Middle Market Growth - November/December 2015

Growth MIDDLE MARKET

// NOVEMBER/DECEMBER 2015

PRIVATE EQUITY CFOs ADD CCO HAT, AND IT’S A BIG ONE A QUALIFIED OPINION: PETRI RAHJA, FOUNDER AND CEO, SCOOPSHOT

Antenna

Signals Strong Growth The official publication of

FUNDRAISING RECEPTION

COME SUPPORT ACG’S EFFORTS TOWARD D R I V I N G M I D D L E - M A R K E T G R O W T H .® M O NDAY, J ANUARY 2 5 , 2016 | 5:00 – 7:00 P.M. EST PAR K HYATT, WAS HI NGTON, D.C.

PURCHASE TICKETS SPACE I S LI MI TE D . P URCH ASE YO UR TICK ETS TODAY. ALL P RO CE E D S BE NE FI T ACG’S P UBLI C POLICY EFFORTS.

NAVIGATING HOW TO USE THIS APP BOOKMARK

CONTENTS

Save an article to read later.

View the current issue.

SEARCH

LIBRARY

Easily search the issue for keywords.

Return to the library to view past issues.

SHARE

Share an article via your social network.

COLORED TEXT

Colored text indicates a link.

NAVIGATOR

Navigate through the issue by page.

Are you reading this on your desktop? Take Middle Market Growth on the go and download the app now from the iTunes Store, Google Play and Amazon Appstore.

INTERACTIVE BUTTONS

MORE Tap to read more or go to a website.

SLIDESHOW Tap to pop up a slideshow of images.

JOIN IN

EMAIL

PLAY

Join the conversation.

Send an email to the email address listed.

Tap to play a video or audio.

READ ONLINE Read more content online.

NAVIGATE Tap buttons to navigate through a section.

R E G I S T R AT I O N I S N OW O P E N . S AV E $ 2 0 0 TO D AY. W W W. I N T E R G R O W T H . O R G

#INTERGROWTH © 2015 Association for Corporate Growth. All Rights Reserved.

EXECUTIVE SUMMARY RICHARD P. JAFFE // Chairman, ACG Global and Partner, Duane Morris LLP

Tune Into the Opportunities in Media

A

ctivity in the media vertical, which encompasses everything from mainstream news to financial analysis and more, is robust. Media continues to be an attractive source of invest-

ment for many private equity firms, in part because of the insatiable demand for information in the digital age. To provide more insight, this issue of Middle Market Growth delves into the sector.

Media customization remains a dominant theme in the Internet age.

Each one of us is faced with finely tuned media solutions every day in both our personal and professional lives, from suggested preferences on our TV viewing platforms to preselected connections on LinkedIn. Our cover story profiles Antenna International, a developer of audio tours for museums and other cultural institutions, which epitomizes customization and underscores the personal control we seek in our multimedia experiences.

If you’ve recently been to the Whitney, the Denver Museum of Art, Alcatraz or any number of other cultural attractions in the United States or around the world, you’ve likely strapped on an Antenna headset and toured an exhibit at your own pace. With capital from New York-based private equity firm The Wicks Group, Antenna has rapidly expanded its geographic reach.

You’ll find additional insight on media, including the perspective of a managing director at PE firm Veronis Suhler Stevenson on why educational media companies such as Infobase are changing the way students conduct research as print materials become increasingly obsolete.

As the voice of the middle market, ACG is playing an important role in the legislative and regulatory arena. Against the backdrop of the recent five-year anniversary of the passage of Dodd-Frank, our feature story on the changing role of private equity CFOs examines how the heightened regulatory environment is affecting the jobs of in-house compliance officers and the resources they must deploy under stricter scrutiny.

And just a quick reminder that we’re now six months away from InterGrowth® 2016 in New Orleans on May 2-4, where the mix of networking, educational programming, and local music and culture promises to be among the best in ACG’s history. To learn more about this exciting dealmaking opportunity, please visit InterGrowth.org.

Be sure to take advantage of all of the robust media channels ACG offers, from this interactive digital magazine to videos, podcasts and webinars on topics ranging from industry snapshots to cybersecurity, all available at middlemarketgrowth.org. //

EXECUTIVE SUITE JOHN MARSHALL // Founder & CEO, JM Search

Q

DO PRIVATE EQUITY-BACKED COMPANIES HAVE AN ADVANTAGE WHEN RECRUITING TOP EXECUTIVES? JOHN MARSHALL: It depends on the scenario, but there are key aspects that can create a recruiting advantage. Top executives are often attracted to private equity portfolio companies because of the opportunity to have a transformational impact on the business, which can result in significant personal wealth creation. The ultimate goal of going public or selling the company creates straightforward objectives for incoming executives, making it easy to tie incentives to performance. Executives understand that if they accomplish what they set out to and lead the company to a successful outcome, they will realize substantial financial gains in a relatively short period of time. And without the quarterly reporting requirements of public companies, which emphasize near-term earnings, portfolio company leaders can focus on strategic changes to maximize value three to five years down the line.

Q

HOW CAN INVESTORS ADD VALUE TO THE RECRUITING PROCESS FOR PORTFOLIO COMPANIES?

JM: Private equity investors can play a major role in both attracting the best candidates and assuring that the company hires the right leader.

A private equity firm’s brand and prior successes offer clear differentia-

BIO //

tion. Executives often evaluate an opportunity with a portfolio company

JOHN MARSHALL is founder and CEO of JM Search, an executive search firm that recruits leaders for private equity and venture capital portfolio companies and other growth-oriented organizations. Marshall founded JM Search in 1980, and the firm has focused on serving the private equity and venture capital community since the late 1990s.

based on the investor’s reputation. Investors are also well-positioned to sell the vision for the company by articulating their investment thesis. With prior success substantiating the vision, the investor’s perspective can validate the opportunity and make it more appealing to candidates.

Investors can also help assure that the right candidate is hired. Private equity investors know what it takes to win in a specific industry and what the leadership team needs to accomplish, so they understand the capabilities and experience required of candidates. Compared with operating executives or independent board members, investors are typically more experienced in evaluating C-level talent because they have worked with various management teams and have participated in a number of search processes for CEOs, CFOs and other functional leaders.

Continued on next page

EXECUTIVE SUITE JOHN MARSHALL // Founder & CEO, JM Search

Q

HOW DO YOU GET ALL THE KEY STAKEHOLDERS INVOLVED IN THE SEARCH PROCESS?

JM: We begin each search with an in-depth kickoff process that includes the investors, board members and senior management. This range of perspectives gives us a complete view of the company and helps us determine the type of leader needed. Typically, all stakeholders are aligned before the search begins. If there is disagreement on what the company needs, we will review profiles of executives from different backgrounds with the search committee to reach a consensus on the types of individuals we are targeting before recruiting begins.

Q

AFTER A COMPANY TAKES OUTSIDE INVESTMENT FROM PRIVATE EQUITY, WILL THE PE FIRM TYPICALLY MAKE CHANGES TO MANAGEMENT? JM: It depends on the situation of the company and the makeup of the team. If a company is in growth mode, you may not want to disrupt the team. Often we look to augment management by adding key strategic hires that bring competencies the current team lacks. But in some instances, a company outgrows the capabilities of its management team.

Taking a company from $50 million to $500 million in revenue requires a different skill set than going from zero to $50 million. It is rare that executives are exceptional in both phases, and founders and early-stage CEOs usually recognize this. Once a company reaches a threshold, it needs leadership that can guide it through the next growth cycle.

In buyouts and growth equity, bringing in an experienced CFO following an investment is common. In these instances, the company requires a sophisticated financial leader who can work with the board and position the company for a successful exit. //

C RAC K IN G T H E C O MP L IANCE CO DE Become a Member of ACG’s Private Equity Regulatory Task Force

ACG’s Private Equity Regulatory Task Force (PERT) gathers together CFOs, CCOs and in-house legal counsel of middlemarket private equity firms nationwide. Together, they interpret and navigate the often complex compliance and regulatory issues affecting the industry. As a member of PERT, your firm will join a national network focused on shaping compliance best practices alongside federal regulators.

CONTACT US For more information on joining PERT today, contact Amber Landis, VP of Public Policy, at alandis@acg.org.

© 2015 Association for Corporate Growth. All Rights Reserved.

MIDPOINTS RANDY SCHWIMMER // Founder and Publisher, The Lead Left

Information, Please

I

’ve always been a passionate fact-finder. From a young age my Christmas list included the annual World Almanac, which I consumed cover to cover. What’s the second highest peak in China? K2. How

many types of penguins are there? 17. What’s the population of Wyoming? 584,153.

My father encouraged my habit. One day he took me out to his car and opened the trunk. There were six boxes filled with the entire set of Encyclopaedia Britannica (1949 edition), leather-bound and gilt-edged.

My eight-year-old brain reeled at the undiscovered worlds stored within.

I carried the books to my bedroom and reassembled them alphabetically on my bookcase. That was when I discovered my first fact: the penulti-

BIO // Randy Schwimmer is senior managing director and head of origination and capital markets at Churchill Asset Management LLC, a middle-market senior debt provider.

He is also founder/publisher of The Lead Left, a weekly newsletter about trends and deals in the capital markets.

mate volume—Vol. 23 (Vase-Zygo)—was missing.

Not to spoil the moment, I kept that information secret. In the years of schooling that followed, I made constant use of those tomes, somehow avoiding subjects like Vonnegut and Zoroaster.

In the (spoiler alert!) half-century since that gift, nothing on our planet has changed more than the way we get information. The Internet was the catalyst, affording instant access to all knowledge, right or wrong.

Cocktail party arguments that once took weeks to settle see closure in a Googled minute.

