Evergreen Advisors, a middle market Investment Bank and Corporate Advisory Firm, with offices in both Columbia, MD and McLean, VA, is pleased to announce the addition of John Reichlin to the Evergreen Advisors Corporate Advisory Practice. John specializes in business turnarounds and financial restructurings. He also works closely with owners of middle market companies as a strategic advisor to help them drive growth and to improve profitability.

We are thrilled to be welcoming John to our team as we strengthen our capabilities,” said Rick Kohr, CEO of Evergreen Advisors. “Focused on developing the efforts of our turnaround and restructuring team, John’s experience further complements our capabilities and will help us better serve companies with their corporate finance needs.”

John has served as an advisory board member to Evergreen and most recently served as President of Hearn Kirkwood, a leading East Coast manufacturer and distributor of produce and freshly prepared food products. Prior to joining Hearn Kirkwood, John was a founding member in Strategic Partners, LLC, a consulting firm specializing in turnarounds and financial restructurings. During John’s 12 years with Strategic Partners, he worked with numerous middle-market companies leading organizational and financial restructurings, including taking two different company’s successfully through Chapter 11 reorganization and ultimately refinancing debt to allow them to grow and thrive after emerging from bankruptcy. He also served as an outsourced CFO and strategic advisor for numerous companies in the manufacturing, distribution, and construction contracting industries. John also provided diligence and advisory services to commercial lenders to assess options and develop a strategy for resolving troubled loans.

“I am excited to be joining Evergreen’s talented team of professionals who have an outstanding reputation in the industry,” said John Reichlin. “Joining Evergreen provides me with the depth of resources I need to provide a full range of advisory and M&A services to my clients. I look forward to working with Rick and his team to grow Evergreen’s turnaround and restructuring practice”.

About Evergreen Advisors

The Evergreen Advisors, LLC is a leading investment banking and corporate advisory firm focused on assisting emerging growth and middle-market companies in the areas of corporate finance, growth and exit strategies, business valuation, Outsourced CFO services and advisory services. Providing innovative and strategic solutions, the team has completed over 100 M&A and capital raising transactions, totaling over $5 billion in value for publicly traded and privately held companies. Evergreen has offices in Columbia, MD and Mclean, VA. For more information, visit www.evergreenadvisorsllc.com

Securities transactions conducted through Evergreen Advisors Capital/Member FINRA/SIPC. https://evergreenadvisorsllc.com/

On March 18, 2020, YUM! Brands, Inc. (NYSE: YUM), a worldwide owner and operator of restaurant brands, acquired The Habit Restaurants, Inc. (NasdaqGM: HABT or “Habit”) for approximately $408 million in cash.  At the time, Habit operated 245 company-owned and 31 franchised Habit Burger Gill restaurants in the U.S. and in China.  According to YUM’s 10Q filing, Habit expected to benefit from the global scale and resources of YUM.  As a result of the transaction, YUM recorded $219 million of goodwill and $98 million in brand/trademark value based on the analysis of a third-party valuation firm. [Read more…]

We are in uncharted territories given the impact of the Pandemic at many levels ranging from our physical health to the mental challenges brought to bear on each of us to the significant impact on our economy.

Venture Funding  

In the first quarter of 2020, companies in the region raised 227 million in venture capital, according to the  PwC/CB Insights MoneyTree Report.  This funding went to 21 companies over this period and over $50 million higher than the quarterly average from 2019.   Zerofox raised $74 million, which was the third-largest round secured by a cyber company in this country.

There was over $121 billion in dry powder amongst the Venture Funds in 2019, and they continue to fund, but many are being more conservative in their approach.  I spoke to Chuck Cullen at Grotech Ventures about their philosophy last week – they have two investments they were focused on.  One was just funded the other was put on hold in the near term.  Speaking with numerous funds, their focus has primarily turned to their existing portfolio companies, ensuring companies have enough cash runway and stressing efficiency. New deals are still happening, but most of these had already been in the pipeline prior to the onset of the Pandemic. The investment pace will surely slowdown in the near term.  One Venture Fund I spoke to was working through new deal screening protocols.  How do you connect with the founding teams before making an investment?   The old axiom is that you invest in an “A” management team is still quite true.  They were trying to derive a technology solution to measure management teams while travel has all but ceased.

Valuations may not have retreated much yet, but indications from Venture community and startups alike suggest that valuations are likely to be challenged in the coming quarters.  Late-stage valuations may see valuations impacted more so after reaching record highs in 2019.  Historically, investor early-stage deal values tend to be more range-bound and may be affected less.

