For any given project other than Projects requiring funding
Crown Financial & Merchant Bank Plc process draws on its many years of Corporate Finance experience to
evaluate companies, prepare the proposed transaction materials, and close the transaction. There are six
phases of the process for direct investments:
Crown Financial & Merchant Bank plc pursues Private Investment Opportunities referred through Banks, Venture Capital Firms, its network of Professional Banking Consultants, and Introducers - all of whom are protected for their commission. Crown financial & Merchant Bank Plc gathers insight into each Investment Opportunity, including its Business Model, Financial Prospects, Management Team, and of course the use of Funds. Crown Financial & Merchant Bank plc also consults Industry Experts (if appropriate) regarding the Business Model and assesses Market conditions.
Assessing the Investment
Using its standardized data sheets, Crown Financial & Merchant Bank Plc will gather complete details about the Client's business strategy, financial history, management structure, growth objectives, products, markets, competitive forces, and capital requirements. Crown Financial & Merchant Bank Plc then assesses the financing need in order to determine if the opportunity is compatible with the investment returns specific to the company's industry.
Performing Due Diligence
Crown Financial & Merchant Bank Plc will then assemble a Team of Investment Professionals and, if necessary, Outside Advisors to perform the appropriate Due Diligence. It is also common procedure to outsource specific Assignments to firms such as American Appraisal Associates, Ernst and Young International, The Law Firm of Baker - all of whom have a well-established professional relationship with Crown Financial & Merchant Bank Plc. The Due Diligence includes a thorough review of any and all aspects of the Client's projects and review of any and all related documents. The outcome leads to a conclusion of "Go/ No Go", and if it's a No Go, Crown Financial & Merchant Bank Plc works with the client to assess the weaknesses of the Project and try, in cooperation with the client, to remedy to the situation.
Supporting Investor Review
At Crown Financial & Merchant bank plc, a transaction moves forward, further to a positive Due Diligence. The Project is then submitted to Crown Financial & Merchant Bank Plc Executive Committee, and further to a positive recommendation, Crown Financial & Merchant Bank Plc then establishes the "Amount of Funding" to be provided by third investors or partners.
Supporting Market Place Activity
As "Principal" or "Advisor", Crown Financial & Merchant Bank Plc responds to Corporate Investors inquiries as they review the proposed transaction, until the "Closing" of the transaction.
Ensuring On Going Accountability
Once a Company / Client has received its funding, it submits an On-Going Performance Report to Crown Financial & Merchant Bank Plc and its Financial Partner / Funder / Corporate Investors.
Presentation Reports Introduction
If you are looking for lenders or investors, it is to your advantage to understand the elements that they would most want to see in a well-written business plan and presentation report. Investors (or Venture Capitalists) will become equity partners in your company. They will need to justify to themselves that the money they are investing in your company will essentially result in the desired return on their investment. Remember that bankers are people, too. Just as you will have to present your business plan to them, they will have to present your plan to their bank's loan committee or syndicate of investors. Crown Financial & Merchant Bank plc can help you increase your chances of success with lenders and investors by preparing a business plan and presentation report addressing the following topics:
- Activities and products, history, market, target (who and where), competitors, and amount of funding required
Vision and Mission:
- Management: management team
- Product and services
- Market environment: brief description of the market
- Pricing and profitability
- Customers : target market - geographic area definition
- Distribution : direct sales/export, local retailers/distributors or licensees
- Financial status : how much capital has been raised to date
- Vision statement
- Mission statement
- Present Situation
Legal Business Description
- Company name
- Legal form of business
- Business location
- Pricing and profitability
- Government regulations
- Management team and subsidiaries
- Current product
- Return on investment
- Useful features/benefits
- Legal Business Description
- Market definition : industry analysis
- Market segment : strengths, weaknesses, opportunities, unexploited opportunities and threats
- Observations and conclusions
- Industry growth
- Environment risk : economic and natural
- Size of the industry markets
- Industry trends
- Geographic location
- Sales and profit potential by country/continent
- Customer profile
- Customer needs : problems with competitors' products
- Product benefits
- Target market
- Sales strategy
- Media objectives and strategy (TV, Radio, Newspapers, Magazines, etc.)
- Income statement
- Balance sheet
- Cash flow budget
- Ratios: liquidity, operating, solvency, etc...
- Five-year forecast: income statement, balance sheet, cash flows
- Complete and detailed financial analysis
- Thorough risk analysis
Due Diligence Introduction
Over the past few years, Crown Financial & Merchant Bank Plc has developed expertise in
conducting professional Due Diligences connected with a wide variety of situations.
Why a Due Diligence?
The "Due Diligence" is a process whereby Crown Financial & Merchant Bank Plc seeks sufficient information about a business entity to reach an informed judgment as to its value for a specific purpose.
A Due Diligence can also be performed in a wide variety of other situations such as:
- A Firm considering a potential acquisition
- An Investment Banker considering underwriting a public security offering or promoting a Private Placement
- A Banker considering the making of a loan
- A Lawyer preparing an offering statement or a merger proposal for a client
- An Appraiser who has been retained to estimate the value of a business unit
- A Business Broker offering a company for sale
- A Public Accounting Firm in conjunction with an audit performed at the request of a potential buyer or in support of a security offering
- A Security Analyst preparing a buy, hold or sell recommendation on a public security
The Due Diligence investigation is normally carried out with the knowledge and cooperation of the management of
the entity being investigated.