Content sponsored by

How much information is there? Well, if you Google that question, the answer seems to be “a lot.” As we shared in our November/December 2014 column on curation, we now generate as much information in 48 hours (5 billion gigabytes) as we did in our entire history prior to 2003.

But as the great alphabet curator and “Wheel of Fortune” game show host Pat Sajak related in a recent WSJ interview, it hasn’t necessarily made us smarter. “The great irony of our time,” Sajak noted, is “there is nothing in the history of mankind that you can’t find out about in 15 seconds. And yet we know less about things. There’s less information floating around in our heads. It’s all in the d_v_c_s.” (Can I buy two e’s and an i?)

Continued on next page

MIDPOINTS RANDY SCHWIMMER // Founder and Publisher, The Lead Left “THE INTERNET WAS THE CATALYST AFFORDING INSTANT ACCESS TO ALL KNOWLEDGE, RIGHT OR WRONG.”

That demand on our devices—the “Internet of Things”—won’t let up anytime soon. Take the news. According to the Pew Research Center, “39 of the top 50 digital news websites have more traffic to their sites and associated applications coming from mobile devices than from desktop computers.”

To make things scarier, Pew reports almost half of adults who use the Internet get their government and political news from Facebook. So much for curation! Still, the trend by information providers to segment audiences by age, gender, nationality and political persuasion is inescapable. Every special interest group wants to generate “news,” thereby controlling content, and thus opinion.

WyoFile is a good example. Started seven years ago by a former LA Times reporter and a local media entrepreneur, this online startup covers news in Wyoming, the state with the fewest residents (see above). With a liberal cast it breaks stories like the lack of protection of the greater sage grouse under the Endangered Species Act, or the controversy regarding a proposed smoking ban in Casper.

That brings us to another concern: As the world of information becomes more particularized and bespoke to its audience, it risks greater polarization. With access to a vast trove of bits and bytes of actionable data, we gravitate toward the familiar. When news and shoes are curated alike, can we separate facts from fashion? Or will our discernment of reality become a dizzying blur?

On reflection, there’s something to be said for having the world’s information, from A to Z, in one neat set of decades-old books. Not including velociraptor and Zarathustra. //

Growth MIDDLE MARKET

// NOVEMBER/DECEMBER 2015

FEATURES

Antenna Signals Strong Growth As the leading producer of audio and multimedia tours for cultural institutions, Antenna International engages visitors across the globe while creating new revenue streams for museums. With backing from private equity firm The Wicks Group, Antenna is improving its efficiency, innovating and entering new markets.

Read more.

“...MEDIA AND INFORMATION CONSUMPTION CONTINUES TO GROW AND BECOME MORE IMPORTANT AS THE WORLD DIGITIZES.” // DANIEL L. BLACK, MANAGING PARTNER, THE WICKS GROUP

PE CFOs Add CCO Hat, and It’s a Big One A middle-market private equity CFO’s job has become more complex since Dodd-Frank’s passage as the demands of compliance force the role to evolve.

Read more.

TABLE OF CONTENTS

IN EVERY ISSUE

PRESIDENT & CEO Gary LaBranche, FASAE, CAE glabranche@acg.org

Executive Summary

VICE PRESIDENT, COMMUNICATIONS & MARKETING

Executive Suite MidPoints

by Randy Schwimmer Growth Economy Face-to-Face Quick Takes

Kristin Gomez kgomez@acg.org

DEPARTMENTS POLICY POINTS • Broadening the Joint Employer Standard

B-Side

• ACG Public Policy Priorities for the 114th Congress

The Ladder

• D.C. Summit to Engage Deal-Makers on Policy Issues Read more.

It’s the Small Things The Leadership

THE ROUND • It’s Time for HR to Step Up! • Digital Media Mergers Are Coming Read more.

READ ONLINE Read additional content on the MMG website.

2015 Folio Ozzie Digital Winner, Standalone Digital Magazine

A QUALIFIED OPINION

EDITOR-IN-CHIEF Deborah L. Cohen dcohen@acg.org

ASSOCIATE EDITOR Kathryn Mulligan kmulligan@acg.org

DIRECTOR, COMMUNICATIONS & MARKETING Larry Guthrie lguthrie@acg.org

VICE PRESIDENT, EVENTS & PARTNERSHIPS Christine Melendes, CAE cmelendes@acg.org

Petri Rahja, Founder and CEO of Scoopshot, Describes the Firm He Founded and How It’s Changing How Clients Purchase Stock Photography.

Read more.

DIRECTOR, STRATEGIC DEVELOPMENT

ACG@WORK

Albert Pereira apereira@acg.org

• Arizona Chapter Celebrates 10th Anniversary, Hosts Military Leader • Battle of the ACG Bands Puts Deal-Makers Center Stage

Maggie Endres mendres@acg.org

BUSINESS DEVELOPMENT

Custom media services provided by Network Media Partners, Inc.

2014 Association TRENDS All-Media Silver Award, Monthly Trade Publication

• Attendance Milestone Achieved by GLCC

2014 Folio Eddie Digital Winner, Standalone Digital Magazine

THE PORTFOLIO

Association for Corporate Growth 125 South Wacker Drive, Suite 3100 Chicago, IL 60606 ACG Membership: membership@acg.org www.acg.org

The latest middle-market trends and thought leadership written exclusively by a team of expert ACG Global featured firms.

Read more.

Copyright 2015 Middle Market Growth®, InterGrowth and the Association for Corporate Growth, Inc. All rights reserved.

2014 Apex Award, New Magazine, Journal & Tabloid

• DFW Chapter Toasts 10 Years of Wine Tasting Read more.

Find your ideal candidate without sorting through hundreds that aren’t.

Post your job opening today jobsource.acg.org

POLICY POINTS THE LATEST PUBLIC POLICY ISSUES IMPACTING THE MIDDLE MARKET

PUBLIC POLICY UPDATE POLICY POINT NEWS

1

Broadening the Joint Employer Standard A new NLRB ruling will change the relationship between employers and employees.

2

ACG Public Policy Priorities for the 114th Congress

Learn which issues ACG will focus on this session.

3

D.C. Summit to Engage Deal-Makers on Policy Issues Make your voice heard in Washington.

Broadening the Joint Employer Standard

By Amber Landis, ACG Global While Congress was away for recess in August, the National Labor Relations Board issued a ruling that impacts the relationship between employers and employees. The NLRB’s 3-2 decision on Aug. 27 expanded the definition of a joint employer to include companies that rely on franchise and contract workers. The decision centered on a case, Browning-Ferris, involving sanitation workers in California.

Identical bills to limit the impact of the NLRB’s decision were introduced on Sept. 9 by Sen. Lamar Alexander, R-Tenn., chairman of the Senate Health, Education, Labor and Pensions Committee; and Rep. John Kline, R-Minn., chairman of the House Education and the Workforce Committee. The legislation, the Protecting Local Business Opportunity Act, would clarify the definition of a joint employer under the National Labor Relations Act of 1935.

Continued on next page

POLICY POINTS THE LATEST PUBLIC POLICY ISSUES IMPACTING THE MIDDLE MARKET Prior to the decision, companies had to have direct operational control to be impacted by labor disputes involving employees. The ruling now broadens that relationship and deems a business a potential joint employer if there is direct, indirect and potential control over matters governing the essential terms and conditions of employment, including hiring, firing, discipline, supervision and direction.

ACG contends that the increased employer liability has wide-ranging consequences

Amber Landis

beyond the fast food and construction industries and will impact any business that partners or subcontracts with outside vendors and suppliers, thereby creating serious uncertainty for middle-market companies regarding business-to-business relationships.

ACG contends that the Coalition to Save Local Businesses, a group dedicated to protecting and strengthening all sectors of business impacted by the NLRB, an independent government agency. The coalition’s goal is to maintain the current joint employer legal standard across federal and state statutes.

Regulatory Monitoring In addition to its legislative efforts, ACG has been active on regulatory issues impacting its members. In the fall, ACG engaged with members of its Private Equity Regulatory Task Force to submit comment letters on a number of important proposed rules released by agencies typically outside of its purview. These include the Internal Revenue Service and proposed IRS regulations on disguised payments for private funds; and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, and FinCEN’s proposed rules for registered investment advisers related to anti-money laundering.

The written comments to the IRS argued against a proposed rule targeting management fee waivers by private equity firms. The proposed rule would make it more difficult for firms to have such waivers in order to receive capital gains tax treatment. ACG believes the proposed rule was enacted primarily for political purposes; in the comment letter it urged the IRS not to change the current regulatory regime for taxation of partnership interests.

FinCEN’s proposed rule would expand the definition of a “financial institution” under the Bank Secrecy Act to include registered investment advisers. This would result in investment advisers—including advisers of pooled investment vehicles such as private equity funds—to be subject to all of the anti-money laundering requirements of the BSA, including the filing of suspicious activity reports to FinCEN. The association will continue monitoring these issues as they develop. // If you have questions or comments, please contact Amber Landis, vice president of public policy, at alandis@acg.org.

READ ONLINE // Find updates and insight on policy issues on the MMG website.

