The need for expert valuation services is increasing in today’s litigious environment. The valuation of closely-held business interests and related assets in the context of tax, corporate transactions and legal disputes is necessary to properly resolve matters and make key financial decisions.

In contentious situations such as divorce or shareholder disputes, it is typical for the parties to hire two valuation experts; one for each side.  However, opposing parties may jointly decide, in consultation with their legal teams, to use a neutral valuation expert (NVE).   In this case, a neutral appraisal is completed for parties with opposing interests by an independent third-party appraiser or valuation expert.

How can a neutral valuation expert assist you?

1. Reduce Financial Uncertainty and Suspicion – The NVE has the expertise to identify the necessary and appropriate data required to ensure full disclosure of all relevant financial information including, financial statements, tax returns, and other bank, investment and retirement plan account data. Trust increases when clients are comfortable that a complete financial picture has been presented and any questions have been asked and answered.
2. Provide Fair Access to Financial Information – Specifically, in a divorce setting, the NVE can alleviate the non-money spouse’s financial suspicions and concerns. In many cases, one spouse handles the family’s finances or holds equity interests in privately-held companies. A lack of familiarity with the family finances contributes to angst and uncertainty about the future. The NVE may educate the spouse who has not been intimately involved with the finances. The increased education and understanding diminishes some of the anxiety and concern.
3. Independent Opinion – Since the NVE is independent, the parties are more likely to reach an agreement. The NVE can help clients evaluate the various financial options under consideration and explain how those decisions impact both parties and the valuation outcome. Information about the implications of various terms from the NVE provides the parties with the confidence to make decisions and reach an agreement.

[Read more…]

Rick Kohr was recently interviewed at the Maryland Life Sciences’ first annual Bio-Innovation Conference, which was held on October 7, 2019. Marty Rosendale, CEO of MTC and host of the Capital M podcast, sits down Rick to discuss access to capital in Maryland and the Mid-Atlantic. He discusses what investors are looking for when meeting new companies and how his company prepares others for raising capital. 

The Bio-Innovation Conference provides a forum for professionals from industry, academia, and government to discuss trends and insights into Maryland’s growing life sciences industry while showcasing the state’s and region’s innovations and successes in the life sciences industry. The all-day event attracts more than 400+ top life science professionals.

Listen Here

 

The cybersecurity industry will continue to remain a growth industry with the internet and its related threats routinely appearing in various new forms. Security is continually evolving — what worked to protect the internet user a year ago is not effective today.

This year has brought a flood of new venture capital funding in cybersecurity, following up on the approximately $5.3 billion invested in 2018. The industry continues to see capital pour into companies competing in the SaaS Monitoring & Security vertical. Going back to the third quarter of 2016 there have been more than forty deals funded every quarter, except two.

However, cybersecurity was more recently listed fifth in investment dollars behind other emerging markets – Artificial Intelligence, FinTech, Digital Health and IoT. Cybersecurity deal activity dropped to its lowest level since the fourth quarter of 2018. There were 63 deals funded in the third quarter, totaling $1 billion..

Read more Here in the I95 Magazine

Evergreen Advisors, LLC is pleased to announce that George Davis will be joining the firm as Executive Vice President, Strategic Advisory. Strategic Advisory. George is well-known for his successes in investing, building and managing biotech, IT, and software companies, often from the start-up stage. He recently completed a 2-year tenure as Executive Director and CEO of Maryland’s Technology Development Corporation (TEDCO), the State’s Technology Transfer, Innovation Development and Venture Investing Platform. With over 30 years of management experience, having served in various C-level positions, including President and CEO of publicly traded companies, George offers a broad range of experience and business acumen.

“George brings tremendous wisdom, experience, strategic insights and network to the firm and our clients,” says Rick Kohr, founding member and CEO of Evergreen Advisors. “Most importantly, he’s a perfect fit for Evergreen in terms of our reputation for strategically guiding clients to meet their goals. We’re thrilled to have George and his track record of helping companies generate accelerated, profitable growth across many industry verticals.”

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 and advisory services. Providing innovative and strategic solutions team, 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

This month Rick Kohr, CEO of Evergreen Advisors is featured in The Business Monthly with a Q&A on venture capital.

