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Expansion financing Featured

9:17am EDT October 3, 2005
Chip Weinberg keeps a file that says, “Things to remember in future deals,” based on his experience with past deals, such as the recent acquisition of a service provider to international cargo carriers coming into the JFK and Houston airports.

Although a typical deal takes three to five months, Weinberg says this acquisition by The Weinberg & Bell Group, a Cleveland-based middle-market private investment firm, took more than a year to complete because his firm had to wait for the Port Authority to approve a building into which the firm was going to expand.

“Literally, we were waiting around for quite some time, holding the deal together, working with everyone and being patient because of that holdup,” says Weinberg, a managing partner of The Weinberg & Bell Group. “It speaks well to our team being able to keep the deal together.”

Weinberg says the service provider’s management team is staying in place.

“The goal was for us to help get them growth capital and to expand both internally at this new building and to help them fan out to other airports,” he says. “Through our capital, we can help them grow.”

Based on his experiences and his notes in his “Things to remember” file, Weinberg offers seven tips for persevering during a year-long acquisition process.

  •  Flexibility is a must. It’s important to consider the seller’s needs and demands rather than have a template into which everything has to fit. “It may be some demand that sounds unreasonable — more money, more perks. Whatever it is, you should always act like you’re willing to consider it, and many times there’s a way to bridge the gap,” he says.

  •  Regular face-to-face communication. Weinberg says the more you sit face-to-face with people involved in the deal, the more comfortable they become with you. “They can look at your body language, and they can see that you’re not dodging the issues,” he says. “It helps foster relationships, and it’s that relationship which is going to help smooth over tough periods of time.”

  •  Stay up to date on the numbers. “Let’s say that you have a four-month delay, and you’re pricing your deal off December,” he says. “You don’t want to find out in February the run-rate is a lot lower.”

  •  Be thoughtful. The accounting firm working with the buyer should also be sensitive to the seller’s concerns. “A lot of them don’t know how this whole process works, and they would get pretty put off if someone just came in and started firing questions like they were on a witness stand,” he says.

  •  Know what issues need attention once it’s a done-deal. “Have a ready playbook so that you’re using your operational experience and know-how to improve the company to grow it, because at the end of the day, that’s really what you’re trying to do,” he says.

  •  Run a tighter ship than prior to the new financing. “You’re going to be borrowing money to some extent, and you’ve got to make sure you’re not spending more than the cash needed to pay back some of your interest, to finance all the capital that you need to spend, if any, to make payroll and to do what needs to be done,” Weinberg says.

  •  Have a good financial team. Weinberg says the way to keep a close eye on finances is to have a top-of-the-line CFO, controller or financial team that watches and manages the company’s cash position on a daily basis. HOW TO REACH: The Weinberg & Bell Group, (330) 225-1602 or http://www.weinbergbell.com