POLICY POINTS THE LATEST PUBLIC POLICY ISSUES IMPACTING THE MIDDLE MARKET POLICY POINT NEWS

ACG Public Policy Priorities for the 114th Congress 1. PRESERVE INTER-

2. REDUCE ONEROUS COMPLIANCE & REGULATORY

EST DEDUCTIBILITY

BURDENS FOR MIDDLE-MARKET PRIVATE EQUITY

ON CORPORATE DEBT

An area of concern for many ACG members is the requirement

ACG contends debt financing is

that private equity fund advisers register as investment advisers with the

critical for business expansion

SEC under the Investment Advisers Act of 1940. Registration to com-

and investment; in addition, it

ply with the act has been challenging, confusing and costly for midsize

provides an important source of

private equity firms without conferring any corresponding public benefit.

funding to middle-market com-

ACG would welcome and support legislation allowing private equity fund

panies. ACG opposes efforts to

resources to be directed back to middle-market companies and to let

eliminate the long-standing

private equity funds use their resources to support and foster the growth

deductibility of interest as an

of their portfolio companies. In the 114th Congress, ACG will actively

“ordinary and necessary” cost

support legislation to remove burdensome compliance requirements for

of doing business.

middle-market private equity funds.

3. PRESERVE THE CURRENT ‘JOINT

4. MAINTAIN CAPITAL GAINS

EMPLOYER’ LEGAL STANDARD FOR

TREATMENT FOR CARRIED

MIDDLE-MARKET BUSINESSES

INTEREST

Recent action by the National Labor Relations Board

Fundamentally, private equity investments are long-

could put contractual business relationships at risk

term in nature, maturing after several years. Middle-

by shifting liability over employment disputes to more

market private equity funds are commonly structured

companies. Upending the current, well-established

as partnerships in which fund managers commit

joint employer standard—which limits the definition of

entrepreneurial capital and assume investment risk

a joint employer to those companies exercising direct

alongside their investors. Thus, the returns to the fund

operational control over their workers—would cause

managers are taxed as capital gains. A modification

uncertainty and disruption for many small and mid-

to this 100-year-old tax treatment would jeopardize

size business owners, force some small businesses to

a long-standing partnership model. ACG will work

close and deter aspiring entrepreneurs from opening

with Congress to ensure middle-market private equity

businesses and creating new jobs.

investing is not disproportionately impacted during tax reform discussions.

For more information, please contact Amber Landis, vice president of public policy, at alandis@acg.org.

POLICY POINTS THE LATEST PUBLIC POLICY ISSUES IMPACTING THE MIDDLE MARKET

HAVE A VOICE // Join ACG members in D.C. on Jan. 25-26.

POLICY POINT NEWS

D.C. Summit to Engage Deal-Makers on Policy Issues ACG is making the voice of the middle market heard in Washington.

The association will host its fifth annual ACG Middle-Market Public Policy Summit on Jan. 26 to bring together top middle-market leaders in the nation’s capital. The event will engage ACG members in dialogue about policy issues critical to the middle market. Sessions led by policy experts will address how to shape the narrative around private capital investment to reflect its positive impact on midsize firms and the wider U.S. economy.

Prior the summit, on the evening of Jan. 25 the Middle-Market Voice Fundraising Reception will celebrate recent advocacy successes and raise funds to support ACG’s public policy initiatives. The reception is an open event, although registration is required.

Speakers for the summit have not yet been announced but are expected to include high-profile Washington insiders. Last year’s event featured Mark Wyatt, deputy director of the SEC Office of Compliance, Inspections and Examinations; Amy Walter, national editor of the Cook Political Report and former political director of ABC News; and Rikki Amos, director of the U.S. Public Affairs Practice of the Public Affairs Council. // To learn more and to register, visit the ACG Middle-Market Public Policy Summit website.

GROWTH ECONOMY THE IMPACT OF MIDDLE-MARKET PRIVATE EQUITY

CONNECTICUT // 1995-2013 Connecticut has seen tremendous jobs and sales growth driven by private equity-backed middlemarket businesses, including a jobs growth rate more than 16 times that of other businesses in the state between 1995 and 2013.

157.2% JOBS GROWTH IN PE-BACKED BUSINESSES

+100+T 259.1%

9.7%

CT

JOBS GROWTH IN ALL BUSINESSES

SALES GROWTH IN PE-BACKED BUSINESSES

ACG CONNECTICUT

27.3%

15,958

SALES GROWTH IN ALL BUSINESSES

JOBS CREATED

BY PE-BACKED BUSINESSES

See the impact of middle-market private equity on your state at GrowthEconomy.org.

JOBS GROWTH % BY SEGMENT 12%

SALES GROWTH % BY SEGMENT

MM Seg 1: $10-50M in sales

23.5%

13.2%

MM Seg 2: $50-100M in sales

4.6% 49.5%

0%

Small: Less than $10M in sales

7.1% 25.3%

64.8% 0%

KEY

MM Seg 3: $100M-1B in sales Large: More than $1B in sales

All stats are from PitchBook and the Business Dynamics Research Consortium at the University of Wisconsin-Extension.

P A R T N E R S I N D R I V I N G M I D D L E - M A R K E T G R O W T H .® To d a y ’s f a s t - p a c e d m a r k e t r e q u i r e s a n e d g e . A C G G l o b a l P a r t n e r s prov ide y o u wit h t h e e x pe r t is e a n d be s t pr a c t ic e s n e e de d t o c l o se t he d e a l .

L E A R N M O R E A B O U T A C G PA R T N E R S H I P S , V I S I T A C G . O R G / PA R T N E R S H I P S © 2015 Association for Corporate Growth. All Rights Reserved.

FACE-TO-FACE CONNECT TO YOUR NEXT DEAL RIBBON CUTTING // American University’s Kogod School of Business launched its Cybersecurity Governance Center; ACG is a partner.

ACG Responds to Cybersecurity Issues Cybersecurity is increasingly important to middle-market companies, investors and advisers.

In response, ACG is creating an array of resources to help members better understand and respond to cybersecurity issues.

ACG members are at particular risk for cyberattacks, given their connections to a wide range of investors, portfolio companies, advisers and related parties. In addition, the nature of cyberthreats means that sophisticated attacks may well reach these connections to portfolio company customers and supply chain partners.

The ACG Cyber Resources Program will include information and other resources to address a wide range of threats, from fraud to credit card theft and blackmail.

“As larger companies become more effective at countering cyberthreats, bad actors are increasingly focusing on the middle market,” said ACG President and CEO Gary LaBranche, FASAE, CAE. “ACG will help build the capacity of the middle market to prevent, counter and respond to the rapidly emerging, critical issues of cybersecurity.”

This effort will include a range of educational programming designed to keep members apprised of developments in the cybersecurity arena, including updates about government advisories, articles, guest columns, webinars with cyber experts and other resources. //

FACE-TO-FACE CONNECT TO YOUR NEXT DEAL

CHAPTER EVENTS Get involved! This winter, ACG chapters across the globe will host hundreds of local events. Check out what’s happening at your local chapter, register and join in on valuable educational and networking opportunities.

ACG Richmond Networking Event at Hardywood Park Craft Brewery Left: Lisa Hedrick of Hirschler Fleischer (left) and Jaymie Upton of Merrill Lynch talk at the event, sponsored by Chase. Right: From left, Nick Harrison of Dixon Hughes Goodman, Gerald Escobar of Marsh & McLennan Agency, John Atkinson of Dixon Hughes Goodman and Mike Wilkerson of Morooka USA sample Hardywood’s craft beers.

ACG Brasil Chapter View Calendar

ACG Cincinnati Chapter View Calendar

ACG Denver Chapter View Calendar

ACG Detroit Chapter View Calendar

ACG Holland Chapter View Calendar

ACG Maryland Chapter View Calendar

ACG Minnesota Chapter View Calendar

ACG New Jersey Chapter View Calendar

ACG New York Chapter View Calendar

ACG Orange County Chapter View Calendar

ACG Pittsburgh Chapter View Calendar

ACG San Francisco Chapter View Calendar

ACG South Florida Chapter View Calendar

ACG Wisconsin Chapter View Calendar

Had a newsworthy chapter event?

Send a 150to 200-word summary and high-resolution photos to Associate Editor Kathryn Mulligan.

THE ROUND NEWS THAT MATTERS

It’s Time for HR to Step Up!

By Dan Hawkins The middle market continues to expand despite worldwide economic uncertainty and relatively slow U.S. employment growth. The dollar is strengthening, deals continue to close and growth remains the priority of midsize companies and their investors.

Unfortunately, most midsize companies are not equipped for the growth needs of the business, and external volatility only makes matters worse. Leadership and human capital are constraints. Human resources departments are responsible for driving the organization’s agenda, yet they’re not rising to the occasion. Consider the evidence: • In The Hackett Group’s 2015 study of HR functions across the United States, the majority of HR organizations were reportedly “underprepared to address their enterprises’ most critical strategies and goals.”

• Deloitte’s Global Human Capital Trends 2015 report reveals that 61 percent of chief human resources officers, or CHROs, (confidentially) admit that their HR programs and solutions are lagging behind the needs of the organization.

Continued on next page

THE ROUND NEWS THAT MATTERS When you look deeper into the middle market, the picture is even worse. Last year, APQC conducted a proprietary analysis of HR functions in larger companies (more than 1,000 employees) versus smaller companies (fewer than 1,000 employees). Smaller company HR departments spend far more time and resources on administrative and policy management activities. In addition, the HR organizations in these smaller companies have very little involvement in strategy, business needs, human capital planning, talent management, culture and employee engagement. Leaders of small and midsize businesses report very little strategic partnering activities with their HR leadership.

In my own experience, I’ve observed firsthand how HR often fails to make the strategic impact it should for midsize companies. Too often I meet with PE investors who comment that fewer than 10 to 15 percent of their portfolio companies have any type of forwardthinking human capital approach or progressive HR leadership. The head of HR is typically not a professionally trained HR executive, lacks business acumen and leadership, and may not even be invited to engage in strategic matters of the company. This weakness results in poor leadership pipelines, a lack of talent when and where it’s needed most, an inability to retain the best people, a misaligned culture and strategy, and dysfunctional or ineffective leadership teams.