Private Equity

There is $1.4 trillion of dry powder in the Private Equity space.  Further, there is a strong push for exits in the existing portfolio.   Many expect this capital source to play a larger role in this next economic recovery relative to the 2008 downturn.  This is due, partially, to the AUM held by these funds relative to 2008.  Private Equity and their portfolio companies account for approximately 1/3 of all technology transactions in recent years.  Due to the excess of liquidity and the profusion of competitors, Private Equity firms themselves have become much more structurally flexible in the last couple of years.  They pursue investment strategies as a minority investor as an example.  I suspect they will continue to invest in control situations but also to recapitalize stressed companies.  I spoke to Private Equity Firm in Philadelphia last week, and, not surprisingly, their attention is on their existing portfolio.  Ensuring they have the capital and other resources necessary to survive this crisis.  They are requiring their companies to reexamine budgets and model different scenarios where revenues are materially lower.

Merger & Acquisitions

The likely prospect of a serious recession looming (if it has not already begun) has critically affected the health of the startup ecosystem. The IPO market has rapidly fizzled out, and it’s possible that the M&A market could see hits as well, as large potential acquirers are also cutting costs.   Evergreen Advisors Capital has not seen a change in the deal process thus far.  Several deals were under or nearing Letter of Intent when this Pandemic started and they are continuing to a close at this time.  Further, we have seen several new term sheets in recent weeks – all at valuations, we would have anticipated prior to this crisis.    Having said that, we do not expect to see the $3.9 trillion deal volume of worldwide M&A activity this year as compared to 2019.  2019 ranked as the fourth biggest year for global M&A since data collection began in 1980, according to Refintiv.

Summary

Fundraising figures were strong in the first quarter, 2020, however, fundraising will slow down as both Venture Capital, and Private Equity assess their portfolios and performing triage versus spending that time on new investments.  We would expect valuations to be negatively impacted as we come off of record levels for both public and privately-held companies.

The IPO markets, with a few exceptions, have vanished entirely during the coronavirus crisis. The exceptions include a sizeable offering as Rackspace filed for an IPO.  As you are probably aware, they operate in the cloud services industry.  There were about 20 IPOs throughout the country were delayed due to the crisis.

US-based venture capitalists are sitting on record amounts of dry powder, having raised over $100 billion in fund capital over the past two years. There is ample dry powder in the market, ready to be put to work in promising startups. Also, downtimes have proven to be good times for startup investing, as companies born in an era of struggle tend to be more battle-hardened and capital efficient.

It remains to be seen how long this Pandemic will last.   The quicker we get back to work, the more likely we can rebuild positive momentum given the capital in the marketplace.   While we see how this unfolds, staying focused on the key indicators of your business is of utmost importance.  Cash is king, profitability critical, and understanding this economic period on your customers important.  The amount of dry powder in the capital markets is unprecedented.  Please contact us to help you migrate through this period and be well-positioned to increase your valuation and be attractive to the capital markets prospectively.

About Evergreen Advisors

The Evergreen Advisors, LLC is a leading investment banking and corporate advisory firm focused on assisting emerging growth and middle-market companies in the areas of corporate finance, growth and exit strategies, business valuation, Outsourced CFO services and advisory services. Providing innovative and strategic solutions, the team has completed over 100 M&A and capital raising transactions, totaling over $5 billion in value for publicly traded and privately held companies. For more information, visit www.evergreenadvisorsllc.com

Securities transactions conducted through Evergreen Advisors Capital/Member FINRA/SIPC. https://evergreenadvisorsllc.com/

The Coronavirus Recession is forcing even the most well-capitalized companies to deliver cost savings across their supply chains. To weather the crisis, companies must reassess opportunities to source products and services domestically, reduce exposure to regional labor market disruptions, navigate ongoing rent, utilities, debt service obligations, and redeploy their workforces across their physical and digital facilities. The importance of a sound corporate location strategy has never been more apparent, and the need for collaboration with the public sector never more pressing.

The crisis at hand presents unique challenges to company supply chains and economic development organizations, challenges that affect the fiscal positions of both companies and local authorities in then incentive negotiation process. Just as companies must manage risks across their supply chains, cities and states facing shortfalls in sales and income tax collections are reassessing their approaches to the incentive negotiation, with new need to realize savings as well as to identify opportunities for growth.

Successful location and supply chain analysts in the time of the Coronavirus Recession will be the ones that can leverage creative funding opportunities to realize cost savings for both the public and private sectors.
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With the rapid spread of COVID-19 taking hold in the U.S. and across the world, publicly-traded stock prices have taken a beating. Additionally, as business, economic, and political uncertainties increase, private valuations in certain types of securities and industries will certainly take a hit this year. Although this may cause temporary pain in the form of lower portfolio and 401k balances, significant planning opportunities remain for high net worth individuals, business owners, and shareholders of privately held companies. It could be possible that those involved in online stock trading could navigate the financial landscape during this uncertain time to come out the other side in a strong position, after making smart investments. The federal government issued PPP loans to businesses to help them during this time, but after this is all done, will businesses be able to pay them back? The rules for how to get a Payroll protection loan forgiven are here and must be looked at by all businesses who worry for after this is over.

