How South Florida entrepreneurs can find and access the right funding

To view the original article click here.

By James S. Cassel
Special to the Miami Herald
February 15, 2015

cassel

With a growing entrepreneurial community in South Florida and increased access to a wide array of funding sources, companies seeking to raise capital have no shortage of options and resources locally and nationally. The key is creating a compelling investment story and setting realistic expectations regarding the time it will take and the valuation you will receive.

Governmental and nonprofit entities are encouraging the creation of new businesses. South Florida has a growing number of early-stage funding options including incubators, accelerators, angel groups, individual angel investors, and strategic business partners. Identifying the best-possible partners/investors is critical to your success. Doing so requires knowing which qualities will complement your goals, strengths, weaknesses and verticals. By researching the possible funding sources, you can better position yourself to find the right investors. Not every type of deal is good for all investors. For example, investors who like technology deals might not like biotech deals.

In South Florida, there are various places you might look for funding. The oldest local angel group is New World Angels. There’s also Accelerated Growth Partners, Scout Ventures, and Krillion Ventures. Venture Hive may supply small grants, office space and mentoring, while Rokk3r Labs might supply development, skill and technical expertise. There are later-stage investors like H.I.G. BioVentures, a life sciences fund, and Medina Capital. This is the tip of the iceberg.

Businesses are also participating in early-stage investing to stay on top of emerging trends. Strategic business partners can be solid mentors. For example, Kaplan Inc. invests in entrepreneurs through its Kaplan EdTech Accelerator, primarily in the education space.

South Florida is a good place to start, but smart entrepreneurs will look beyond the local market to find the right financial partner or investor. The National Venture Capital Association provides many entrepreneur resources, including lists of investors. Active local investors from out of town include Arsenal Venture Partners and Summit Partners.

Before contacting investors, entrepreneurs should develop a strong investment thesis and set realistic expectations. Fundraising takes time and involves many ups and downs. Entrepreneurs should be open to all partners, advice and offers. After many meetings and ideally multiple offers, they may be in the position to begin selecting the right financial partners. Often we see entrepreneurs regretting their decisions to reject strong offers that they had received early on when their valuation expectations were unrealistic.

Again, the investment story differs from the customer story. For first-time entrepreneurs, mentors may help with crafting the investment thesis. South Florida has a strong and growing mentorship ecosystem. The Knight Foundation is funding mentorship organizations such as Endeavor and the Enterprise Development Corporation. Smart entrepreneurs might seek out the many local events and cafés where early-stage investors congregate.

Nothing helps valuation and palatable deal terms like tangible validation such as revenue and customer agreements. We recommend self-funding (bootstrapping) or asking family and friends to provide support before seeking outside funds. Working entrepreneurs who want to start businesses should consider keeping their jobs while building their businesses on the side.

Another consideration is where you’ll be located. Until recently, it was assumed that success required a Silicon Valley or Boston home base. That’s no longer the case. Abundant and generous local resources are changing the dynamic of uprooting and are helping keep startups in South Florida.

When you’re considering where to locate your company, remember you’ll also need to tap into quality intellectual talent. The good news is South Florida’s brand, lifestyle and tax rates are attractive to a high-quality talent pool that continues growing, especially as the region continues gaining visibility and positioning as a tech hub.

It’s also not uncommon for companies to establish headquarters here and have team members based throughout Eastern Europe, South America or other places to take advantage of lower costs of quality labor and development so they can come to market less expensively and more quickly. South Florida can be a great point of entry to the U.S. market.

Given the variety of options for funding startups, the decision-making process can be overwhelming. Do not marry the first financial partner who serenades you or say “no” after one date or two — take the time to identify the right partners and confirm whether you need any partners at all. It’s always smart to seek assistance from consultants with deep experience in your industry and in guiding companies through the funding process.

James Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle-market companies. www.casselsalpeter.com

 

 

 

 

2014 South Florida Middle-Market Mergers, Acquisitions and Financings Review

By  Joseph “Joey” Smith, February 12, 2015 

In South Florida, 2014 was an active year for many outstanding middle-market companies.  This positive activity can be seen in both the velocity of the transactions completed and the relatively high valuations achieved.  The “perfect storm” that contributed to their successful closings includes: (1) strong, scalable business models; (2) management teams that innovate and execute; (3) a strong economy, with low interest rates in place; and (4) a plethora of value-added institutional investors with access to inexpensive capital.  These factors contributed to higher valuations and more favorable deal terms for the middle-market companies with the foresight to position themselves for sale or growth capital. The most notable and largest of the transactions seem to have taken place in the fourth quarter. Although not a middle-market transaction, South Florida lost one of its favorite “sons,” with its home-grown Burger King combining with Tim Horton’s of Canada in an $11.4 billion tax inversion transaction in August. The merged company, Restaurant Brands International, with more than 18,000 restaurants worldwide, will be based in Canada. However, Burger King will still have a meaningful corporate presence in Miami.  The most notable sale transaction and growth capital transaction for 2014 are highlighted below. Both companies exemplify superior leadership, vision, teamwork, and execution of their business models.

Sale: Simply Healthcare Holdings, Coral Gables, Fla. – In December, Mike Fernandez did it again. The self-made, serial entrepreneur and billionaire sold his Simply Healthcare Holdings (owned by his private equity firm MBF Healthcare Partners) for just under $1 billion to Anthem, Inc. (NYSE: ANTM), one of the largest insurance companies in the nation, based in Indianapolis, IN.  Founded in 2010, Simply Healthcare offers Medicare and Medicaid plans to about 200,000 Floridians. Simply Healthcare’s revenues were expected to approach $1 billion in 2014, up from $458 million in 2013, and $182 million in 2012. The sale follows another 2014 MBF Healthcare exit, with the sale of the local, Miami-based Navarro Discount Pharmacy chain to CVS Health Corporation (NYSE: CVS).

Growth Capital: Star2Star Communications, Sarasota, Fla. – In December, Norm Worthington, the founder and owner of Star2Star, chose from more than 20 offers received to accept $30 million of growth capital, led by NewSpring Growth Capital of Radnor, PA. Star2Star has been self-sustaining since 2009, which is highly unusual for a technology centric company.  Star2Star accomplished what many others have failed: to use the internet to unify communications for businesses, combining voice, video conferencing, and instant messaging in a cloud-based platform. The 2014 Inc. 5000 List of the fastest-growing private companies during the preceding three years ranked Star2Star No. 1971, with estimated revenues of $33 million and 200 employees in 2013, up from $10 million in revenues and 100 employees in 2010. It is estimated the company has 150,000 business users at 30,000 locations across the U.S. and Canada. Kudos to Norm and his team for a job well done, but also for creating a force to be reckoned with for years to come.

Highlights of South Florida’s Top Middle-Market Mergers & Acquisitions for 2014:

Ladenburg Thalmann (NYSE: LTS) Miami-based financial services company which continued to grow its independent advisor and insurance platform with its August acquisition of Highland Capital Brokerage, a Birmingham, Ala., insurance broker for $42 million. The Dr. Frost-controlled financial services juggernaut continues to successfully execute its growth plan, as evidenced by its positive stock market performance.

Citrix, (NASDAQ: CTXS) Fort Lauderdale, Fla.-based technology company has continued to make strategic tuck-in acquisitions, as evidenced by the September purchase of Virtual, based in Delray Beach, Fla.  Citrix also acquired RightSignature, a Santa Barbara, Calif.-based electronic signature company in October for $37.5 million in cash.  Citrix’s aggressive acquisitions, combined with its organic growth, continues to remind us that it is South Florida’s largest and most successful technology company. Founded 25 years ago in South Florida, Citrix has innovated its way to a $10 billion market capitalization.

MEDNAX (NYSE: MD) Sunrise, Fla.-based healthcare company which operates a network of medical practices with over 2,500 physicians in 34 states, has continued its acquisitive spree with the September purchase of MedData, a revenue cycle management, billing and coding company.  In addition, Mednax acquired approximately a dozen physician group practices in 2014.  Founded 35 years ago in South Florida, MEDNAX continues to grow and flex its muscles with a healthy $7 billion market capitalization.

Bankrate (NYSE: RATE) North Palm Beach, Fla.-based financial news firm acquired mobile finance company Wallaby Financial in December. Bankrate will combine Wallaby’s suite of products and proprietary technology with its existing credit card distribution platform. This transaction closed out an active year for Bankrate, which also acquired Caring, Inc., in May for $58 million in cash. Caring is an operator of online destinations for caregivers seeking information and support for aging parents, spouses, and other loved ones.

