a developing country, many business opportunities exist.  The rising affluence of Brazil’s middle-class consumers provide a new market for minority-owned firms in the United States to consider. 

Doing Business in the Caribbean

Blogged By: 
MBDA

The Caribbean is much more than a vacation destination with blue water and warm sand, it’s actually a steadily growing market with tremendous business opportunities for minority-owned firms.  In fact, the Caribbean is the 3rd largest market for U.S. exports in Latin America – behind only Mexico and Brazil – with $18.5 billion in U.S. goods and services.

For U.S. minority-owned businesses interested in exporting but not sure where to start, the Caribbean offers close proximity to the United States and offers free trade agreements already in place.

Companies providing the following products and services should consider an export strategy:

Did you know...

The percentage of clients with annual revenues in excess of $500,000 increased over the last five fiscal years.
Graph for MBDA Client Portfolio made up by SGI Clients

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