We Invest In The Future
We are a private investment firm, staffed and organized to respond quickly to investment opportunities in a variety of sectors.
We seek to acquire and improve businesses in a diverse range of industries that contribute to infrastructure and economic development.
Our Target Companies
We seek out companies that are $2,00,000-$50,000,000 target size; special interest in water rights, renewable energies, Infrastructure development, agriculture, manufacturing, product development, printing, packaging, wholesale distribution and healthcare.
Fenner & Beane, LLLP is private investment firm active London, Winnipeg, Los Angeles, and Scottsdale. We are actively engaged in helping businesses identify the best option to create a more successful future together, through either building a stronger company or perhaps transitioning out.
In certain cases, we consider companies in turn-around situations or involved companies in Chapter 11 proceedings, if actions can be taken to correct or improve the situation.
Fenner & Beane, LLLP wishes to maintain an active dialogue with other investment pools, investment bankers, financial institutions, venture capitalists, insurance companies, pension fund managers, finders, business brokers, accountants, attorneys, and other members of the financial community.
Our management team includes professionals with solid operating backgrounds and we function as an investor, intermediary broker, finder or consultant in the merger/acquisition process.
our acquisition criteria
Companies $2,000,000 – $50,000,000 target size
Special Interest Industries
Geographic Focus: United states, canada, united kingdom, puerto rico, costa rica & mexico
Target Company Characteristics
Overall, we seek out companies that demonstrate minimal exposure to dramatic cost and revenue cyclically.
For a leveraged buy-out scenario, we seek companies that may demonstrate the following:
- Dominant position with defensible competitive advantage in a mature industry.
- High quality management with a proven track record in managing the company through business cycles.
- Manageable R&D, capital expenditure and working capital requirements.
- Proven historical earnings with consistency and predictability of cash flows.
- Limited access to capital markets and non-regional financial intermediaries.
- Limited negative labor and environmental issues.
Type Of Transactions
Family buyouts, management buyouts, going privates, complementary acquisitions, internal growth, owner recapitalizations, and turnarounds (Informal reorganizations, preferred), real estate, financial services and transportation.
Excluded Transactions: Startups, retail and media.
Our investment process
Phase 1: Selection Phase
The first step in the investment process is to carefully screen identified prospects to determine their suitability under certain criteria. The criterion listed below has been developed by Fenner & Beane, LP. to assist in screening prospective acquisition candidates.
ESTABLISHED BUSINESS ENTERPRISE
Primary manufacturers, distributors and retailer of industrial, commercial and consumer products with significant existing or potential market shares in concentrated industries, or companies with substantial leadership positions in fragmented markets. Relatively mature companies in viable industries are preferred, which offer the potential to generate exceptional investment returns while also limiting the risk to the investment group.
PROVEN OPERATING PERFORMANCE
A record of profitable operations for at least three to five years. Constant earning and consistent cash flow is more important than rapid growth, although companies capable of at least doubling earnings every five years are preferred. Size is not a factor. In regard to underachieving companies, it is recognized that adverse circumstances sometimes provide historical results not indicative of the true potential of a business. The focus, therefore, is not necessarily today’s circumstances but what a company can become if it is properly capitalized and managed.
STRONG BALANCE SHEET
Tangible, viable assets, a high degree liquidity and little or no debt. Companies with fast-turning inventories and accounts receivables, undervalued excess or hidden assets, and relatively low capital intensity are preferred.
Phase 2: Acquisition Phase
quality management team
Mature, experienced and competent managers with dedication, integrity, and proven records of success are preferred. Management must be willing to remain or be easily replaced from the outside. In either case, management should have an equity involvement in venture.
After an acquisition candidate meets our criteria, an extensive in-depth analysis is conducted of the company, its industry, products, competition, markets, management, sales and earnings, balance sheets and cash flow. From this analysis, the company is valued, an offering price is determined and the financing and legal structure for the proposed investment is determined. We then conduct negotiations with the seller and its legal and accounting counsel. A letter of intent is prepared followed by a definite sales agreement to be signed at closing.
The financing of each investment is conducted simultaneously with the acquisition phase. Once the buyer and seller agree on price and terms, our Company has the responsibility for arranging the necessary debt and equity financing. We maintain excellent working relationships with numerous major lenders and equity sources. These financial institutions include family offices, commercial banks, commercial finance companies, insurance companies, hedge funds, pension funds, SBIC’s and funding pools. Some may participate in the acquisition with senior and subordinate debt and may also become equity partners.