BBX Capital (NYSE: BBX) Fort Lauderdale, Fla.-based company and the former parent company of Bank Atlantic continued its sweet consolidation in the chocolate and confectionary industry with its January purchase of Williams & Bennet of Boynton Beach, Fla. This transaction follows the tasty acquisitions of Hoffman’s Chocolate of Lake Worth, Fla., in 2013 and Jer’s Chocolates of Solana Beach, CA. in July 2014.

CBIZ (NYSE: CBIZ) Cleveland, Ohio-based accounting and consulting firm continued to expand its South Florida footprint with the November purchase of Weekes & Callaway, an insurance agency in Delray Beach, Fla.  CBIZ, the seventh-largest accounting firm in the country, had already added valuable inventory with the 2010 acquisition of the long-standing firm, Goldstein Lewin & Co. of Boca Raton, Fla.

MDLIVE Sunrise, Fla.-based telehealth provider of on-demand healthcare delivery services acquired Breakthrough Behavioral, a Silicon Valley, Calif., firm in November to expand its teletherapy network of behavioral health specialists.  In January, MDLIVE announced it received $23.6 million of funding led by Heritage Healthcare Innovation Fund, Kayne Anderson Capital Advisors, and others.

CheckAlt Los Angeles-based leader in Check 21 payment and item processing solutions for financial institutions and merchants acquired ERAS, a Miami-based subsidiary of Diebold (NYSE: DBD) in June. ERAS, with more than 100 employees, delivers item and payment processing solutions for regional banks, community banks, and credit unions.

Majestic Properties Miami Beach, Fla.-based real estate brokerage firm was acquired in June by Douglas Elliman, the largest residential real estate brokerage firm in New York. Since inception, Majestic Properties has brokered more than 3,000 condo sales in Florida, valued at more than $3 billion.

Vantage Hospitality Group Coral Springs, Fla.-based hotel franchisor acquired America’s Best Franchising, Inc.’s six hotel brands and network of 225 hotels in July.  Vantage, the eighth-largest hotel company worldwide, has grown rapidly to comprise more than 1,200 independently owned and operated hotels. Vantage is well positioned to provide strategic advantages and a commanding view.

The Fresh Diet Miami-based gourmet meal delivery service company was acquired in a $10 million-plus stock transaction in August by Innovative Food Holdings (OTC: IVFH) of Bonita Springs, Fla.

Verbatim Support Services Fort Lauderdale, Fla.-based court reporting service acquired its competitor, Apex Reporting Group, and four affiliated companies in October from Sunbelt Diversified Enterprises, a Miami-based private equity firm. Verbatim gained 75 additional court reporters to augment its current 41 employees.

Highlights of South Florida’s Top Venture Capital Financing Deals of 2014

South Florida companies attracted significant venture capital in 2014 from local investment and angel groups to venture capital and corporate investment from Silicon Valley giants. The largest financing for the region was from Magic Leap, a Dania Beach, Fla., augmented reality startup, which hauled in more than $500 million led by Google (NASDAQ: GOOG) in October. Additional participants included a who’s-who list of venture and strategic investors:  Andreessen Horowitz; KKR & Co. (NYSE:KKR); Kleiner Perkins; Legend Pictures; Obvious Ventures; QUALCOMM Ventures; and Vulcan Capital (Paul Allen’s investment vehicle).

Modernizing Medicine Boca Raton, Fla.-based provider of electronic medical record systems for physician groups received $20 million in November led by existing investors, Summit Partners and Pentland Group. The company, co-founded and led by serial entrepreneur Daniel Crane, is wired to add 100 jobs, and has raised $55 million in capital since inception in 2010.

Pure Life Renal Hollywood, Fla.-based provider of kidney dialysis services announced that it has received commitments to raise $21 million in venture capital funding, led by Montreux Equity Partners and Noro-Moseley Partners. The company subsequently closed on $10.5 million in April.