The history of HR’s impact has been spotty; however, the old personnel department needs to grow up. Now is the time to change the role HR plays in a middle-market company for a variety of reasons: 1. The middle market continues to expand and is feeling the pain of not having the leadership or organizational capacity to grow.

2. The labor market is tightening significantly and will continue to pose a challenge with the impending retirement of baby boomers over the next five years.

3. In our knowledge-based economy, human capital trumps all other assets a company can invest in, manage and improve. Customers are buying capabilities more than products today.

4. Finally, the good news: HR is beginning to develop the skills and leadership to add more value in areas such as assessing potential leaders, talent analytics, culture transformation and human capital. It is beginning to develop into a professional, value-added function.

Continued on next page

THE ROUND NEWS THAT MATTERS It is time, however, for HR to step up and meet the challenge. HR leaders and their organizations must get ahead of talent and organizational needs in the business and stop waiting to be told what to do. Much less time should be spent on transactional activities, such as payroll, policies, benefits and administration. More time should be devoted to engaging senior leaders, asking tough questions about organization readiness, assessing talent and providing solutions for future business needs. This is not only important but imperative!

Several actions are suggested for investors and CEOs to ensure the HR organization is ready to step up and become a significant player in the business: • Expect more. Do not be satisfied with the HR team that merely transacts payroll and plans company events. Demand that it provide new ideas and solutions for your business needs. Invite the HR leader to strategy and business reviews and expect him or her to have a point of view. If your HR leader is unable to meet this expectation, see the next point.

• Upgrade your HR leader. Many well-trained HR leaders in big companies (think divisional HR heads) would love taking the No. 1 spot in a midsize company. Do not place your human capital strategy in the hands of a glorified executive assistant. Look for skills in leadership assessment, business acumen, talent development and influencing.

• Put a premium on leadership. Ensure your HR leader has the courage and communication chops to be an influential member of the leadership team. As the CEO or lead investor of a middle-market company, you get no value from a yes man. The main goal of your HR leader is to change the organization for the future, not maintain the status quo.

• Ensure HR leverages data. HR is no longer a touchy-feely function. Regardless of company size, HR should be integrating analytics into talent assessment, predicting future workforce needs and even justifying significant HR investments. All companies have reams of data to extract, analyze and use for future decision-making. Not all of them are ready for regression models to predict a talent gap in five years, but companies should know exactly which HR investments will yield the greatest return. // — Dan Hawkins, a former chief human resources officer, founded Summit Leadership Partners after 25 years in the corporate world. His firm helps business leaders implement strategy and organization performance.

Dan Hawkins

THE ROUND NEWS THAT MATTERS

Digital Media Mergers Are Coming

By Kevin Ramsier, Vesticor Advisors Mergers and acquisitions are becoming more common in the world of media. As news consumption shifts from traditional sources, consumers are increasingly turning to digital media. Analysts predict this trend will continue to be strong over the next 12 to 18 months, with smaller outlets making up the majority of deals with a focus on the digital space.

Compared with other industries, merger and acquisition activity in media is very high, and most companies looking to acquire are seeking multiple deals. Due to new technologies and startups entering the market, the space is quickly becoming redefined. And with an interest rate hike looming, potential buyers and sellers alike are anxious to finance and complete deals.

Industry competition is stiff, so the best way for companies to get a leg up is through acquisitions. By 2012, 90 percent of the media was controlled by only six companies, a large jump from the 50 companies that controlled the sector in 1983. But mega-deals have put large media companies under the scrutiny of federal regulators, making large media mergers difficult. After the Comcast and Time Warner deal fell apart in April 2015, most of the activity in the space has involved smaller entities.

Many of these smaller businesses are closely held, without shareholders and with some of the highest valuations seen in years. Amid this sellers’ market, many niche media businesses are seeing more unsolicited offers before they go to market. Private equity firms are acquiring companies that they wouldn’t even have considered a few years ago.

In the growing digital media space, M&A activity is expanding even more quickly. Deal activity typically follows consumer behavior, and we’re seeing more consumers turn to digital media for news. If companies want to go where advertisers are spending dollars, they must go digital, and acquisitions are a great way to get up to speed without reinventing the wheel.

A larger company may be able to expand not only its reach through an acquisition but also through the services it offers. In addition to content, technologies that allow companies to measure results, operate more cost-effectively, streamline practices, create video content or target specific consumer segments are also being scooped up by media companies seeking to broaden their offerings.

As consumer media consumption evolves, media companies must evolve as well.

M&A is a great strategy to stay profitable at a time when traditional news outlets are considered moribund. // — Kevin Ramsier is managing partner and CEO of Vesticor Advisors, a national M&A advisory firm that helps owners prepare their businesses for maximum value.

Kevin Ramsier

THE ROUND NEWS THAT MATTERS

VERTICAL VIEW // ALL THE DATA THAT’S FIT TO PRINT

++ ++ Between 2011 and 2013, add-on have consistently ++ + transactions comprised about 40% of media+++ ++related transactions. Their share

$33

appears to be increasing, reaching 46.9% in 2014 and 59.6% in 2015 so far.

BILLION

Capital invested in cross-border media deals increased from $3 billion to $33 billion between 2009 and 2013; 2014 broke the trend as total capital invested fell to $22 billion that year.

NEWS

25

INVESTMENTS

In 2014, 25 mediarelated investments were exited through M&A, compared with 16 buyouts and two IPOs, reflecting the general trend in exit strategies displayed year after year.

Media’s share of overall market activity is on the decline, falling to just 2% in 2014 from 7% in 2004.

“You always read that publishing and radio are dying industries, but if you look at the deal numbers, that just doesn’t seem to be true.”

—Chelsea Harris, data analyst, PitchBook

All stats are from PitchBook.

2%

The West Coast and Mid-Atlantic regions consistently top the list of most active regions for middle-market media investment. Last year, the West Coast led with 15 deals to the Mid-Atlantic’s 11.

VSS Communications Partners IV and Wicks Communications & Media Partners III (featured in the cover story) are among the most active media investment funds, having completed 22 and 19 deals respectively within the last decade.

15 DEALS

P A R T N E R S I N D R I V I N G M I D D L E - M A R K E T G R O W T H .ÂŽ Yo u on

can all

rely

on

aspects

operations,

ACG of

Global

M&A

taxation,

Partners

transactions, regulatory

as

trusted

including issues

advisers financing,

and

more.

L E A R N M O R E A B O U T A C G PA R T N E R S H I P S , V I S I T A C G . O R G / PA R T N E R S H I P S Š 2015 Association for Corporate Growth. All Rights Reserved.

Audio Tour Producer Sees Growing Market with PE Backing

Antenna

Signals Strong Growth

BY S.A. SWANSON

AUDIO INSIGHT // Antenna’s offerings guide visitors in the National Gallery.

ANTENNA // Business: Personal audio and multimedia tours for museums and other cultural sites Private equity owner: New York-based The Wicks Group since 2010 Well-known clients: The Metropolitan Museum of Art, Whitney Museum of American Art, Alcatraz Island, Tate Modern Reach: 1,100 sites, mainly in the Americas and Western Europe, but also Singapore, the Middle East and other locations Technology: Custom headsets and downloadable audiocasts for smartphones

I

n 2014, people in the streets of London and Manchester began receiving phone calls from Sherlock Holmes, Achilles and Queen Victoria. It was part of a cultural project called Talking Statues, spearheaded by nonprofit arts organization Sing London and designed to help passersby learn about public sculptures. Some two dozen statues had special QR codes that triggered an option to play a short audio clip on the user’s smartphone. Scan the code attached to the statue at Paddington Station and your screen displays that “The Unknown Soldier is calling.”

Accept the call and the statue will explain its origins (in the voice of actor Patrick Stewart).

The company that made those statues speak is Antenna International.

For 30 years, Antenna has produced audio and multimedia tours for cultural institutions around the world, including Alcatraz, the Louvre and the Tate Modern. It currently lists about 550 clients and 1,100 sites, mainly in the Americas and Western Europe, but also Singapore, the Middle East and elsewhere. Approximately 75 million people take its tours each year—that’s roughly the population of Turkey. Antenna’s goal is to make cultural experiences as engaging as possible. “Our clients’ expertise tends to be curatorial—they understand why something is important,” says CEO David Falter. “We’re experts in storytelling.”

And thanks to a recent investment from New York-based private equity firm The Wicks Group, Antenna is now helping a wider array of institutions share their stories.

TAKE A TOUR // Listen to an audio clip used for an exhibit on Ellis Island.

For the past 25 years, Wicks has focused on lower middle-market media businesses. As that realm expanded, the firm delved into the education, information and data sectors. “We believe that media and information consumption continues to grow and become more important as the world digitizes,” says Managing Partner Daniel L. Black, who notes his firm typically invests $30 million to $50 million of equity in transactions.

About five years ago, Wicks saw an investment opportunity in Antenna. It was already the market leader in its segment and had untapped revenue potential, Black says.

At the time, Discovery Communications owned Antenna but treated it as a non-core asset. Essentially a corporate orphan, Antenna lacked the resources needed for growth.

Wicks began discussions with Discovery in early 2010 and acquired Antenna eight months later—taking twice as long as other deals the firm has completed. That’s because the sale of a non-core asset is usually low on a large corporation’s priority list, Black says. But there’s an upside: The private equity firm is more likely to get a good deal. “It’s more important to (the large company) to execute the plan to sell the business rather than getting the absolute best price,” he says.

