The NorthView Compass
Sometimes 2021 feels like groundhog year: COVID cases are down again, Bitcoin is Up…and Down…and Up again, a new stimulus bill is being proposed again, meme stocks are back again, and M&A activity is still on fire. None of those are what we want to talk about here this month.
Memorial Day, which we will cover later in this edition, is a “holiday” near and dear to us. We remember our fallen heroes each and every day.
Often referred to as D-Day, Operation Neptune occurred 77 years ago on June 6, 1944 when Allied forces conducted the largest seaborne invasion in history against Nazi Germany. Allied forces suffered nearly 10,000 casualties on D-Day itself, Germany estimated 4,000-9,000.
We can’t even fathom what those men, some would even be considered boys, experienced that day. They truly are the Greatest Generation. We should never forget why we fought…to end the oppression of the Nazi’s and Japanese as well as extinguish the largest genocide in human history.
We Americans are forever indebted to the men and women, soldiers and first responders, now and in the past, who protect us and fight for our right to freedom. “Thank you” simply isn’t enough.
About NorthView Advisors
NorthView Advisors is a full-service, lower-middle market focused, investment bank that prides itself in establishing and maintaining meaningful, personal relationships with its clients and investors.
Financial Concept: Investment Bankers
In a time where M&A activity is booming and business valuations are at an all time high, choosing a quality, trustworthy investment banker is becoming increasingly more important. If you’re considering a financial transaction, this May 27 article in Forbes is worth a read.
What is an Investment Banker supposed to do?
How should Investment Bankers operate?
Red flags to watch out for…
- Overpromising: Some investment bankers will promise owners high numbers on sale or low costs on capital raising, knowing full well that they are unlikely to get it. Align the fee structure such that the Investment Banker makes more if he gets you a better deal.
- Offloading: Investment Bank executives and partners, typically at larger firms, often sweet talk to pull you in as an engagement then offload the work to entry or junior level employees. Ask questions so you know who you will be working with.
- Time Wasters: Some Investment Bankers blast the deal to any and every party that will listen, including those that may not be relevant or even competitors, thus straining both an already time consuming process and confidentiality. Make sure you set clear expectations on what kind of deal you want and who you want to see it.
- Activity: There are some investment bankers who simply don’t do the professional work required. They take a retainer fee and do little or nothing with the engagement. Ensure compensation is fair to motivate the Investment Banker, but also to have regular discussions with them to check they are not only being active, but also productive.
Selling a business is usually a once in a lifetime, career defining endeavor. Likewise raising capital for a business is equally important either to finance growth or in some circumstance, save jobs. One out of four engagements fail to result in a transaction, so be careful who you engage because if you choose poorly, it could be a very costly, time consuming exercise.
IT got you down?
A cyberattack on your systems may not lead to an emergency declaration for 17 states and over 10,600 gas stations without gas, but at a time when a cyberattack of the Colonial Pipeline all but shut down the entire East Coast, when was the last time you evaluated your IT department?
Businesses large and small have gone remote as a result of the Pandemic. What keeps you up at night: security, compliance, downtime, salesforce? If you haven’t scrubbed your IT department, regardless of the size of your company, here is a resource that might be helpful.
Is your IT Department an Asset or Liability? – Tier4 Advisors
Private middle market business valuations are climbing. How fast? The Lincoln Middle Market Index, an index that tracks enterprise value for private middle market companies, grew reportedly 5.7% in Q1.
Private Company Enterprise Value Momentum Continues in Q1 2021 as the Lincoln MMI Climbs to Another Record High – Businesswire
Current market conditions suggest that the time to exit is now. M&A activity has not only recovered, but it has hit an unprecedented level. Valuations are high, and capital gain taxes are low (for now). Furthermore, private equity and buyers have loads of cash on hand, leaving them eager to spend.
The Window of Opportunity to Transition your Family Business is Now – BizJournals
A dedicated resource of curated content for CFOs
The biggest gripe amongst business leaders for June is the problem of labor shortages and supply chain deficiencies. This has caused multiple businesses to invest in more inventory to avoid stock shortages. However, with unemployment claims continuing to decrease, a silver lining appears for June, as economists are hopeful laborers will return to the workforce. Here’s a deep dive into the labor shortages by industry.
Small Business and the Staffing Shortage by Industry – Forbes
PPP funding helped over 8 million businesses this past year, which fueled their survival during the pandemic. However, PPP funds have run out for a majority of lenders, and businesses are now left to make ends meet or raise money through other avenues, such as opening new credit facilities or refinancing existing facilities at lower rates.
Other Recommended Reads
U.S. Consumer Prices Post Largest Gain Since 2009 as Inflation Ramps Up – Reuters
U.S. GDP Expanded at Unrevised 6.4% Rate in First Quarter – Marketwatch
FedEx Piles on Peak Surcharges with Increases Set for June – Supply Chain Dive
A Dedicated M&A Team May Be Worth It – CFO Dive
Salute the Troops
Memorial Day weekend is behind us, and although the three day weekend can serve as a nice “holiday”, it is critical that we remember the true meaning of Memorial Day. It is a day dedicated to the brave men and women who have died serving our military. Without the sacrifice of these soldiers, we wouldn’t be the country we are today. Sure we still have work to do as a nation, but without the courage of those men and women, there’s no telling where our country would be.
At Northview, we are supporters of a local charity, Cellphones for Soldiers, a non-profit organization who provides communication services and emergency funding to military personnel. This allows soldiers to communicate with their families for little to no cost while overseas. To support with us, you can visit their website here.
One popular way to celebrate Memorial Day is by doing “The Murph Challenge”, like our Managing Directors JT Schroeder and Paul Gorski have done each of the last 10 years. For those who want to attempt it, “The Murph” is a challenge named after the late Navy SEAL Lieutenant Michael P. Murphy that is all done in sequence and for time consisting of:
1 mile run
300 air squats
1 mile run
Wear a 20 pound vest if you have one.
Lt. Murphy was killed during Operation Red Wings, a counter-insurgent mission in Afghanistan. He was posthumously awarded the Medal of Honor, Silver Star, and Purple Heart. His story is featured in the 2013 film, Lone Survivor starring Mark Wahlberg.
Stories like these put into perspective how lucky and special it is to live in the country we do, and the sacrifices made everyday in order to protect the freedom granted to us.
If you have a related charity or are aware of others worth sharing, please let us know. We would love to support it.
Happy Memorial Day.
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