We worked in a wide variety of industries in 2010:  Building automation systems, energy services consulting, beverage, hotel internet marketing and booking, fitness, auto supply, health care, metal manufacturing, retirement housing, bottling, and pharmaceuticals.  And, we had conversations with dozens of other struggling firms to see if we could help them by securing a quick infusion of a significant amount of capital.

The geography we covered last year was pretty diverse as well.  We worked for clients in the Midwest, Northeast, Mid-Atlantic, South, and in Canada.  Creditors we worked with ranged from private funds to traditional banks to families who committed their own resources to their businesses.

Some common themes emerged from among the reasons these firms found themselves needing a quick infusion of capital.  A few were simply mismanaged.  They failed to control costs, had lost their focus, didn’t provide distinguishable products or services, forgot to do the blocking and tackling, etc.  Some were simply victims of the economy.  They lost top line revenue and could not reduce expenses enough to keep going without additional capital.

Others were caught in a more frustrating trap.  They had been riding the economic wave and expanded in 2004 through the first half of 2007, most frequently by taking on more debt.  Loans were relatively easy to come by, top line revenue was growing, margins were strong – in short, every indicator they could see was telling them it was time to invest and add capacity.  Then the economy tanked, sales slowed, and they found themselves over leveraged.  In many instances, these are good companies, well managed yet they find themselves long on debt, short on cash and needing new money.

The good news is that no matter what reason they had for calling on Equity Partners we were able to find a lot of people willing to pour money and resources into these companies.  In fact, on average, 33 groups responded to our sales and marketing programs, executed Confidentiality Agreements, and downloaded documents from a Virtual Data Room for each engagement.  In most cases, we had conference calls with management and site visits within two weeks of launch.  And, we were getting offers in 6 weeks.

Both financial and strategic investors responded.  Savvy investors moved quickly, ascertained underlying value and acquired stakes in some very nice businesses.  In some cases, these investors needed to put out a large amount of cash because securing financing is still tough.  In others, the cash outlay was not as significant but the investors were going to be putting management expertise, back office shared services, sales and marketing resources, etc. to work to improve the company.

What is heartening, and bodes well for 2011, is that there are investors who are looking for opportunities in all types of industries throughout the country.  By creating and executing robust sales and marketing plans and turning over every stone, we were able to create a competitive environment to maximize value on each and every engagement. We are proud of the economic outcome our work provides but we are prouder still of the jobs we help save by closing transactions that strengthen companies. 

While the U.S. economy certainly isn’t out of the woods yet and there is surely more pain to come, we are seeing the investors come off the sidelines.  We expect to see more of the same in the coming year and as the economy improves we expect to see more competition for a chance to invest in these companies.

We appreciate our relationship and thank you for your support throughout the year.  If there is anything Equity Partners can do for you, please don’t hesitate to ask.

We wish you health and prosperity in 2011 and look forward to talking with you.