UNLEASHING ENTREPRENEURIAL BEHAVIOR The biggest change Wicks made was a substantial investment in Antenna’s leadership. It brought in a new CEO and CFO for the company, which had about $45 million in annual revenue at the time of the acquisition. Over the next four years, it also added new executive positions: COO, CTO and CMO, creating a robust C-suite for a company its size. “We think that investment will pay off,” Black says.

“WE BELIEVE THAT MEDIA AND INFORMATION CONSUMPTION CONTINUES TO GROW AND BECOME MORE IMPORTANT AS THE WORLD DIGITIZES.” Daniel L. Black Managing Partner, The Wicks Group

BRITISH MUSEUM // Two museumgoers listen to an audio tour while looking at classical Greek sculpture.

Wicks also helped the company get leaner. Within the first year of the acquisition, Antenna’s cash flow increased by 150 percent. “It wasn’t because we were geniuses,” Black says. “We were able to unleash a bit more entrepreneurial behavior.” Cutting travel expenses was one example—as a small subsidiary of a $6.3 billion corporation, Antenna was stuck using the airlines and hotels approved by Discovery, even when lessexpensive travel options existed.

CEO Falter says Wicks has been a great partner because it continues to ask, “Is there a better way to do that?” Says Falter: “They have sharp pencils,” crediting Wicks with nudging Antenna toward a more efficient, cost-effective approach to building its proprietary multimedia devices for tours. Prior to the Wicks acquisition, it took almost 2 1/2 years to produce a next-generation multimedia player and cost Antenna more than $2.5 million. That’s changed dramatically. “We delivered a next-generation multimedia player that is far better, in six months, for less than $500,000,” Falter says.

“WE’RE SEEING A LOT OF OUR CLIENTS GET BACK TO BASICS—WHICH IS OKAY BY US BECAUSE WE ARE REALLY GREAT AT AUDIO.” David Falter CEO, Antenna International

Antenna’s tours work with a range of devices, including Android and Apple. That’s important for clients, as they explore ways to leverage visitors’ attachment to smartphones. One trend Falter has seen at museums in recent years is BYOD, or Bring Your Own Device—museum-goers either download the tour as an app or stream it on their smartphones.

Some museums are requesting Antenna tours with even more of a “wow” factor. That includes Bluetooth triggering: When a visitor gets close enough to a particular piece of artwork, for example, a video about the artist automatically plays on the visitor’s device. It doesn’t appeal to everyone, says Falter, noting that some older patrons don’t like losing control of their smartphone screen.

“Visitors can become so mired in managing technology that they lose the experience the museum was supposed to create,” he says. “We’re seeing a lot of our clients get back to basics—which is okay by us because we are really great at audio.”

UNTAPPED MUSEUM DOLLARS Regardless of the technology, museums are increasingly focused on the potential for tours as a revenue generator.

That wasn’t the case 10 years ago, says Falter, when clients’ main concern was cost. But after the recession, cultural institutions were forced to rethink funding sources.

“We’re seeing a change in the thinking of management in these institutions, and they’ve become much more commercially savvy,” he says. One of Antenna’s smaller clients—a U.S. museum with fewer than 100,000 visitors annually—added an $8 audio tour and now generates $100,000 in added revenue. “That took pressure off the conversations with their donor base,” Falter says.

To help clients tell compelling stories, Antenna’s VP of experience design, Jessica Taylor, manages a team of about 40 people, including writers, producers, interactive designers, graphic designers and sound engineers. Together, they create more than 1,000 hours of content each year. Half of those tours are exclusively audio and half are multimedia, Taylor says.

“This is not about the story Antenna decided to tell— it’s about working in close collaboration with clients,” she says. After understanding a museum’s requirements, the team creates an outline for how it will design the tour, followed by several rounds of approvals. The final product reflects the tone each museum wants to convey. That can often deviate from the stilted, pedantic vibe of old-school audio tours. For a children’s tour at the Salvador Dalí Museum in Florida, the narrator introduces himself as Dalí’s closest companion for more than 50 years and then reveals his true identity: Dalí’s mustache.

“THIS IS NOT ABOUT THE STORY ANTENNA DECIDED TO TELL—IT’S ABOUT WORKING IN CLOSE COLLABORATION WITH CLIENTS.” Jessica Taylor VP of Experience Design, Antenna International

When the Antenna team began planning a children’s tour for a prestigious historic house in London, they created a prototype and asked 10 families to take a listen. By observing and interviewing family members, the team could determine which elements resonated with certain age groups. One example was a secret door in the house. “Just pointing it out and asking visitors if they could see it—that was such a hit during user testing,” Taylor says. “So we made a real point of talking about that in the tour and also finding other secret details that would thrill the visitor.”

For multimedia tours, artists’ estates can pose challenges by restricting the use of images on hand-held devices. That’s led to some creative problem-solving.

When the estate of a famous modern artist refused to allow the artist’s work in an Antenna tour, the team had children provide their own renditions of the paintings and used those images instead.

Some tours are offered in a dozen languages, requiring plenty of extra testing with native speakers. “We are representing world-class organizations,” Taylor says. “Often, it’s the only voice of the museum the visitors will hear.”

‘BYOD’ // The trend of “bring your own device” is catching on with visitors.

FAMILIAR VOICES At the Norman Rockwell Museum in Stockbridge, Massachusetts, a prominent voice is that of Peter Rockwell, Norman Rockwell’s youngest son (and also an artist). He’s one of the narrators in an Antenna audio tour initially used in the late ’90s for a nationwide traveling exhibition of about 65 Rockwell paintings.

Because those works are part of the museum’s permanent collection, the audio tour is still offered today—with a few updates over the years, including a Spanish-language version.

“We wanted to find ways to make the art more accessible for people,” says Stephanie Plunkett, deputy director and chief curator at the museum. “Audio tours allow you to bring in additional information in a way that is easy for people to absorb.” The museum had considered two or three companies before choosing Antenna, Plunkett says. “It worked out to be a wonderful choice. They had great ideas and worked with the content we provided to bring it to life.” Antenna took a creative approach with the children’s version of the audio tour, she says; part of it is narrated from the artist’s first-person perspective. “The kids feel like they are hearing from Norman.”

Of the roughly 130,000 visitors each year, about one-third take the tour.

The museum charges adults a nominal fee of about $5, but that still makes a difference, Plunkett says, adding: “It is a way of helping with admission revenues, which are very important underpinnings of the budget.”

The museum is also incorporating the audio tour into a multimedia tour (it worked with a different company for that component), which will play video clips on touch-screen devices.

KEEPING CURRENT Today museums are compelled to offer multimedia experiences to appeal to younger and more tech-savvy visitors, says Alex Freeman, director of membership and special projects for the New Media Consortium. The Austin, Texas-based nonprofit explores trends in educational technology; Freeman served as editor for its recent report on museums’ use of technology. To highlight one challenge facing museums, he points to a National Endowment for the Arts survey about how the U.S. population engages with art. Results showed that in 2012, 71 percent of respondents used electronic media to watch or listen to art, while only 33 percent had attended arts events such as museums, plays, classical music and ballet. Freeman acknowledges that a chunk of that 71 percent figure likely comes from people listening to music on iPods and smartphones; but still, he says it underscores a larger trend—the use of electronic media to experience art and culture.

“Museums are facing a crisis of having an aging population with the traditional museum-goers, and they have to think about maintaining relevancy for other generations,” Freeman says.

Antenna continues to look for new ways to help its clients stay relevant. During Wicks’ ownership, revenue has increased annually in the high single digits and now runs about $60 million. “That’s pretty good growth for a business of that size,” Black says. “But we think it’s going to perform better.”

Late last year, the company launched a consulting service, called Antenna Lab. “It’s our in-house think tank, where we exchange ideas around the future of museums, and how museums can harness technology to reach visitors,” says Taylor, who also serves as general manager of Antenna Lab.

CULTURAL CLIENTS // Antenna provides audio tours for more than 1,100 cultural sites, including MoMA.

Another potential revenue stream will launch by the end of 2015. It’s a software package called Antenna Direct, designed to let small and midsize institutions create their own audio tours. The United States alone has about 25,000 institutions with fewer than 100,000 annual visitors, and many seek affordable options to offer multimedia. “If we could get 10 percent penetration, that would be very lucrative for us,” Falter says.

For all museums worldwide, large and small, Black estimates the selfdirected tour market at about $250 million. That leaves plenty of opportunity for additional share in Antenna’s core market. But why stop there?

“We believe the business has a broader audience than just museums,” he says. That includes other venues with enthusiastic visitors who crave more information. Iconic football stadiums and baseball fields are possibilities, but so far, efforts to expand beyond museums have been “less than fruitful,” Black says. That doesn’t mean Antenna will stop trying. “We think there are other markets to tap, and we haven’t even scratched the surface.” // S.A. Swanson is a business writer based in the Chicago area who frequently writes about technology.

Private Equity CFOs Add CCO Hat,

And It’s a Big One

BY SUSAN NADEAU

B

“WE HAVE SPENT A HUGE AMOUNT OF TIME TRYING TO CONFORM OUR POLICIES AND PRACTICES TO WHAT DODD-FRANK REQUIRES, WHICH WAS NOT WRITTEN FOR PRIVATE EQUITY.” April Evans Chief Financial Officer, Monitor Clipper Partners

y all accounts, the job of the CFO of a private equity firm has never been simple. Overseeing the legal aspects of setting up a fund, working on tax structures, creating special reports for limited partners and aiding financial teams at portfolio companies can be challenging and time-consuming activities.

But especially in middle-market private equity firms, the CFO job has become a lot busier and more complex in the past few years, following the passage of the Dodd-Frank Act and the implementation of subsequent regulations by the U.S. Securities and Exchange Commission. And some middlemarket CFOs are still scratching their heads as to how and why these regulations apply to their industry.

