Colonnade Advises Streamline Recon on its Sale to SolutionWorks

February 6, 2023 SolutionWorks, a leading provider of automotive reconditioning services, announced the acquisition of Streamline Recon, LLC (“Streamline Recon” or the “Company”), a Texas-based automotive reconditioning company focused on the automotive dealership market. SolutionWorks will be partnering with Streamline’s management team, who will remain with the Company post-close and retain an ownership stake in SolutionWorks. Streamline Recon provides automotive reconditioning services primarily for the franchise dealership market, turning new and used inventory into retail-ready vehicles. Founded in 2000, the Company has been a trusted service provider in the Dallas Metroplex for … [Read more...]

Colonnade advises The Reynolds and Reynolds Company on its acquisition of American Guardian Warranty Services

January 26, 2023 The Reynolds and Reynolds Company announced today the acquisition of American Guardian Warranty Services (AGWS), a premier provider of vehicle service contracts, limited warranties, and other F&I products and services. The acquisition will provide a clear path for dealers looking to streamline selling aftermarket products no matter where the customer is – online, in-store, or a combination of the two. “Consumers are demonstrating that regardless of how they shop, they see growing value in F&I products. But they expect to be educated and they expect accurate pricing,” said Chris Walsh, president of Reynolds. “AGWS has proven to be the leader in aftermarket … [Read more...]

Industry Overview – Insurance Premium Finance

Insurance Premium Finance – What is it? The Insurance Premium Finance (“IPF”) industry facilitates the purchase of insurance policies for those who cannot afford to pay lump sum up-front premiums or those who wish to spread the cash flow burden out through the policy term. Premiums can be financed for commercial or consumer insurance policies, but it is more common for commercial. IPF firms help drive growth in the insurance markets and deliver peace of mind for borrowers by providing accessibility to those who may not otherwise have the coverage they need. How Does Insurance Premium Finance Work? IPF lenders provide the funds to the carrier in exchange for security in the … [Read more...]

Jeff Guylay interviewed on the Monitor Daily Podcast

Three Key Questions for Equipment Leasing Firms Considering an M&A TransactionI was honored to appear with Rita Garwood on the Monitor Daily podcast this month. This article is based on that interview, and you can listen to our discussion by clicking the link posted at the bottom of this article.Our discussion focused on how smaller independent equipment finance companies can take successful steps to benefit from today’s highly favorable Mergers & Acquisitions (M&A) market.  As the leader of Colonnade Advisors’ specialty finance practice, I love assisting independent owners who are considering selling all or a portion of their business.  In this interview, I … [Read more...]

Pick Your Partner – The Exclusivity Phase

Exclusivity/documentation is the final phase of the sales process. This phase occurs when a seller goes exclusive with a single buyer. We generally have received several bids and determined the winner of an auction. Both parties sign a letter of intent ("LOI") at this phase, and the seller agrees not to provide information or engage with any other potential buyers. The seller is essentially going off the market, which can be a bit scary because, if the deal does not move forward with the exclusive buyer, we will have to go back to the other bidders. We keep the other bidders warm and engaged in a limited fashion to ensure that we have backups. TASKS COMPLETED DURING THIS PHASE We work … [Read more...]

Valuation: What is your company worth?

Valuation is the process of determining what your company is worth. In the M&A process, it is often performed ahead of going to market. VALUATION METHODOLOGIES There are three primary valuation methodologies: 1) comparable transaction multiples, 2) comparable trading multiples, 3) and discounted cash flow analysis. There are also other types of valuation methods that are not as relevant to middle-market M&A; therefore, this blog will focus on the three main ones. Comparable Transaction Multiples Comparable transaction valuations refer to what the market has offered for companies comparable to the company being evaluated. For example, if a company sold at eight times … [Read more...]

Colonnade advises Peoples Bank on its acquisition of North Star Leasing

March 31, 2021 Peoples Bank acquired the assets of North Star Leasing of Burlington, VT from Copley Equity Partners and management. Founded in 1979, North Star Leasing provides specialized lease solutions for vendors and commercial customers across multiple industries, including automotive, plumbing, healthcare, pet supply and foodservice. North Star Leasing works with more than 10,000 equipment vendors, manufacturers and resellers to help customers finance and access equipment. With a portfolio ranked 119th by Monitor, North Star Leasing has grown its originations 18% annually from 2014 to 2020. North Star Leasing has 42 employees. “We are excited about North Star Leasing … [Read more...]

Value Drivers in Middle Market M&A Transactions

The value of a company is determined by more than just the financial numbers. Two companies in the same industry can have the same EBITDA (Earnings Before Interest Taxes Depreciation and Amortization), but one is worth 8x while the other is worth only 6x. There are numerous factors that drive value, the most common are as follows. Serving a large, addressable market drives value because it offers significant growth potential in terms of growing market share. An addressable market is one that is fragmented, meaning no one company is large enough to move the market in a particular direction. Consolidated markets offer far less avenues of growth as the biggest players often dominate the … [Read more...]