Take Advantage of the Exemption from Estate, Gift and Generation-Skipping Transfer Tax – With everything that’s going on, it’s easy to forget the significant changes that went into effect in 2018 with respect to the estate and gift taxes. To summarize, the federal tax law was changed to allow individuals to transfer double the amount that was previously allowed over the course of their lifetime free of tax. As of this writing, individuals may transfer $11.58 million and married couples up to $23.16 [Read more…]

March madness canceled. Ice hockey thawed. No baseball. Schools closed. Restaurants offering curbside pickup. Breweries doing delivery. Supply chain disruption. Hoarding. Entire companies working remotely. No toilet paper on the shelves! Trump. Congress. COVID-19 vaccine. Social distancing. Stay at home. Olympics delayed. N95 masks. SXSW scratched. Distance learning. Concerts delayed. Disney locked. Group meetings? Fuhgeddaboutit! The headlines sound like new lyrics to REM’s famous title “It’s the End of the World as We Know It.”

What does it mean for a Company’s business valuation? Coronavirus, or COVID-19, muddies business valuations for an indeterminable period. Many businesses will be adversely affected by reduced sales, uncollectible receivables, staff absences for a variety of reasons, increased costs of operating remotely, increased sanitation costs when out of the office work is not feasible, etc.

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COVID-19 has affected the world much more than initially anticipated. A lot more businesses are being affected than originally thought with the majority having to close down. Some are staying open for now by using janitorial services in order to ensure the required cleanliness standards are kept to help workers and customers feel safe. Nonetheless, some businesses require more support now than ever before. As a result, many people are using sites like GoFundMe to support those who have been worse affected financially and it is nice to see communities pull together and support each other. Even those businesses have survived and remained open must ensure they’re following government guidelines and that they are giving their workers the proper equipment – like providing them with an n95-mask or other protective clothing. These businesses have an obligation to look after their staff at this time, including providing PPE, offering financial support, ensuring that (where possible) jobs aren’t lost, and informing workers at risk of the Coronavirus what they should and shouldn’t be doing to protect themselves and others.

As we navigate the ongoing impact of the Coronavirus, we are assisting our clients who are suffering from the loss of clients/customers during this time. Below are several options for assistance currently available for small businesses in addition to information being given by the Maryland Department of Commerce and the CDC. As more resources become available we will update this list.

• Sales and Use Tax in Maryland:
  • Businesses who paid their Maryland and Sales Use taxes for March early may request a refund of their payment by emailing taxpayerrelief@marylandtaxes.gov or by calling 410-260-4020
• SBA – Disaster Loan Assistance Business Disaster Loans – https://www.disasterassistance.gov/get-assistance/forms-of-assistance/4479

• • Businesses of all sizes, as well as private non-profit organizations, may borrow up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, and inventory and other business assets.
  • In some cases, SBA may be able to refinance all or part of a prior mortgage or lien. We may also be able to increase the loan up to 20% of the confirmed physical losses.
  • You could use the loan increase to make improvements that reduce the risk of damage by future disasters. This could include improvements like retaining walls, seawalls, sump pumps, safe rooms, and storm shelters.
  • The SBA offers Economic Injury Disaster Loans (EIDL) up to $2 million to help meet working capital needs caused by the disaster. The program limit for business loans is $2 million. This applies to all combined funding paid to a business and its affiliates for each disaster.
  • To qualify, your business or private non-profit organization must have physical damage or economic harm and be located in a declared county.

• SBA – Economic Injury Disaster Loans – https://disasterloan.sba.gov/ela/Information/EIDLLoans

• • The SBA can provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. Your loan amount will be based on your actual economic injury and your company’s financial needs, regardless of whether the business suffered any property damage.
  • The interest rate on EIDLs will not exceed 4 percent per year. The term of these loans will not exceed 30 years. The repayment term will be determined by your ability to repay the loan.
  • A business may qualify for both an EIDL and a physical disaster loan. The maximum combined loan amount is $2 million.

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Evergreen Advisors, a middle market Investment Bank and Corporate Advisory Firm, with offices in both Columbia, MD and McLean, VA, is pleased to announce the acquisition of Baker-Meekins.  As part of the transaction, James Webb, ASA and Shawn Moxley, ASA will become employees of Evergreen and Ross Adams, CFA will serve as a consultant.  Based in Lutherville, MD, Baker-Meekins has been providing independent, expert opinions of the value of a business or its securities since 1987.

“We are very excited about the prospects of combining the experience, expertise and client base of the Baker-Meekins team with those of Evergreen.  James and Shawn are widely known in the business valuation community for their expertise in complex fair value and ESOP valuations.  They will be a tremendous addition to the group“, said Patrick Lowry, Managing Director of Evergreen’s Valuation Practice.

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