President
Peter Kubasek, The Malibu Group

President-Elect
Crystal Faulkner, Cooney Faulkner & Stevens

Vice President / Membership
Bob Winget, ProFill Holdings, LLC

Programs Chairperson
Gerald Zobrist, CapTec Corporation

Treasurer
Andrew B. Quinn, ILSCO Corporation

Deal Maker Co-Chairperson
Krissi Barr, Barr Corporate Success

Deal Maker Co-Chairperson
Andy Hawking, Integra Bank

M&A Symposium Co-Chairperson
Tom Anthony, Frost Brown Todd LLC

M&A Symposium Co-Chairperson
Rick Maier

National Board of ACG
Ron Moss, Sweney Cartwright & Co.
Don Feldmann, Winton Associates, Inc.

Directors
Jon Dill, AMPAC
Matt Hager, Fifth Third Bank
William Kohlhepp, Cors & Bassett
Greg Taylor, Blue Chip Venture Co.
Bert Cannon. Deloitte & Touche LLP
 
 
 
SUCCESSFUL BUSINESS GROWTH THROUGH EDUCATION, PROGRAMS AND RELATIONSHIPS.




Tel: (866) 500-ACGC (2242)
Fax: (937) 222-5794
info@acgcincinnati.org
www.acgcincinnati.org

ACG Cincinnati E-Newsletter - January 2007
Association For Corporate Growth - Cincinnati
FEBRUARY 14th LUNCHEON SET - REGISTER TODAY!
The February 14, 2007 ACG Cincinnati Luncheon will feature three of the Association's 2006 Deal Maker award recipients as panelists with a moderator and forum for questions and discussion.

Panelists:
Frank (Bo) Wood, Secret Communications
Pat Harlow, Contech
Dave Williams, Chemed Corporation

Moderator:
Jack Wyant, Blue Chip Venture Company
____________________________________________________________

Frank (Bo) Wood received the 2006 Deal Maker Lifetime Achievement Award. As his nomination states, "Bo is a dreamer - a big dreamer." He is able to spot an "out-there" idea and visualize how it can be "mainstreamed". In 1967, with just a $5,000 investment, Bo bought WEBN and in 1999 when he divested Secret Communications of the last 15 radio stations (from a high of 22 radio stations), more than $550M went to pay debt and investors.  The WEBN Labor Day weekend fireworks are well known throughout the U.S. as a major fesitval attraction. Secret Communications at one time owned stations in nine major markets.  Bo co-founded The Darwin Group, a venture capital firm specializing in second-stage technology investments, in 1998. He serves as Chairman of the Board of 8e6 Technologies, a developer of internet filtering software, Healthy Advice Networks, a place-based media company with a presence in physicians' offices, and Sub Rosa Communications, publisher of Tracks magazine.  He is a graduate of Harvard and the University of Chicago Law School.  He is currently is a board member of Chemed, Marketron (maker of radio and television traffic systems) and Rewards Network, Inc.

Pat Harlow with Contech Construction Products will represent one of our Corporate Deal Maker award recipients.  Contech is an industry leader and the only nationwide manufacturer in the emerging and expanding stormwater, bridge, drainage and earth stablization markets.  In business for more than 100 years and a spin-off of AK Steel in 1987, Contech was acquired by Butler Capital Corporation in 1997.  Contech acquired four companies prior to 2004 and recent M&A transactions include Apax Partners, L.P., Armortec, Stormwater Management, BridgeTek, Con/Span Bridge Systems, Vortechnics, and Central Supply.  The total enterprise value is approximately $1 billion.

Dave Williams, CFO with Chemed Corporation will be on hand to answer questions and speak about the corporation that operates VITAS Healthcare Corporation (VITAS), the nation's largest provider of end-of-life care, and Roto-Rooter, the nation's largest commercial and residential plumbing and drain cleaning services provider. In early 2004, the company completed a merger of its wholly owned indirect subsidiary, Marlin Merger Corp. and Vitas Healthcare Corporation.  The transaction, including the refinancing of existing Vitas debt and other payments made in connection with the merger, totaled approximately $415 million in cash.  During 2004, the company conducted its business operations in three segments: Vitas Group, Roto-Rooter Group and Service America Network.  In late 2004, the board of directors authorized the discontinuance of the operations of the company's Service America segment through an asset sale to employees of Service America.  The transaction was completed in the first half of 2005.

Panelists will spend time explaining their principal product or service, and what factors drive their industry.  Discussions will take place on organic growth versus growth through mergers and acquisitions and what value drivers are considered by the panelists in determining a viable balance between the two.  Learn which panelists have been pro active in pursuing acquisitions and from the time an acquisition target has been identified, their pre-closing game plans. 