Aeropost International Miami, Fla.-based mail and package forwarding company raised $5 million, led by North Bridge Venture Partners of Waltham, Mass.  Aeropost offers AeroProtect, a service providing protection in case of loss, damage, wrong items, factory defects, or items under warranty by the supplier.

AdMobilize Miami Beach, Fla.-based big data company providing real-time metrics and intelligence for outdoor and indoor advertising raised $2.2 million in May led by Azoic Ventures and Rokk3r Fuel.

Kairos Miami, Fla.-based technology company received $1.2 million in February.  The facial recognition technology provider’s financing was led by New World Angels of Boca Raton, Fla., along with Innovision Ventures, True Ventures, venVelo, among others.

Avisena Miami, Fla.-based revenue-cycle management and medical billing company landed an additional $1 million from an existing investor, WFD Ventures, a venture capita

Reflecting on 2014, Thoughts on 2015
 
“The person who says that it cannot be done should not interrupt the person who is doing it.” 

– Ancient Chinese Proverb

 

At Cassel Salpeter & Co., we have been getting it done for years in the most interesting of times.

Reflecting on 2014, Thoughts for 2015

As 2015 begins, it is important to reflect on the past year, evaluate our performance, and take the necessary steps to ensure that we are best prepared for things to come.

The good news: Things are looking bright on a national level. Despite a volatile stock market and challenging international situations in 2014, we are excited that 2014 helped to position us for a strong 2015. Today, the market is creating opportunities to sell your company or raise capital.

Moreover, in our backyard, Florida continues to gain increasing importance as a hub for investment, deal activity, technology and general business growth. There are many opportunities to take advantage of this resurgent climate and position your business for continued growth.

 

Cassel Salpeter & Co. Celebrates
Another Strong Year

 

For the team at Cassel Salpeter & Co., 2014 was another strong year. Thanks to our valued clients, partners and other friends for continuing to make possible our continued growth and success.

 

Some highlights included:

  • Successfully handled more than 50 assignments in a broad range of industries, including healthcare, financial services, business services, retail, technology, and industrial. Our team worked on behalf of family businesses, financial sponsors, public companies, boards of directors and special committees.
  • Published the Florida PE Deal Report: View of Florida, a semi-annual report recapping PE deal flow in Florida. Click here to view.
  • James Cassel continued to share his subject-matter expertise as a middle-market columnist for The Miami Herald.  He also was featured in a spectrum of local and national media, including: Bloomberg, American Banker, The Deal; Mergers & Acquisitions Magazine, Daily Business Review, and Florida Trend.
Changes in 2015 to Watch That May 
Impact Your Business

There is a high likelihood that changes in 2015 in interest rates, unemployment rates, demand curves, and the prices of oil, real estate, and health care will affect your business in one way or another.

No matter what vertical your business operates in, 2015 presents a strong market for sellers with more buyers than sellers in the market as well as attractive financing options available for buyers. However, it’s important for middle-market business owners to keep a close pulse on these key changes in order to protect their best interest and ensure their businesses are in the strongest position in 2015. As always, it’s important to consult trusted professionals with subject-matter expertise who can help develop the right strategic plans to overcome the obstacles and seize the opportunities.

 

Click here to read James Cassel’s article about this topic, which was published on January 19, 2015, in The Miami Herald.

Contact Cassel Salpeter & Co. Today

At Cassel Salpeter & Co., we are excited about the growing demand for our guidance from middle-market and emerging growth companies in the U.S. and worldwide related to mergers and acquisitions, capital raising, fairness & solvency, valuations, restructurings, and general advisory services.

Please feel free to contact us today to learn more about how we can help you.
 
 
About Cassel Salpeter & Co.   

 

Cassel Salpeter & Co. is an independent investment banking firm that provides advice to middle market and emerging growth companies in the U.S. and worldwide. Together, its professionals have more than 50 years of experience providing private and public companies with a broad spectrum of investment banking and financial advisory services, including: mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings, such as 363 sales and plans of reorganization.

Co-founded by James Cassel and Scott Salpeter, the firm provides objective, unbiased, results-focused services that clients need to achieve their goals. Personally involved at every stage of all engagements, its senior partners have forged relationships and completed hundreds of transactions and assignments nationwide. The firm’s headquarters are in Miami. Member FINRA and SIPC. More information is available at www.casselsalpeter.com.  
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