The Handbook of Financing Growth: Strategies, Capital Structure, and M&A Transactions »

Kenneth H. Marks is the founder and Managing Partner of High Rock Partners, Inc. He has been involved as a manager, advisor, and board member with over two dozen emerging growth and middle-market companies. Marks was a member of the Young Presidents' Organization (YPO) while growing his first company. He teaches in executive programs at Loyola University Chicago and North Carolina State University. Marks obtained his MBA from the Kenan-Flagler Business School at the University of North Carolina in Chapel Hill and is a Certified Merger & Acquisition Advisor.

Larry E. Robbins is a founding partner of Wyrick Robbins Yates & Ponton LLP, a premier law firm located in North Carolina. He is a leading attorney in North Carolina middle-market financing and M&A transactions. Robbins received his BA, MBA, and JD from the University of North Carolina at Chapel Hill. He was also a Morehead Scholar at UNC.

Gonzalo Fernández is a partner with High Rock Partners, Inc. and a retired vice president and controller of ITT's telecom business in Raleigh, North Carolina. He received a BA in accounting from Havana University, Cuba, and wrote the book, Estados Financieros (Financial Statements, Third Edition).

John P. Funkhouser has been a partner with two venture capital funds and operated as chief executive officer of four companies in a variety of industries. He worked in commercial banking with Chemical Bank of New York, in investment banking with Wheat First Securities, Inc., and in venture capital with Hillcrest Group. Funkhouser has an undergraduate degree from Princeton University and an MBA from the University of Virginia, Graduate School of Business.

D.L. Williams is a managing partner of High Rock Partners, Inc. As a CEO for over twenty-five years, he led three global manufacturing/technology companies through major transitions—two of which he led the buyout of, working with private equity firms. As an advisor, he has worked with companies in numerous industries on growth, operational, and turnaround strategies to create value and implement change. Williams obtained his MBA from the Kenan-Flagler Business School at the University of North Carolina in Chapel Hill.

Over the past two decades, access to capital for emerging growth and middle-market companies—firms with revenues ranging from zero to $500 million—has fluctuated based on broad stock market performance and the liquidity or tightness of the credit markets. Today, despite the current economic turbulence, there is arguably the greatest amount of capital ever focused on emerging growth and middle-market companies. But the hurdles to accessing this capital have never been higher.

The Second Edition of The Handbook of Financing Growth has been designed to help leaders and advisors gain a solid understanding of the financing strategies, sources, and transactions that will allow them to excel in such an unpredictable environment.

Written by an experienced group of practitioners who operate within this dynamic market—and fully updated to reflect new market realities—this reliable resource outlines the full spectrum of funding alternatives currently available to emerging growth and middle-market companies and presents the practical strategies and techniques you need to be aware of when considering the capitalization, growth, or sale of your, or your client's, company.

New material found in this Second Edition includes detailed discussions of positioning a business for value creation before the transaction and how your financing strategy fits into the overall plan for growing and raising capital as well as creating an exit. Among various techniques, the authors address buyouts and recapitalizations as two alternatives to create shareholder liquidity and potentially finance future growth. A new chapter on M&A addresses the acquisition process and how to fund acquisitions and external growth initiatives, while additional case studies highlight bank financing alternatives and growth equity.

In recent years, the capital markets for emerging growth and middle-market companies have quickly evolved. This practical guide will help you adapt to the changes and put you in a better position to succeed in building your business and creating value.

Foreword.

Preface.

Acknowledgments.

About the Authors.

PART I The Financing Process.

Chapter 1 Introduction.

Chapter 2 Planning and Alignment (Begin with the End in Mind).

An Overview of the Planning Process.

Strategic Planning.

Updated Forecast.

Business Valuation.

Chapter 3 Acquisitions, Recapitalizations, and Exits.

Acquisitions.

Selling the Company, Creating Shareholder Liquidity.

Chapter 4 Capital Structure and Financing Strategy.

Assimilating the Drivers.

Developing Liability Limits.

Chapter 5 Sources of Capital and What to Expect.

Bootstrapping Sources and Techniques. 

Individual Investors (Private Placements Not from Angels or Institutions).

Angel Investors.

Commercial Banks.

Asset-Based Lenders.

Commercial Finance Companies.

Leasing Companies.

Private Equity.

Venture Capital Funds.

Mezzanine Funds.

Buyout Funds.

Hedge Funds.

Strategic or Industry Investors—Corporate Venture Capital.

Merchant Banks.

Community Development Initiatives and Government Agencies.

Micro-Cap Public Entities.

Royalty Financing.

Chapter 6 Equity and Debt Financings: Documentation and Regulatory Sources of Capital and What to Expect.

Basic Definition of Debt and Equity.

Debt Instruments.

Loan Documentation.

Equity Instruments.

Equity Investment Documentation.

Compliance with Securities Laws.

Chapter 7 Expert Support—The Players and Their Roles.

Counsel.

Board of Directors.

Investment Bankers.

Accountants.

Consultants/Advisers.

Summary.

Chapter 8 Closing the Deal.

Process Check-in.

Final Perspective.

PART TWO Case Studies.

Case Study 1 Asset-Based Lender, Receivables Financing.

Case Study 2 Asset-Based Lender, High Risk Loan.

Case Study 3 Asset-Based Lender, Assignment for Benefit of Creditors.

Case Study 4 Asset-Based Lender, Acquisition.

Case Study 5 Asset-Based Lender, Turnaround Funding.

Case Study 6 Asset-Based Lender, Growth Financing.

Case Study 7 Commercial Finance, Trade Financing.

Case Study 8 Angel Investor, Initial Funding and Sale of Company.

Case Study 9 Venture Capital, Early Stage Growth Equity.

Case Study 10 Royalty Financing.

Case Study 11 Venture Capital, Growth Equity.

Case Study 12 Community Development Finance, Growth Funding.

Case Study 13 Debt with Revenue Sharing.

Case Study 14 Mezzanine Investment.

Case Study 15 Private Equity, Acquisition through Exit.

Case Study 16 Private Equity, Management Buyout / Partner Exit.

Case Study 17 Private Equity, Restructuring.

Case Study 18 Private Equity, Acquisition with Management Participation.

Case Study 19 Private Equity, Public to Private Transaction.

Case Study 20 Private Equity, Buy-and-Build Strategy.

PART THREE Financing Source Directory.

Suggested Use of the Directory Section.

APPENDIX A Corporate Finance Primer.

APPENDIX B : Financial Statements.

APPENDIX C Discount Rates.

APPENDIX D How Fast Can Your Company Afford to Grow?

APPENDIX E Notes about Start-Ups.

APPENDIX F Accounting Principles—GAAP and IFRS.

Glossary.

Notes.

Index.