Have these individuals walked away from a deal and what caused them to do so?  Most importantly, if these panelists were to start over, growing their companies, what would they do differently and why? These questions amongst others and an open forum from the audience will be featured at the February luncheon. 

Professionals involved in all aspects of corporate growth, including chief executive officers, chief financial officers, investment bankers, investors, lawyers, bankers, accountants and deal makers of all types should plan to attend this informative session.

The luncheon is $30 for members and $40 for non-members. To register for the February 14th luncheon, click here or call (866) 500-ACGC.

The sponsor for this luncheon is First Financial Bank.  At First Financial, they blend a rich heritage with a promising future.

With a tradition of service that dates back to 1863 First Financial Bank has the eighth oldest national bank charter. They are rich in tradition, and continue to build on this tradition while also innovating and building upon their successes.

They have combined the resources and expertise of a mega-bank with the care and perspective of a neighborhood community bank. They make their decisions locally so they can provide clients with the appropriate guidance and solutions to achieve their financial goals.

Service areas include loans and lines of credit, CRE, and Treasury Department Services.  First Financial Bank has as Wealth Resource Group that includes First Financial Capital Advisors LLC.

 

CINCINNATI MERGER PROFESSIONALS EXPRESS HIGH CONFIDENCE IN YEAR-END 2006 ACG/THOMSON DEALMAKERS SURVEY

Private Equity, Easy Debt, Global Growth Fuel Deals

 

A record $3.8 trillion year in global mergers and acquisitions has led Cincinnati dealmakers to call the current M&A environment good or excellent (95%), with almost half (44%) expecting further merger acceleration in the first half of 2007, according to a new survey by Association for Corporate Growth (ACG) and Thomson Financial.  Fifty-one percent of survey respondents expect M&A activity to remain the same, and only 5 percent expect the pace to slow.

 

The ACG/Thomson DealMakers Survey polled 1,230 investment bankers, private equity professionals, corporate development professionals, as well as lawyers, accountants and other service providers involved in the deal economy in December 2006.

 

Cincinnati is experiencing more activity and competition from private equity and strategic buyers than ever before,” said Peter J. Kubasek, president of ACG Cincinnati and founding partner of The Malibu Group.  “2007 is off to a roaring start and we do not foresee any slowdown.”

 

The 2006 merger worldwide total of $3.8 trillion was 38 percent higher than last year’s total, and surpassed the previous 2000 record of $3.4 trillion, according to Thomson Financial.  The number of large transactions also beat the 2000 record, with 55 transactions of more than $10 billion in 2006 versus 39 in 2000.  In the United States, half of the top 10 deals were done by private equity firms, which have been playing an increasingly active role fueled by record sized funds and easy access to debt financing.

 

M&A Drivers

Survey respondents say the primary driver of M&A activity in the next six months will be:

1.        Hefty capital reserves of some acquirers (51%)

2.        Good multiples for companies being acquired (22%)

3.        Improved domestic economy (8%)

4.        Increased investment banking activity (8%)

 

Sellers Market

When asked which side of the transaction is in the best position today, M&A pros overwhelmingly said:

1.        Sellers (79%)

2.        Buyers (8%)

 

Hot M&A Sectors

Dealmakers anticipate the following sectors experiencing the most merger activity in the first half of 2007:

1.        Manufacturing and Distribution (22%)

2.        Business Services (19%)

3.        Technology (19%)

 

M&A Objectives

Survey respondents say the primary objective of mergers and acquisitions is to:

1.        Grow market share (49%)

2.        Increase revenues and profitability (43%)

3.        Gain technology (3%)

4.        Diversify geographically (3%)

5.        Acquire competitor (3%)

 

Cross-Border M&A

Almost half (43%) of dealmakers polled expect to be involved in an international cross-border deal during the first half of 2007, and 54% say cross-border deals are becoming more important to their firms.  Geographically, they anticipate these deals will be with:

1.        Western Europe (45%)

2.        China (45%)

3.        Canada (35%) 

 

In 2006, European deals increased 39% to $1.4 trillion, even more than the 36% increase to $1.6 trillion in the United States, close to the $1.7 trillion record set in 2000.

 

“Dealmaking in Western Europe is always a couple of years behind the United States,” said ACG President and CEO, Daniel Varroney.  “As European economies gain strength and as increased capital flows to Europe in search of new investment opportunities, European M&A is poised to take off.”