Rollover Equity: A Second Bite at the Apple

Rollover equity is a form of contingent consideration in which the sellers reinvest a portion of their proceeds into equity and ownership of the new or acquiring company. The main purpose of rollover equity is to align interests.  The primary advantage of rollover equity for the selling party is it gives the owner(s) a second bite at the apple, meaning they get to participate in the equity appreciation of the combined entity. Rollover equity can usually be structured on a tax-deferred basis. From the buyer’s perspective, it ensures management is motivated and incentivized to hit their projections, and it reduces the amount of upfront cash the buyer has to fund to close the deal. In … [Read more...]

Reps & Warranty Insurance

Reps & warranty insurance insures the buyer from a breach of reps & warranties in the purchase agreement.  A purchase agreement's representations can include data security, outstanding taxes, and accounting policies, which insurance would not otherwise cover.  If there’s a breach, the buyer (or seller) would tap the insurance policy instead of an escrow or other mechanism. Without reps & warranty insurance, a portion of the seller's closing proceeds would generally  be held in an escrow to protect against potential breaches.  The escrow is typically 10% of the purchase price and stays in place for 12 to 24 months.  Reps & warranty insurance can … [Read more...]

Colonnade advises CalTex on its sale to Cornell Capital and Spectrum Automotive

NEW YORK, Dec. 16, 2020 /PRNewswire/ -- Spectrum Automotive Holdings Corp. ("Spectrum"), a leading agent, marketer and administrator of finance and insurance ("F&I") products for the U.S. automotive market, today announced the acquisition of CalTex Protective Coatings ("CalTex" or the "Company"), the largest manufacturer and provider of automotive appearance protection products in the U.S. Terms of the transaction were not disclosed. Since its founding in 1983, CalTex has become a leading administrator of automotive F&I products with one of the most extensive distribution networks in the industry, selling through nearly 4,000 franchise dealerships nationwide. A trusted … [Read more...]

Milestone Marketing Solutions was acquired by Spectrum Automotive, a portfolio company of Cornell Capital

October 2020 – Spectrum Automotive, a portfolio company of Cornell Capital, announced the acquisition of Milestone Marketing Solutions, a lead generation (“lead gen”) data analytics company. Milestone improves organizational marketing effectiveness through value-add analytics and consulting. Colonnade Securities LLC acted as exclusive financial advisor to Milestone Marketing Solutions. … [Read more...]

DIY Banking vs. Hiring an Investment Banker

News of a sale of a company can spread like wildfire. Bring in the experts to manage the process, and don’t try this at home. When news first spreads about the sale of a middle market company, it is common for the seller to receive direct inquiries from interested parties. At this point, it can be tempting to ditch the sale formalities and banker fees.  Individuals unfamiliar with investment banking may not see the value of hiring bankers to sell their company. Ultimately, when it comes to finding the broadest universe of buyers, creating a competitive process, and structuring a deal, the benefits of hiring an investment banker outweigh the costs by millions. Striking a great deal … [Read more...]

Potential Doubling of the Capital Gains Tax Rate Drives Strategic Discussions Among Business Owners

Whatever your political affiliation, U.S. business owners are assessing the likelihood, timing, and impact of tax proposals from Vice President Biden and the Democrats if they win the White House and control Congress. This blog post focus on potential changes to investment taxes and, in particular, the possibility of long term capital gains rates doubling to nearly 40% from current levels of 20%. Including the 3.8% net investment tax already in place, capital gains could be taxed at a higher rate than ordinary income in the new administration. PROPOSED CHANGES: Significant changes are expected to corporate tax rates, personal income tax rates, investment taxes, international taxes, IRS … [Read more...]

M&A Due Diligence: Technology Diligence (Part IV of IV)

Even if your company is not a technology company, technology-related aspects are important to investors during the process of capital raising or when getting ready to sell your business. Why are these technology-related aspects important? The elements of technology that support your business on a day-to-day basis can both limit and accelerate your company’s revenue and profits, which drive valuation. When investors and our team at Colonnade Advisors come in for due diligence, we look at all of the aspects of the technology that support your business operations: Hardware, including networking and servers Software, especially understanding what is off-the-shelf vs. home-grown … [Read more...]

Overview of Minority Recapitalization

An attractive transaction option for business owners who want to continue to maintain control of a growing business There are two types of recapitalization options for business owners—majority and minority. This article will focus on minority recapitalization. What is Minority Recapitalization? In a minority recapitalization, the investor provides debt and equity capital in exchange for 20-49% of the company. A transaction is typically structured with preferred equity that guarantees a return for the investor via a liquidation and dividend preference over common equity. The return can be a combination of cash coupon and deferred interest. The principal will be repaid after the senior debt … [Read more...]