With the venture capital market hopping with big money deals and his company planning a (partial) move to the South Baltimore’s glitzy Port Covington project, Rick Kohr, the founding member and CEO of Columbia-based Evergreen Advisors, is at a juncture in his career. That means Kohr, who has more than 30 years’ experience in advising early stage growth and middle-market companies has plenty to talk about.

 What are the trends in venture capital (VC) today?

First off, we’re seeing a very robust market. Going back to 2014, it was very strong in terms of investment in the U.S., where we’d gone from $71 billion of invested capital to $132 billion in 2018; this year, the first quarter was $32.6 billion in the U.S., which was down 36 percent from last year…..

Read more on page 8 here: http://www.bizmonthly.com/wp-content/uploads/2019/07/aug_Web_pages-reducedsize.pdf

While the appraisal of an Employee Stock Option Plan (ESOP) is very similar to other types of valuations of a private company, there are some complexities that require valuation expertise in ESOPs. The Employee Retirement Income Security Act of 1974 (ERISA) requires Trustees to obtain appraisals by independent valuation professionals to support ESOP transactions. An appraisal is needed when the ESOP initially acquires shares from the company’s owners and each year thereafter that the corporation makes contributions to the plan.

When the Trustees of an ESOP face issues related to appraiser objectivity and independence, qualifications, and knowledge of ESOP special considerations, they often look to Evergreen Advisors for valuation expertise. The following are the main reasons we are contacted for a change:

1. Independence and Conflicts

The number one reason ESOP Trustees engage the experts at Evergreen is when an ESOP appraiser is conflicted by providing services to either the company, board, or other related parties to the company. This includes accounting firms that have separate valuation practices. ESOP Trustees are opting to mitigate this risk by engaging truly independent valuation firms like Evergreen to perform critical compliance-related analyses.

2. Qualifications

ESOP transactions are regulated by the Department of Labor (DOL), and typically have significant tax and legal implications. Therefore, an ESOP valuation must be able to withstand scrutiny and potential challenges from multiple parties including the DOL, the IRS, and the ESOP plan participants. With the additional scrutiny being given to ESOPS by DOL auditors, it is imperative that the ESOP valuation appraiser also have the requisite valuation training, experience,  and credentials such as the Accredited Senior Appraiser (ASA), Accredited in Business Valuation (ABV), or Certified Valuation Analyst (CVA). [Read more…]

You would have to be completely unplugged from the media if you have not seen multiple headlines over the past few years profiling mergers and acquisition activity at record levels and record valuations.  According to the Institute for Mergers, Acquisitions and Alliances, United States M&A volume as measured by transaction value was over $1.9 Trillion in 2018 up from almost $1.8 Trillion in 2017.  Year to date through May, 2019 there was approximately $800 Billion in transaction value.  2018 Middle-market M&A volume in the U.S. hit $427.9 Billion up from $372.7 Billion in 2017.

Valuations are experiencing record levels as well.  U.S. private equity backed buyouts were executed at an average EBITDA multiple of 11.6x in 2018, down a bit from the 11.9x multiple in 2017, but still above the average post-financial crisis multiple of 9.9x (2010 – 2016).

Unprecedented liquidity is driving all this activity.  A few anecdotes:

• Private capital dry powder is approximately $2 Trillion;
• Private debt funds (non-bank, private lenders) have over $300 Billion of dry powder; and,
• Corporate America is holding almost $1.7 Trillion of cash.

Working with middle-market companies, our investment banking teams at Evergreen Advisors Capital are consistently interfacing with private equity and strategic buyers and our activity levels and outcomes are reinforcing the statistics and anecdotal evidence – It is a great time to be a seller.  Across several industries such as business services, software, healthcare, cyber,  government contractors, and diversified industrials, we are seeing strong, consistent interest in our sell-side mandates from both financial and strategic buyers.  That being said, it is not a one size fits all market. To ensure success and best manage time and resources, entrepreneurs considering liquidity alternatives need to access and evaluate the appropriate audiences for their particular fact pattern.

Scale continues to be a factor in generating interest from strategic buyers.  During more than one sell-side engagement, we have seen potential strategic buyers show initial interest in a target only to back away when a higher priority (i.e. larger target) opportunity became available.  Even though we found other buyers, the message has been clear that corporate America’s human resources are constrained when it comes to M&A causing transaction timelines to stretch a bit.  We have been successful in guiding middle-market companies that may be sub-scale to larger strategic buyers, in generating interest from smaller strategic buyers that are backed by private equity.  In almost all of these PE-backed strategic transactions, we encountered a counterparty that was able to act quickly and decisively, generating a great outcome for our client. [Read more…]

2019 continues to be another robust year for cyber M&A transactions. The first half of 2019, M&A deal volume is up 31% over the first half of 2018.¹ We all remember last’s years IPO of locally based Tenable Software and the activity continues with this month’s debut of software maker, Crowdstrike Holdings, a cloud-native endpoint protection platform built to stop breaches, going public with a valuation of $6.6 billion, raising $612 million in their debut.

