Operating Plan to Turn Around Lab Company

Our latest assignment is to provide strategic consulting services to a lab company doing business nationwide.  The lab industry has changed drastically in recent years, resulting in substantially lower reimbursements and increased regulatory pressures. These industry circumstances has caused this lab company to shrink down to about a $12 million run rate, running at about breakeven on an EBITDA basis. The CEO retained us to examine his operations and financials.  Employees knew that I’d been retained to help the CEO and an am independent third-party advisor.  We have spent the last several weeks talking and drilling down to the fundamentals of the business with all business department heads, assisting in a potential acquisition and developing an operating plan to improve operations and profitability. This industry reminds me of the home health business back in 1998-2000.  Reimbursement changes from Medicare caused about 1/3 of all home health businesses to close.  The other 2/3rds held on but were badly damaged. Today the lab business is dominated by Lab Corp & Quest.  Most smaller  labs have closed, or been acquired, or are struggling to find significance within this huge industry. Mr. Villwock is working with this company’s CEO to become one of the …

Growth Equity – Is Crowdfunding the Answer?

Crowdfunding is gaining a lot of press.  The SEC has finally come out with proposed rules and regulations to allow companies to raise growth equity through crowdfunding.  But is that the answer for most entrepreneurs in search of capital? It’s very important to distinguish between “investment crowdfunding” and “direct investor solicitation”.   Most people think of Kickstarter or similar web sites when thinking of “crowdfunding”.  On these sites, an entrepreneur may raise some capital as donations, giving investors back product or other promotions, but not equity in the company.  Generally the amounts raised are small. “Investment crowdfunding” rules were just issued by the SEC in October and won’t be effective until May 2016.  In investment crowdfunding, companies will be able to raise up to $1 million per year, and unaccredited as well as accredited investors can participate. While that’s a move forward and will surely seed a lot of companies, most existing companies that have proven concepts need more than $1 million in $5,000 or $10,000 increments. The JOBS Act also opened the door for “direct investor solicitation”.   Before the law changed, companies could not “solicit” for investment.  As an example, a company could not run an ad in the …

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 …

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, and we are looking at strategic …

#1 Mistake Business Owners Make When Ready to Sell

You’ve built a nice business, congratulations. Now you’re ready to sell.  Would you like to receive the full value for your business, or would you rather just get 60-80% of the value? Stupid question, right?  Not really. Please allow me to let you in on a secret … entrepreneurs are typically horrible at getting their business ready for sale!! Don’t believe me?  Ask M&A attorneys who get the call from their client that they want to sell, and would like the process completed in 4 months and want to maximize value in an all cash sale. I can’t tell you how many times we’ve talked with a CEO/Owner and they want to start the process today.  Sometimes they tell their lawyers.  Sometimes their accountants.  But more times than not, owners who want to sell start with the assumption that the business is ready for sale … and even worse, that the CEO is really ready to sell the business. Let’s ask a few very basic questions: Is the corporate structure ready for a transaction?  We worked with one client for over a year, just to get the corporate structure in such a form that a transaction was possible.  We obtained …