Should Crown Financial & Merchant Bank Plc be mandated to execute a Due Diligence, either to realize an in-house transaction or be appointed by a third party in connection with the situations above-mentioned and/or other situations, Crown Financial & Merchant Bank Plc will thoroughly review, without being limited to, the following activities of the subject entity:
- Overview of entity
- Capitalization and ownership
- Organization and management
- Relationships with outside organizations
- Description of products and/or services
- Revenues and market share
- Marketing operations
- Customer service
- Inventory control and purchasing
- Physical distribution
- Computer, communications and information systems
- Financial management
- Legal affairs and litigation
- Security and safety
- Human resources
- Public relations
- Corporate development
Description of fixed assets
- Land and buildings
- Vehicles, equipment and tooling
Introduction to financial analysis
- Balance sheet analysis
- Current assets
- Non-current assets
- Net worth
Income statement analysis
- Cost of goods sold and gross margin
- Operating expenses
- Operating income
- Non-operating and nonrecurring items
- Income taxes
- Net income
- Capital expenditures
- Cash flow
- Financial ratio analysis
- Income statement projections
- Balance sheet projections
Evaluation of a Business Introduction
The Evaluation Report to be prepared should address the following topics:
- Assumptions and limiting conditions
- of the adjusted and unadjusted balance sheet
- of the adjusted and unadjusted income statement
- comparative industry analysis
- book value
- liquidation value
- capitalization of earnings
- Summary of valuation methods
- Discounts and premiums
Opportunities, fortunes and relationships are won or lost, shattered or repaired, by the interaction of
individuals, their assessment of a situation or goal, and their strategies and tactics to achieve a
successful negotiated conclusion.
Successful negotiators are not simply born that way - they are honed by experience, fortitude, and the deployment of strategies and tactics applicable in each situation. The clichè "everything is negotiable" is misleading because people have principles, beliefs, and values that they simply will not alter or negotiate. Experienced negotiators do the homework necessary to understand their adversary and create a plan of action to achieve a fair result for all parties. Or as fair as you need to be!
This plan of action is broken into two parts:
Strategy is the complete blueprint of how everything comes together, much like a General looking over the
field of battle. Tactics are the steps, measures, and methods employed to achieve a certain strategic goal.
Both interact together, though they are entirely different; tactics can never bring about a successful result without a master strategic plan.
At Capital Corp, our professionals are not only businessmen, they are skilled negotiators as well. For over twenty-five years, Capital Corp's business professionals have demonstrated their ability to successfully initiate and negotiate transactions by designing, implementing and closing deals - both for us and for our clients.
Our collective experience in the areas of mergers and acquisitions, divestitures, turnaround management, corporate restructuring, securing debt or equity financing and contractual issues is available on a retainer fee basis.
Acquisitions are Principal or Privately held companies, with Joint Venture Equity Partners or
Crown Financial & Merchant Bank Plc is NOT industry-specific and is highly experienced in a wide variety of Companies and Real Estate-related Ventures including Hotels and Resorts. We look at where a company is in its life cycle and assess the factors that affect the growth of its market segment and the ability of the company to increase market share and profit margins. Our interest is in three types of transactions:
1) Small to Mid Size market niche Companies
We prefer companies that have demonstrated strong growth and are capable of sustaining a 15% to 20% earnings increase per annum for 3 years to 5 years after acquisition. Pretax earnings for the latest 12 months should be at least $250,000. Typically these are companies with low asset bases in relation to shareholder value and that, because of their growth, consume capital. Thus we seek to provide a capital structure that addresses not only the acquisition but the continued financial requirements of a growing business. When and where appropriate, we will invite the retention of an equity interest by the seller(s) or key management. This is an attractive incentive for owners/managers seeking personal liquidity but wishing to remain active in the business and thus benefit from future equity appreciation.
2) Industry consolidation
Our objective is to acquire a company who can serve as the nucleus to add related businesses. Usually these are in fragmented industries where consolidation can complement a company's competitive position, improve customer service and decrease product or service cost.
3) Under performing Companies, Turn around or Chapter 11 Opportunities
The 1980's and 1990's spawned excesses of financial leverage in a recession environment. We believe there are consequent opportunities to achieve superior investment returns in under performing, turnaround and Chapter 11 companies. Unlike market niche companies, purchase prices for transactions in this category should bear a reasonable relationship to asset value. Our preference in this category is for companies that have revenue in excess of $4 million in the latest 12 months.
Acquisition & Management focus
In all of the three above-mentioned categories, our focus is to identify such companies that have the potential for significant profit improvement. Our procedure is to provide strong incentives and equity ownership for remaining management within the target company. Our experience shows that companies produce success because of the quality of their management. Consequently, we participate as active advisors and directors and work with management to establish realistic strategic and operational objectives. Once these goals are established, the company's management is responsible for all day-to-day business decisions.
Crown Financial & Merchant Bank Plc approach to investing can be summarized as follows:
Manage a network of Business Owners, Brokers, Accountants, Lawyers and Business Professionals with an emphasis on a timely response to investment opportunities and swift, efficient pursuit of situations that fit the Crown Financial & Merchant Bank Plc model.
Maintain confidentiality throughout the transaction process.
Submit Investment Proposals that are fair and complete in a structure that both promotes a timely closing with minimal business interruption and offers flexibility in transaction structuring in order to achieve a variety of seller specific economic and non-economic considerations.
Conduct reasonable business Due Diligence that provides a complete, accurate view of the opportunity and allows Crown Financial & Merchant Bank Plc to establish, along with substantial input from management, a post-transaction strategic vision for the company.
Design and implement management incentive programs designed to reward short and long term performance. Provide management with an equity stake in the successful implementation of the strategic initiatives.
Work closely with management from a board level to assist in the continuous "intrinsic improvement" of the business through revenue enhancement, margin improvement, working capital reductions and add-on acquisitions.