 

Private Equity

 

Liquidity Events

Private equity professionals say the greatest opportunity for liquidity events for their portfolio companies in the next six months are:

1.        Sale to strategic buyer (55%)

2.        Sale to financial buyer (27%)

 

Greatest Threat

Private equity professionals say the greatest threat they face is:

1.        Lower returns (40%)

2.        Competition with other private equity firms (33%)

3.        Competition with strategic buyers (13%)

 

Proprietary Deal Flow

Most deals are competitive.  Survey respondents said of their deals:

·          Less than half are proprietary (77%)

·          More than half are proprietary (22%)

 

“It’s an extremely competitive marketplace right now,” said ACG’s Varroney.  “Global competition is driving up deal prices, making it a great time to sell a company.  The private equity firms have large funds to put to work, many corporations have large cash coffers and growth ambitions, and now hedge funds are getting increasingly involved.  This is driving up acquisition prices.  For funds, competition could put pressure on returns, and for corporations, it’s making acquisitions more difficult.”

 

Acceptable IRR

Private equity professionals say the lowest internal rate of return they will accept when bidding on a transaction is:

·          5-10% (0%)

·          11-15% (0%)

·          16-20% (0%)

·          21-25% (80%)

·          26-30% (10%)

·          31-35% (10%)

·          36%+ (0%)

 

Debt Market

The days of easy financing may be ending.  According to survey participants, one year from the now the debt market will be:

1.        A little worse (56%)

2.        The same (44%)

 

Organic Growth

 

Hot Growth Sectors

Survey respondents say the sectors that will experience the most organic growth are:

1.        Healthcare, Life Sciences (47%)

2.        Technology (17%)

3.        Business Services (14%)

 

Potential Growth Impediments

Executives caution, however, that the following factors could slow growth:

1.        Energy (36%)

2.        Labor costs (19%)

3.        Terrorism/War (14%)

 

Survey Methodology

The survey, conducted in December 2006, was completed by 1,230 ACG members and Thomson Financial customers.  Respondents were comprised of private equity, venture capital and buyout firm members (22%); investment bankers, intermediaries, brokers (25%); lenders, finance providers (12%); corporate professionals, entrepreneurs (17%); and service providers, such as lawyers, workout specialists, accountants and consultants (25%).  The majority of respondents were from the United States (1,114), where 45 states were represented.  Internationally, executives from 25 countries completed the survey. 

 

About ACG

Founded in 1954, the Association for Corporate Growth (ACG) is a global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions.  Today ACG stands at nearly 11,000 members from corporations, private equity, finance, and professional service firms representing Fortune 500, Fortune 1000, FTSE 100, and mid-market companies in 53 chapters in North America and Europe.  For more information, please visit www.ACG.org.  For more information about ACG Cincinnati, click here.

 

About Thomson Financial

Thomson Financial, with 2005 revenues of US$1.9 billion, is a provider of information and technology solutions to the worldwide financial community.  Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (www.thomson.com), a global leader in providing integrated information solutions to more than 20 million business and professional customers in the fields of law, tax, accounting, financial services, higher education, reference information, corporate e-learning and assessment, scientific research and healthcare. With revenues of US$8.50 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).

 

ACG CINCINNATI RECOGNIZES NEW MEMBERS

The following individuals joined ACG Cincinnati in the month of December 2006.  We welcome each to the organization and look forward to their active participation.

- Alan Fishman, Partner with Tatum, LLC
- Richard Flynn, President with Flynn & Company
- John J. Huszczo, Account Executive with IntraLinks, Inc.
- Hiten Patel, Senior Consultant & CEO with ITCube LLC
- Cary Sierz, Senior Vice President with National City Bank

Our members are our best ambassadors, if you know of someone who would benefit from ACG Cincinnati, contact the office and we'll send a personal invitation. 
MARK YOUR CALENDARS NOW!
Mark your calendar for upcoming ACG Cincinnati events including . . . 

March 14, 2007
Luncheon Meeting
Held in conjunction with the Greater Cincinnati Venture Association
Hilton Netherland Plaza - Hall of Mirrors
Raising $900 Million to Build a New Mature Market Business presented by Eddie Lehner with SeverCorr
Sponsored by Barr Corporate Success and Cincy Tech
To register, click here

April 18, 2007
CEO Focus Event Luncheon
Hyde Park Country Club
What Private Equity Funds Look for in Making Their Investment Decisions presented by Dave Bauer, CFO with Lubar & Co. and Peter Boylan, Vice President of Swander Pace Capital
Sponsored by The Malibu Group
Check the website for updates.

May 10, 2007
Deal Maker Dinner
Hilton Netherland Plaza - Hall of Mirrors
Check the website for updates.

July 23, 2007
Golf Outing Triple Crown Country
Check the website for updates
HAVE YOU JOINED?
For a small annual investment, you can join the premier national organization focused on corporate growth and development.  Becoming a member of ACG Cincinnati earns you discounts to events; access to and listing in the Member Directory; access to members-only events.

If you would like more information about becoming a member, click here or call Fred Young at (866) 500-ACGC.