M&A Due Diligence: Legal (Part II of IV)

Before purchasing a company, the buyer should understand not only the financial risks associated with the acquisition, but also the legal risks. Some of the most important talking points Colonnade engages in with both parties' legal teams include gathering all relevant documents, reviewing tax history, reviewing intellectual property, and discussing past or outstanding litigation. Before moving into any sensitive discussion, be sure to establish confidentiality through a non-disclosure agreement. Relevant Documents A business may fit on a strategic basis, however upon further review of certain documents, the deal may be derailed. Items such as supplier contracts, leases, employment … [Read more...]

Colonnade advises Triumph Bancorp on its sale of Triumph Premium Finance

July 2020 Triumph Bancorp completed its previously announced sale of the operations and assets of Triumph Premium Finance (“TPF”) to Peoples Bank. Based in Kansas City, Missouri, TPF provides premium finance services for customers to purchase property and casualty insurance products through its growing network of independent insurance agency customers nationwide. As of December 31, 2019, TPF had total receivables of approximately $100 million. John Binaggio will continue to manage the insurance premium financing operations for Peoples Bank, now rebranded Peoples Premium Finance. Triumph Bancorp, Triumph Insurance Group, and Peoples Bank maintain an ongoing relationship for premium finance … [Read more...]

Earn Outs in M&A Transactions

Earn outs are a form of contingent consideration often used in deals, particularly middle market transactions. The buyer pays additional consideration if specific performance targets are achieved or events occur. Earn outs are used: to bridge valuation gaps (which widened in the recent sellers’ market), to motivate management in the short to medium term, to hedge risk in high-growth, competitive sectors such as software or tech-driven services, and to align interests in businesses that are reliant on the seller’s management to remain involved to execute on growth plans. How often are earn outs used? Over the past few years, earn outs have been used at varying rates. In 2019, 22% … [Read more...]

Gina Cocking interviewed on Build a Better Agency Podcast

Most agency owners hope to sell their agency someday down the road. If that’s you, understanding how agencies are valuated today will help you maximize that opportunity whenever it comes. Even if you aren’t interested in selling, you can and should still be beefing up your agency’s value. Gina Cocking joins us for this episode to provide an investment banker’s perspective on the valuation and sales process. She’ll walk us through the key items investment firms look for in your agency’s valuation and explain the technical numbers-side. She’ll also help us identify ways you can add value in advance.   Listen to the podcast here … [Read more...]

Gina Cocking has been appointed to the Board of Directors for CIB Marine Bancshares, Inc.

BROOKFIELD, Wis., Nov. 19, 2019 (GLOBE NEWSWIRE) -- Bank holding company CIB Marine Bancshares, Inc. (OTCQB: CIBH) announced today that Mses. Gina Cocking and JoAnn Cotter have been appointed to its Board of Directors, effective November 21, 2019. Ms. Cocking is based in the Company’s Chicagoland market and currently serves as Managing Director and Chief Executive Officer of Colonnade Advisors, LLC, an independent investment bank focused on the financial services and business services sectors.  Ms. Cocking will stand for election at the annual meeting of shareholders to be held in 2020. Ms. Cotter is based in the Company’s Wisconsin market and is a retired partner of Wipfli LLP where … [Read more...]

Gina Cocking of Colonnade Advisors named to 2020 Most Influential Women in Mid-Market M&A

Mergers & Acquisitions has named the 2020 Most Influential Women in Mid-Market M&A.  This marks the fifth year we have produced the list. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Some of the names are familiar to our readers and have appeared previously. Pam Hendrickson, the chief operating officer of the Riverside Co., for example, continues to expand her sphere of influence. In addition to playing a pivotal role at a leading private equity firm, Hendrickson … [Read more...]

Colonnade Securities Advises on Smart AutoCare sale to Tiptree

Founder and CEO Peter Masi will continue to run business NEW YORK & RICHARDSON, Texas--(BUSINESS WIRE)--December 17, 2019--Tiptree Inc. (NASDAQ: TIPT) and Peter Masi today announced that Tiptree Insurance has agreed to acquire Smart AutoCare, a rapidly growing vehicle warranty solutions provider led by its founder and CEO, Peter Masi, in an all cash transaction that will also include incentive-based earn outs over time. The transaction is subject to customary closing conditions including regulatory approval and is expected to close early in the first quarter of 2020. Peter Masi will remain CEO of the business. The acquisition is expected to expand Tiptree’s warranty distribution … [Read more...]

Colonnade advises Technology Finance Corp on its sale to Kingsbridge Holdings

LAKE FOREST, Ill. and SCOTTSDALE, Ariz., Oct. 29, 2019 /PRNewswire/ -- Kingsbridge Holdings LLC, ("Kingsbridge") announced today the acquisition of Technology Finance Corporation ("TFC"). Terms were not disclosed. Founded in 2004, TFC is a fast-growing technology leasing company that provides financing for information technology equipment and software to businesses throughout the United States. TFC funds over $125 million of IT infrastructure leasing/finance transactions annually, sourced through a network of vendor relationships, value-added resellers, software partners, and service providers. Through its application-only processing, and … [Read more...]