Phase 3: Monitoring Phase
monitoring for success
The completion of an acquisition triggers the beginning of an extremely intensive follow-up to ensure the success of the investment. Our Company devotes a substantial amount of time to each investment in an effort to achieve a high probability of success.
Our relationship with management is primarily supportive and we ideally do not become directly involved in the day-to day operations. The company makes its contribution through participation on the Board of Directors. Although participating in management at the board level, we strongly believe in operating autonomy for the management group
Selling Your Private or Public Company, Subsidiary or Division
The key aspect to selling a business is to interest a small number of motivated buyers who have the experience and capital resources to react professionally, discreetly and quickly.
Buyers are usually corporations or investment group(s). If market conditions are right, the seller can consider a merger with a larger public or private company to achieve a tax-free exchange of stock. If the seller desires cash (often obtainable through a tax-free transaction), continued corporate independence, and, perhaps an equity involvement for the owners and/or management, then a sale to an investment group is a viable alternative. The role of the investment group as buyers of operating companies has become a major factor in the acquisition field in recent years.
Corporate sellers are usually motivated by strategic and economic reasons.
PROBLEM: Product line strategies, product fit and size, and markets targeted are major reasons for divestiture. The assets for sale, although usually profitable and trouble-free may not meet the corporate benchmarks for profit as a percent of sales, return on assets or equity or of growth in sales or earnings. Sometimes the corporate seller needs cash, has been unable to solve a management problem, and wishes to focus its management efforts or may even have antitrust problems, which can only be solved by a divestiture. Corporate owners of divisions or subsidiaries often find it difficult to supervise their holdings because of the diversity of activities or the distances involved, especially if these companies represent only a minor part of their overall activity.
SOLUTION: Corporate sellers usually want cash for their unneeded or unwanted assets. The most viable buyers for corporate spin-offs are management teams and/or investment groups. Often, investors and incumbent managers team up to acquire a spin-off because the management group, although highly knowledgeable enough to structure the acquisition and package the financing alone. Management frequently has difficulty negotiating an arms-length transaction with their own immediate supervisor. Finally, the lenders and sellers almost always insist on outside capital and/or expertise in the deal.
The sale of a closely held company can provide estate liquidity for the owner and his family by separating his capital and his career. Other considerations are health, management succession, retirement, multiple ownership and division of interest.
PROBLEM: The prospect of going public is less desirable or viable than it used to be. The alternative of merging with a larger company often means the loss of identity and independence.
SOLUTION: Merge with a larger company to sell for cash and notes to an investment group. The sellers preserve the continuity and independence of their management and employees by retaining employee benefit programs, pension and profit-sharing plans, and established relationships with vendors, customers, attorneys, accountants and banks. They may also contribute to and benefit from the future growth of the company by becoming part of the investment group.
PROBLEM: Major shareholders of small to medium-sized public companies often have little or not liquidity for their stock, or have few opportunities to raise capital through new offerings and can suffer from low price-earning ratios, yet they still have the high cost and reporting burden of remaining public. These companies have all the problems of being public, but enjoy none of the benefits.
SOLUTION: A corporation needs to buy back all its stock or to sell substantially all its assets or stock to an investment group. The first method of going private is usually very costly, risky, and time consuming. The sale of assets or stock to investors for cash is usually easier and quicker. In the case of cash-for-assets transactions, the shareholders of the public company may either redeem their shares for cash or remain as shareholders of the firm, which may become a subsidiary of an investment company. Using the cash merger technique, the shareholders end up with cash as in any other acquisition for cash.
Fenner & Beane LLLP
We are a private investment firm with offices in Manitoba, Los Angeles, and Scottsdale, and are staffed and organized to respond quickly and professionally to investment opportunities.
We are actively engaged in a continuous investment program of acquiring companies with strong balance sheets, experienced management teams and demonstrated operating results.
We maintain an active dialogue with other investment pools, investment bankers, financial institutions, venture capitalists, insurance companies, pension fund managers, finders, business brokers, accountants, attorneys, and other members of the financial community.
Our management team includes professional managers with solid operating backgrounds and we function as an investor only, not as an intermediary broker, finder or consultant in the merger/acquisition process.