“We have spent a huge amount of time trying to conform our policies and practices to what Dodd-Frank requires, which was not written for private equity,” says April Evans, chief financial officer at Monitor Clipper Partners since 2005, and now chief compliance officer too. She says that she and her firm’s tax director spend 25 percent of their time ensuring compliance with the new regulations.

They are not alone. Bank of America Merrill Lynch’s 2015 CFO Outlook Pulse Survey, which surveyed 250 middlemarket CFOs from various industries across the country to understand their views on the current state of the U.S. and global economies, found that 30 percent of CFOs consider regulatory issues to be among the top five business concerns or threats to earnings, alongside health care costs and a shortage of skilled talent.

“We (already) have a set of practices and policies here (at Monitor Clipper) that makes sense in private equity,” Evans says, adding that she would be “hard-pressed” to find an area that private equity firms themselves hadn’t self-regulated, if there was a need.

“Every time I am doing something that is in the direction of compliance, I am taking my eyes off improving things for my limited partners,” she adds. “There are only so many hours in a day.”

ADAPTING // Many PE firms are still figuring out how to comply with Dodd-Frank.

‘A SWEEPING OVERHAUL’ The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010, and over the past five years the regulations it includes have taken effect. It was the answer to the Great Recession of 20072009, when the U.S. debt bubble exploded and the entire financial system came under fire.

President Barack Obama said this reform would be “a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.” Some think DoddFrank, as the 2,000-page document has become known in reference to its authors, goes too far. Others say it doesn’t go far enough.

Five years later, the private equity investment industry is still sifting its way through the legislation, and some CFOs don’t see how the regulations make sense for the private equity world—especially considering that under Dodd-Frank, PE firms with $150 million or more in assets under management must register under the Investment Advisers Act of 1940.

“That’s a very old act, and private equity is very new,” says Amber Landis, vice president of public policy for the Association for Corporate Growth.

She heads up ACG’s Private Equity Regulatory Task Force, known as PERT.

What is sure is that, for better or for worse, Dodd-Frank has resulted in new regulations and required actions; for middle-market-focused PE firms, compliance with those new regulations falls most typically to the firm’s chief financial officer (who, like Evans, is often handed the chief compliance officer title as well).

WHAT TO DO? Initially (and still today), there was confusion as to what Dodd-Frank meant for private equity firms. And private equity executives found that SEC examiners did not always understand how the industry works.

“I’d say that certainly in the last five years everything has somewhat exploded,” says Jonathan Schwartz, partner and CFO (and now CCO) of NewSpring Capital. “We spent a long time trying to figure out how we fit into rules that don’t necessarily fit us, and how to comply with directives when there is no clear discussion about how to comply.”

In fact, in the registration phase some firms may have been answering more than asking when trying to figure out what is needed for compliance.

“Now most everyone has gone through an examination— we did early on,” Schwartz says. “It was certainly an education lesson for the folks who came in, and we were more than happy to educate them on our business.”

There still seem to be different readings on what complies with regulations and what doesn’t, according to Schwartz.

“I see a wide range of disparity in how firms handle marketing in terms of what they put on their website and what they disclose in press releases, versus what we tend to do, which is very conservative,” he says, adding that there’s a fine line between soliciting investment, which is a no-no, and marketing to entrepreneurs who may one day want to sell their companies, which is allowed.

“We want to meet other entrepreneurs—that’s our business,” he adds.

“WE SPENT A LONG TIME TRYING TO FIGURE OUT HOW WE FIT INTO RULES THAT DON’T NECESSARILY FIT US, AND HOW TO COMPLY WITH DIRECTIVES WHEN THERE IS NO CLEAR DISCUSSION ABOUT HOW TO COMPLY.” Jonathan Schwartz Partner and CFO, NewSpring Capital

DOCUMENTS AND MORE DOCUMENTS

“EVERYTHING REVOLVES AROUND MAKING SURE DOCUMENTATION EXISTS. THAT IS THE BIGGEST SHIFT.” Patty Nykodym CFO, FFL

One of the main requirements of compliance is increased documentation, according to the CFOs. To start, Evans says that Monitor Clipper has a 100-page manual on compliance that her team put together.

“Everything revolves around making sure documentation exists,” says Patty Nykodym, CFO of FFL. “That is the biggest shift.”

For example, firms are required to establish restricted lists of stocks that can’t be traded by employees (a practice Evans says her firm has always followed) because of the possibility of access to insider information. But now firms are required to review and submit all employee stock trades, accounts and emails.

“Our folks spend time every quarter reviewing personal accounts and submitting through our electronic system that they are in compliance,” Evans says. This sounds good, but she notes that a middle-market private equity fund would not be involved in a transaction large enough to move the stock price of a publicly traded company.

PE firms must also contract a custodian to hold stock certificates, a requirement that was designed for mutual funds and financial institutions that trade public securities.

“We pay a custodian to hold all of our stock certificates and report periodically on what they have—but our stock certificates are completely worthless, as they are in private companies,” Evans says.

Other issues are specific to the agreements between private equity firms and their limited partners. For example, compliance examiners have been known to require valuations of portfolio companies—but the companies being valued are private, therefore valuation is subjective.

Disclosures in limited partner agreements are another example. It is understandable to ask where expenses should be charged—for example, to the firm or to the LPs— but the agreements themselves are very long, detailed and sophisticated.

“The reality is that the LP agreements are negotiated with people who really understand our business and really know what they are doing,” Schwartz says.

“And in the end, these agreements don’t affect the general public.”

Evans takes issue with the SEC being required to monitor private equity firms, as they’re already monitored by LPs and other sophisticated investors through very detailed contracts. She adds, “When I sit out and look at it as a taxpayer, it makes no sense. It’s a waste of taxpayer dollars.”

SILVER LINING Despite the extra work and, at times, the frustration with compliance, some CFOs welcome the external review and say that investors find security in it.

“There is a positive effect—it gives our investors additional comfort in dealing with a registered firm,” Nykodym says. “They are always asking questions, such as ‘Are you registered?’ which makes me think that they are interested in compliance.”

The compliance officers we spoke to are not necessarily pushing for a rollback of Dodd-Frank. Regulations seem to be here to stay (there is more legislation than just Dodd-Frank, such as the Foreign Account Tax Compliance Act, or FATCA, and the Alternative Investment Fund Managers Directive, known as AIFMD, that can affect the private equity industry). Instead, it seems the industry is asking that expectations are clear and consistent.

ACG’s Landis says that she and the action group PERT are working to develop best practices in compliance. “As a trade group we need to help decode these issues,” she says.

Meanwhile, the CFOs (and CCOs) will march on. “Roles change all the time,” Nykodym says. “Myself and other CFOs will continue to evolve.” // Susan Nadeau is a business writer who splits her time between Hartford, Wisconsin, and Thessaloniki, Greece.

P A R T N E R S I N D R I V I N G M I D D L E - M A R K E T G R O W T H .ÂŽ ACG

Global

network,

Partners

providing

help

valuable

expand

your

connections

middle-market with

corporate

clients and a consistent source of deals for capital providers.

L E A R N M O R E A B O U T A C G PA R T N E R S H I P S , V I S I T A C G . O R G / PA R T N E R S H I P S Š 2015 Association for Corporate Growth. All Rights Reserved.

QUICK TAKES CHRISTOPHER RUSSELL // Managing Director, Veronis Suhler Stevenson

V

eronis Suhler Stevenson is a private equity firm that invests in the information, business services, health care IT, education, media and marketing services industries in North America and Europe. MMG spoke with Christopher

Russell, a managing director, about why educational media companies remain a smart bet.

Q

Why is educational media compelling?

Christopher Russell: What’s interesting about educational media

from an investment standpoint is that the transition from print to digital had been somewhat slow in the school and library channel, but it’s been accelerating and that’s where the opportunity is. That’s where the two businesses we own—Infobase and Cambium Learning—operate. When

BIO //

you start to shift to digital, the revenue models change, the use of data

Christopher Russell is responsible for originating, structuring and managing U.S. and international investments for Veronis Suhler Stevenson, which he joined in 1995.

He specializes in investments in the information, education and business services industries.

changes. People tend to use these products more when they’re digital; they can manipulate them more. You can incorporate them more, if you’re a teacher, into your curriculum, homework assignments and planning, and all of that stuff.

Q

Can you walk us through one of the investments?

CR: Let’s take Infobase. The original business was actually

called Facts on File. It was core reference materials for libraries: the Encyclopedia of American History, a big book series on biology—kind of big, clunky reference materials that had tons of facts and figures. When someone was writing a paper on the Civil War, they would go through all of these big encyclopedias. And when we invested almost 10 years ago, (Infobase) was 80 percent print and 20 percent online databases, such as a history database. Now it’s made up of 85 percent online databases and 15 percent print. The bet we made, because we’d been in that business for a while, was that it would take a while, and it has. The advantage of taking a while is you don’t drop off a cliff. It’s been a very good investment.

Continued on next page

QUICK TAKES CHRISTOPHER RUSSELL // Managing Director, Veronis Suhler Stevenson

Q

What else does Infobase offer?

CR: Career-related information. One brand (that’s part of

Infobase) that you may be familiar with is Vault. Vault is used mostly by graduate students—particularly grad students from law school,

“WHEN YOU START TO SHIFT TO DIGITAL, THE REVENUE MODELS CHANGE, THE USE OF DATA CHANGES.” Christopher Russell Managing Director, Veronis Suhler Stevenson

business school, accountants and consultants who are going into the service industry. All of those constituents can learn more about potential employers, companies and job types. Vault sells subscriptions directly to the career resource centers of the schools, from Harvard on down. Infobase also has other materials, like (the database) Ferguson—vocational guidance for careers, etc.