Locally, BlueRidge AI, Fulton MD just received a $1.9 investment from Datatribe. BlueRidge is integrating Internet of Things (IoT), machine learning (ML), and predictive analytics to help the industrial and manufacturing sector target electric motor failure modes, providing manufacturers with the ability to schedule prescriptive maintenance and minimize downtime. Datatribe announced this year it raised $50 million for fund two to invest in an additional 12 companies. Inner Loop Capital announced in June that they raised $2.6 million to invest in early-stage cybersecurity and enterprise technology companies in the region. The fund aims to make approximately eight seed-stage investments over eighteen months, with typical initial investments of $300-400k.

Evergreen Capital is working on several projects in this space and seeing some key trends including:

Key Trends:

Digital Expansion
Security Threats continue to grow, along with the volume, variety, velocity, and data. The Digital Expansion includes IOT and Critical Infrastructure. [Read more…]

Kathy Warden was born and grew up in the small town of Smithsburg, Maryland.  She graduated from James Madison University in 1992 and in the early part of her career she worked for GE, Verizon, and General Dynamics.  She joined Northrop Grumman in 2008 as Vice President and General Manager of the Cybersecurity division.  In 2016 Kathy became President of the Mission Systems Test Sector, COO of the Corporation in 2017, and this past January 1^st was named Chief Executive Officer.

Recently I met with Kathy at Northrup Grumman’s headquarters in Falls Church, Virginia.  We discussed a wide range of topics, but what stood out as I reflected on our conversation, was her thoughtfulness and passion for people and mission.  Enjoy!

Mike Gill
Chairman, Evergreen Advisors

Interview with Kathy Warden

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Small Town Girl

 

MG: You went to school in Smithsburg, a town of 3,000. It keeps being named the safest city in Maryland. What’s the secret?

KW: There’s only 3,000 people, and they all know one another.

MG: From a small town to CEO of Northrop Grumman: Is there some part of you that was shaped by that experience in terms of character and values? Have you ever thought about that?

KW: I have actually thought about that quite a bit. I’m still just that small town girl. I think values and character are very much shaped in those early stages of one’s life. Being in an environment that was so small, where people knew one another and trusted each other and understood their character based on what they did, not just what they said – that shapes you as you become older.  You realize how important character is to building relationships with people.

MG: In high school, were you part of clubs and organizations?

KW: Interestingly, when I was in high school, I was involved, but also looking at what was next. I finished high school by going to the local junior college to get some college credits in my senior year. I interned in a law firm, trying to get exposed to new things. That really helped to shape my thinking about what I was going to study in college. Then I abandoned all of that when I got to James Madison and switched majors. I decided to go in a completely different direction, switching from pre-law into computer systems.

MG: Tell me about your family.

KW: I come from a very humble background, with my parents working traditional blue collar jobs.  They taught me the value of setting goals and working hard to achieve them. [Read more…]

Evergreen Advisors Capital, a middle market Investment Bank is pleased to announce that it has been named a 2019 Moxie Award finalist. The Moxie Award program honors the accomplishments and achievements of growing businesses, nonprofits, and associations in the DC metro community. Organizations are recognized for having demonstrated boldness and innovation as an integral part of their growth strategy.

“I want to congratulate our team for being nominated as a Finalist for the 2019 Moxie Award enabling us to be recognized among the boldest and most innovative organizations in the D.C. metro community” Rick Kohr, Chief Executive Officer said. Our team has a proven track record in providing innovative and strategic solutions to meet our clients’ evolving business needs and implementing winning strategies for our clients.”

Finalists were recently announced by Sarah Cody, the 2019 Moxie Award executive chairwoman.  “We received an unprecedented number of entries,” Cody said. “We look forward to revealing the winners at the 2019 Moxie Award celebration on Nov. 5, 2019, at The Ritz-Carlton in Tysons Corner.” [Read more…]