Joined Lanier Securities LLC as President/CEO

Jeff Villwock announced that he has joined Lanier Securities LLC as its President & CEO.  Lanier will privately place debt and equity securities through the direct solicitation of investors and provide investment banking services including M&A and corporate advisory services.   We intend to provide alternative investment products to individual investors through direct investment into companies and by marketing funds which will provide investors diversity and high yield current rates of return.

Lanier Securities is in the process filing a New Membership Application for FINRA’s approval to operate as a licensed broker/dealer.

This is a new era of capital formation in the US.  The JOBS act gives smaller companies a new opportunity to be properly capitalized.  We will use our experience to find good companies that deserve to be well capitalized, and then work with these companies through their life cycle.  It is our goal to become a firm known for raising capital for deserving private companies and assisting those companies to create value for shareholders.

This is an exciting time for capital formation in the USA and I believe we have an opportunity to make a meaningful difference for companies seeking capital and for the investors that wish to invest.

Medway Air Ambulance – A Home Run

It’s my pleasure to announce that Medway Air Ambulance has completed a recapitalization resulting in a significant liquidity event for its owner, and a growth capital infusion by Merit Capital Partners and American Working Capital.

In just over two years, we worked with Rick Moore, Medway’s CEO, to double the revenue, more than double the profitability and increase equity value by more than 5x. After the recapitalization, Rick continues to own a significant piece of the company and remains CEO. It is my personal expectation that Medway can double its revenue again over the next three years, and potentially triple over the next five years.

It has been great to work with Rick and to assist him in adding the financial discipline, debt financing and to jointly create a growth vision for the company. When we first talked about a joint venture in 2012, he thought I was crazy … this would never happen. We started with a good company at the end of 2012, and over the next two years created a world class company.

My congratulations to Rick for the great job he has done, and to Merit/AWC for the opportunity they have to work with Rick and his excellent staff to take the company to the next level.

Raising Equity

5 Common Mistakes to Avoid When Raising Equity

Raising capital for a business, whether it is a start-up or a mature company, can be an extraordinarily frustrating and time consuming experience. Entrepreneurs want to operate and grow their business, not raise capital. But the fact is that for most businesses, the entrepreneur or CEO is responsible for raising capital.

When attempting to raise capital, CEO’s very often make some crucial mistakes. These mistakes not only can dictate whether or not the business will be able to raise capital, but also how long it will take and the ultimate cost of the capital. Using the wrong assumptions, raising capital can be impossible.

We believe there are 5 common mistakes that CEO’s make when raising capital:

1. Unrealistic Expectations of Value

Most of us has watched Shark Tank at least once. Just watch one episode and you will likely see this mistake. The entrepreneur goes to professional investors with a company that did $100,000 in sales last year and confidently tells the Sharks he will sell 10% of his business for $1 million. What’s the chance of this CEO getting funding? Zero.

With few exceptions, investors will pay for what you have already done – not what you believe you will do in the future.

Villwock Advisory Services joins Axial

Villwock Advisory Services LLC announced that it has joined Axial as member in order to introduce our services to a broad base of lower middle market companies, and to the private equity and debt funds that provide capital to these companies.

Axial is a network of over 16,000 companies, including investment banks, private equity, lenders and operating companies.  The platform has become “the place” for each of its constituencies to network with potential clients.  Companies use the site to find advisors, whether that be to raise capital, provide advisory services or investment banking services.  Bankers and advisors use Axial to market or test market transactions, and to attract new clients.

Villwock Advisory Services works with middle market companies, private equity and debt funds in several ways:

1.  We partner with operating company CEOs to develop and implement a growth and exit plans.  As an example, we start working with a company in late 2012 that had plateaued at $12 million in sales for five consecutive years.  Less than two years later, the company is on track to produce over $24 million in revenue and EBITDA margins have improved.  The CEO’s equity value has tripled,

Bank Financing Back to 2007

In 2008 bank lending essentially stopped.  It is safe to say that 2007 was the best lending environment in history.  Tons of money available at incredibly low rates and without covenants.  It was an LBO paradise.

It seems that 2007 has returned.

I’m working with a client on a new banking package.  We’ve got a term sheet with good availability.  Normal 80% LTV financing on capital equipment.

Unlike 2007, the covenants are reasonable for both parties.

But the interest rate?  I still can’t believe it.

Because of non-disclosure agreements, I can’t talk about the rates, but believe me, they are below anything you would expect.  Even on 10 year money.

As we learned not too long ago … get what you can while you can.

Earnings Season Started

The earnings season has started and in just the first couple of earning releases a trend is developing:  executives are concerned about revenue growth going forward and are cutting estimates due to weak economic activity.  Obviously this is not good for a stock market that has been on fire.

AmSurg beat estimates by a  penny, yet lowered forward revenue and EPS guidance.  The company lowered the upper end of its guidance by $0.04/share with $1.69-1.71.   Q4 guidance is $0.41-0.43 vs. consensus of $0.43.  Consensus 2010 has been $1.70.  Weak same store volume has now turned negative for its surgery centers.

HealthWays also lowered forward revenue and earnings guidance after beating estimates.  Management was very clear that the visibility that they have in 2011 has gotten worse in the last few months as a combination of continued high unemployment and uncertainty about healthcare reform is putting customers in a holding pattern.  Analysts downgraded the stock Friday and the stock collapsed down over 10%.  Q4 guidance is now 0.21-0.28 vs. current consensus of $0.29.  Consensus 2010 is $1.13 (new guidance is $1.07-1.14 and for 2011 estimates are $1.24.  If management is uncertain about growth, estimates probably come down to $1.10-1.15.