The third leg of the Infobase stool, and probably the most dynamic right now, is educational videos. So it’s video for the library channel.

Infobase produces, licenses and aggregates tons of films that are almost exclusively for the use of library channels. For example, BBC, PBS, ESPN—all of these big brands license content to Infobase to sell in the library channel exclusively for streaming. They’re kind of the leader now, so they’re buying a lot, they’re licensing a lot. They’re even curating the free stuff. One thing they do that’s interesting, through a lot of technology: Say a video is 60 minutes long and it’s a Civil War-related video, they’ll cut it into little bits (Robert E. Lee, or whatever these little sections are). A student can watch the whole thing but can also search in the database and say, “I need a video about Robert E. Lee.” They’ll get that little eight-minute clip. // —DLC The interview has been condensed and edited for publication.

A QUALIFIED OPINION PETRI RAHJA // Founder and CEO, Scoopshot

BIO //

“WE WERE COMPELLED

BY THE GROWTH POTENTIAL OF MOBILE CAMERAS AND BELIEVED THAT PHOTOGRAPHERS OF ALL LEVELS OF EXPERIENCE SHOULD GET FAIR COMPENSATION FOR THEIR CONTRIBUTIONS.”

P

etri Rahja founded online photography sourcing site Scoopshot in 2010 and is now responsible for the business’s international development. Rahja has extensive experience with smaller technology startups as well as large multinationals. He founded Iprbox, a Finnish online provider of intellectual property rights services, and served as chief technology officer for CRF Box, a mobile clinical data capture company with operations in Finland, the United States and the United Kingdom. He helped develop the Web platform for Finnish Web portal operator Iobox, which was acquired by Spanish telecoms company Telefónica in mid-2000. Earlier he worked for BEA Systems Inc., since acquired by Oracle, and the former Andersen Consulting, now part of Accenture.

WHY DID YOU FOUND SCOOPSHOT?

C

ompanies and creative agencies still prefer exclusive content that helps them to differentiate their brands.

There was no platform on the market back in 2010 that would provide photographers on demand. The existing services focused on the traditional stock photography model. What we wanted to do was to create a marketplace that would be a win-win for both photographers and photo buyers, a simple iTunes-type marketplace for images. Even today, buying photographic images on stock sites is far too complex from a licensing point of view. We were compelled by the growth potential of mobile cameras and believed that photographers of all levels of experience should get fair compensation for their contributions. We launched the site in February 2011 and have both venture capital and private equity backing.

A QUALIFIED OPINION PETRI RAHJA // Founder and CEO, Scoopshot HOW DOES SCOOPSHOT WORK?

W

hen an editor or art director is looking for a photographer to cover an event, or for a particular specialty area, he goes to the site. He may enter the name of a specific photographer, but more likely the customer will enter the country and location where the job needs to take place. The location can be specific, like Bethesda, Maryland; by using a simple slider, the customer can specify a radius—for instance, “anyone within 30 miles of Bethesda.”

The customer can also indicate certain expertise the photographer must have. Next he writes a brief summary for the task, being as precise as possible. This summary is then emailed to each of the photographers selected through the search criteria.

R

WHAT ARE THE BENEFITS OF USING A SCOOPSHOT PHOTOGRAPHER OVER A STOCK PHOTO SITE?

equesting an image at Scoopshot is easier than searching for one on stock photography sites such as Shutterstock or Reuters and delivers very creative results. You can focus on getting the images you want while we take care of all the tricky things, like image rights and photographers’ compensation. Whether you need engaging content to keep your social media channels buzzing or exclusive photos and videos for your marketing campaigns, Scoopshot provides exclusive images with all rights and no hassle. We take 25 percent of the total fee; the photographer can cash out based on the payment methods specified by each country. For example, in the United States PayPal is used.

A QUALIFIED OPINION PETRI RAHJA // Founder and CEO, Scoopshot

HOW MUCH CONTROL DO CUSTOMERS HAVE OVER THE PROCESS?

T “PROFESSIONAL PHOTOGRAPHERS CAN FOCUS ON THEIR WORK, AND THEY DON’T NEED TO WORRY ABOUT CONTRACTING OR ADMINISTRATIVE FUNCTIONS SUCH AS BILLING OR GETTING PAID.”

he customer can review the portfolios and select one or more photographers to receive a task brief on the job. Each photographer may provide a quote or ask for more information. This interaction may take place by email or over the phone. The customer may ask to review a more complete or targeted portfolio to determine if the photographer is the right person for the job. The photographer provides an accurate quote, completes the job and submits the work—all through the Scoopshot system.

The client then has the right to review the submitted images and reject them all if they are not satisfactory.

S

WHAT ENTICES PROFESSIONAL PHOTOGRAPHERS TO WORK WITH SCOOPSHOT?

coopshot provides an ecosystem that helps photographers get assignments. The client can be the newspaper next door or a creative agency from the other side of the world. What they have in common is their desire to get images—the photographer’s job is to deliver.

Professional photographers can focus on their work, and they don’t need to worry about contracting or administrative functions such as billing or getting paid.

Since all assignments are prepaid, a photographer gets paid immediately after the customer approves the work. Pay for professional assignments ranges from $200 to $3,000 and sometimes more. //

P A R T N E R S I N D R I V I N G M I D D L E - M A R K E T G R O W T H .ÂŽ F r o m c o n s u l t a n t s t o C PA s a n d a h o s t o f o t h e r a d v i s e r s a n d specialists, ACG Global Partners guide the success of more than 90,000 professionals in the middle market worldwide.

L E A R N M O R E A B O U T A C G PA R T N E R S H I P S , V I S I T A C G . O R G / PA R T N E R S H I P S Š 2015 Association for Corporate Growth. All Rights Reserved.

ACG@WORK CHAPTER NEWS FROM AROUND THE GLOBE

LOS ANGELES ARIZONA

GREAT LAKES DALLAS/FORT WORTH

TAP CITIES TO NAVIGATE TO ARTICLE

ACG ARIZONA

Arizona Chapter Celebrates 10th Anniversary, Hosts Military Leader ACG Arizona celebrated its 10th anniversary as a premier organization in the local business community with a fall event featuring one of America’s most renowned military leaders.

Retired Adm. Eric Olson was the keynote speaker for the event, titled “A Celebration of Leadership,” which more than 230 business professionals attended on Sept. 15. Olson drew on his nearly 40-year career in the Navy, including his role as former commander of the U.S. Special Operations Command from 2007-2011. His address included a discussion of building, training and leading highly effective teams, as well as current national security concerns and geopolitical challenges.

The event, hosted at the Arizona Biltmore in Phoenix, marked ACG Arizona’s 10th anniversary and included recognition of the chapter’s past presidents and board members for their service to the organization. //

ACG@WORK CHAPTER NEWS FROM AROUND THE GLOBE

GO ONLINE // Watch a slideshow featuring photos from the event.

ACG LOS ANGELES

Battle of the ACG Bands Puts Deal-Makers Center Stage Dealmaking is a competitive business, but at a recent ACG Los Angeles event, the rivalry wasn’t over purchase price or term sheets. Instead, middle-market professionals dueled onstage behind guitars, drums and even a trombone during the chapter’s first ever Battle of the ACG Bands.

Seven bands made up of ACG members and their colleagues played at the Conga Room in the downtown L.A. Live Complex to a packed house of fans from band members’ firms.

Audience members cheered on their co-workers and networked over cocktails, with several taking to the dance floor to enjoy the music.

“This was definitely a different approach to networking, but it was a blast,” said Gary Rabishaw, ACG Los Angeles president and the guitarist for Intrepid Investment Bankers’ band, The Deal Killers, pictured above.

The event was made possible through sponsorship from Deloitte, along with silver sponsorships from BNY Mellon and LSQ Funding.

“We can’t wait to do it again next year,” Rabishaw said. //

ACG@WORK CHAPTER NEWS FROM AROUND THE GLOBE LIVING LEGEND // Baseball great Pete Rose (left) with ACG Cincinnati Past President Doug Bolton.

ACG GREAT LAKES

Attendance Milestone Achieved by GLCC The Great Lakes ACG Capital Connection®, a collaboration of seven ACG chapters in the Midwest, achieved record-breaking attendance this fall. The seventh annual dealmaking event, which rotates its host city each year, was held in Cincinnati for the first time.

More than 950 middle-market private equity professionals and business leaders attended the conference on Sept. 1-2, the highest level of participation in its history. Meanwhile, two events hosted as part of the conference—the ACG Capital Connection private equity marketplace and ACG DealSource®, a forum for one-on-one meetings—were sold out.

“The record attendance is a strong indicator that middle-market M&A is alive and well in the greater Midwest,” said Barry Peterson of Northcreek Mezzanine, ACG Cincinnati president-elect and co-chair of this year’s Great Lakes ACG Capital Connection.

Besides networking, the conference featured panel sessions on topics such as due diligence and leveraging market conditions for successful acquisitions and exits. Baseball legend Pete Rose gave the conference’s closing keynote address.

“From the insights of industry experts to structured business meetings and networking events, GLCC is all about making connections and getting deals done,” said Natalie Galbato of Grant Thornton, ACG Cincinnati’s president and co-chair of the conference. //

ACG@WORK CHAPTER NEWS FROM AROUND THE GLOBE

ACG DALLAS/FORT WORTH

DFW Chapter Toasts 10 Years of Wine Tasting ACG Dallas/Fort Worth treated attendees to a wide selection of fine wines in September at its 10th Annual Wine Tasting.

The event, which consistently attracts more than 550 deal-makers from across the country, featured a variety of highly rated wines and champagne alongside five-star eats from chef Wolfgang Puck.

This year’s tasting event, titled “Old World and New World Wines,” gave attendees the opportunity to network among themselves and build business relationships, as well as access to sommeliers, who shared insight into wine tasting notes.

In honor of the event’s 10th anniversary, the chapter gave away a weekend trip to Napa Valley; Justin Smith of Financial Additions and a member of ACG Dallas/Fort Worth was the lucky winner.

Support from sponsors was a key component of the success of the tasting. The event included improved sponsor visibility through hosted wine tables to increase sponsorattendee engagement. The chapter’s wine committee, led by Anthony Herrera of Holland & Knight LLP, played an integral role producing the event. Tony Banks of Hein CPA will succeed Herrera as chair for next year’s tasting. //

THE PORTFOLIO INSIGHT FROM THE EXPERTS SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

IN THIS ISSUE SOUND DECISIONS

MID-MARKET TRENDS

• While news of data breaches has become commonplace, an even greater danger exists in the possibility that unknown cyberthreats have wormed their way into a portfolio company’s network.

• Private equity firms are not immune to cyberthreats, and many could be doing more to protect themselves.

• Companies that commit to sell-side due diligence will gain a significant edge in any transaction, since the process helps minimize surprises while maximizing tangible value.

• Technology spinoffs have become more frequent in the last few years, but it’s important to treat each one individually to achieve success.

• How a firm interacts with its employees and manages the change process can be a key element of success during a merger.

COMING SOON Check out the Portfolio section of the January/February issue for more on the latest middle-market trends, written exclusively by our team of expert ACG Global featured firms. To learn more about contributing to this section, please contact Albert Pereira, (416) 560-6455.

These articles are brought to you by ACG Global’s featured firms.

THE PORTFOLIO SOUND DECISIONS // Jamie Barnett, Rear Admiral (Ret.), Partner, Venable LLP

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

Cyber Due Diligence: Are the Bad Guys Inside Your Company?

T

Avoid deal disruption by taking steps to mitigate cyberthreats.

he nightmare of every acquisition or exit is the possibility of an unknown or hidden liability showing up just in time to disrupt the deal or upset valuation. Increasingly, cyber has the potential to create major problems for both the buyer and seller. While the media is full of examples of data breaches and cyberattacks, an even greater danger exists in the possibility that currently unknown cyberthreats have already quietly wormed their way into a portfolio company’s network and are waiting to spring. This is the so-called Advanced Persistent Threat, or APT. The Threat Inside You know the portfolio company has

percent of victimized companies discover a breach themselves; nearly 70 percent are

an anti-virus system, a firewall, and that

notified by someone outside of the firm

it changes passwords every three months;

that its network has been compromised!

how can it have an APT? Malware may

The median amount of time for the APT

have come from a dirty attachment to an

to lurk in the system is more than six

email, a third-party contractor that had

months, and in certain situations the time

not updated its operating system security,

before discovery has amounted to years.

or even a disgruntled employee who in-

Cyberattacks are not just launched

fected the system from the inside. The APT

against large firms. Approximately 20

can sleep until activated and then leach

percent of attacks hit businesses with

company secrets, intellectual property,

fewer than 250 employees, according to the

business plans, or sensitive customer and

U.S. House Small Business Subcommittee

employee data.

on Health and Technology, and that num-

If there is any doubt that APTs can exist

ber may be growing. Nearly 60 percent of

and persist without detection, consider the

small businesses close within six months

findings of cybersecurity company Mandi-

of a cyberattack.

ant. According to its 2015 report, only 31

THE PORTFOLIO SOUND DECISIONS // Jamie Barnett, Rear Admiral (Ret.), Partner, Venable LLP

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

What to Do About APTs?

mission’s Division of Investment Man-

Midsize companies are disadvantaged,

agement’s 2015 Cybersecurity Guidance

since they may not have the resources for a

Update.

robust internal cyber team. Yet those same firms may be a target because of their Admiral Jamie Barnett

4. Use advanced monitoring and detection.

intellectual property. Here are some cost-

Cybersecurity firms now have a variety

effective ways to mitigate the risk:

of methods and technology to detect when an APT is embedded or active and

1. Get an outside assessment. Cybersecuri-

if it has extracted data. By incorporating

ty companies can assess your firm’s sys-

cyberthreats as part of enterprise risk

tem, including the network, procedures,

management, these methods and tech-

training and policies. But this should be

nologies become affordable.

done under your law firm’s supervision: If you get a report about threats and

5. Use good cybersecurity hygiene. Make

vulnerabilities, it could be discoverable

sure the company changes passwords

during a lawsuit unless prepared under

regularly, disallows easily guessed pass-

attorney-client privilege.

words and prohibits default passwords; ensure that patches and updates are in-

2. Hire a virtual chief information security

stalled immediately. Check that a firewall

officer (CISO). All companies may not

is installed and operates well, and ensure

be able to justify the expense of a full-

good access control.

time cybersecurity staff member, but cyber firms now offer those services on

When it comes to cybersecurity, just be-

a shared or part-time basis. Or, portfolio

cause you haven’t detected a problem does

companies can share a CISO and divide

not mean there isn’t one. We all operate in

the costs.

cyberspace—doing business as usual is a good way to find out why you shouldn’t. //

3. Make sure the company is in compliance.

All companies should work to comply

Admiral Jamie Barnett (Ret.) is co-chair of

with governmental standards, such as

the Telecommunications Group and a partner

the National Institute of Standards and

in the Cybersecurity Practice of global law

Technology’s Cybersecurity Framework

firm Venable LLP.

and the Securities and Exchange Com-

THE PORTFOLIO SOUND DECISIONS // Nick Gruidl, Partner, and Vipul Barbhaya, Director, RSM LLP

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

Gaining an Edge with Sell-Side Due Diligence

T

Using sellside due diligence can help maximize deal value while minimizing surprises.

he notion of conducting due diligence from the seller’s side gained traction in the United States after the 2007 recession, when banks and other financial institutions tightened lending standards and steered clear of deals even with minor issues. In this environment, sell-side due diligence was vital to keep an M&A transaction intact. Even with today’s improving credit availability and economic performance, sell-side due diligence provides several distinct advantages: Verifying the accuracy of financial informa-

purchase price, but reduce the likelihood

tion. The easiest way to jeopardize a deal is

of buyer renegotiations after a letter of

to raise buyer concerns about the reliabil-

intent has been signed.

ity of data offered by the seller. Because all relevant financial, operational and

Uncovering issues to avoid deal-killing sur-

tax issues are reviewed for accuracy and

prises. No one likes to receive unexpected,

GAAP conformance by an objective and

last-minute information before committing

credible third-party resource, sell-side due

to a major purchase decision. For example,

diligence directly addresses this issue.

if a company has a series of unresolved state and local tax liabilities in jurisdic-

Identifying adjustments that positively

tions where it does business, those issues

impact EBITDA. When prospective buyers

can represent significant tax, penalty and

conduct due diligence, their analysis looks

interest liabilities for a prospective buyer.

specifically for any negative adjustments

A sell-side due diligence process would not

to EBITDA. On the other hand, a sell-side

only flag such issues but provide manage-

due diligence analysis can review histori-

ment with options for fixing the problem

cal financial performance, validate (or

or accurately presenting the information

challenge) earnings assumptions and often

to prospective buyers, including the devel-

uncover positive adjustments impacting

opment of credible responses that address

EBITDA. That detailed, third-party assess-

buyer concerns. This upfront disclosure

ment can not only increase the company’s

helps build trust, keeps multiple buyers

THE PORTFOLIO SOUND DECISIONS // Nick Gruidl, Partner, and Vipul Barbhaya, Director, RSM LLP

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

interested in the process, maintains deal

purchase price while minimizing the

momentum and eases final negotiations.

owner’s tax liability. Sound tax structuring can also identify key elements to make a

Nick Gruidl

Vipul Barbhaya

Allowing business leaders to stay focused

deal more attractive to prospective buyers.

on goals. When company leadership teams

If the seller has net operating losses, or if

opt to take M&A due diligence in-house,

the deal contains significant transaction

they frequently underestimate the level of

or compensation expenses, those items can

internal staff and resource support needed

generate future tax deductions that can

for adequate data gathering, analysis and

help a buyer offset post-transaction in-

reporting. When third-party sell-side sup-

come. At the same time, the seller can use

port is retained, it relieves stress on key

these potential tax benefits as a means to

personnel and allows the management

boost the company’s purchase price.

team to focus on day-to-day operations and

Companies that invest in sell-side due

the achievement of key business targets in

diligence will gain a significant edge in

support of a transaction.

any transaction by minimizing surprises while maximizing tangible value.

Key Tax Issues and Opportunities

Download the full white paper. //

The tax ramifications of any prospective M&A deal are a significant issue for play-

Nick Gruidl is a partner in RSM’s

ers on both sides of the table. By using

Washington National Tax office. He advises

sell-side due diligence, a business owner

clients and firm personnel on corporate M&A

or private equity group can identify any

activity, spin-offs, bankruptcy and debt re-

significant tax issues early in the process

structuring, private equity transactions, con-

and frame those concerns in the best possi-

solidated group issues, analysis of net operat-

ble light. Examples of those issues include

ing loss issues, and partnership taxation.

worker classifications, uncertain tax positions and accounting method changes.

Vipul Barbhaya is a director with RSM’s

Aside from an early warning on poten-

transaction advisory services practice. His

tial tax issues, sell-side due diligence can

experience includes working with strategic

also be a great tool for helping to structure

and financial buyers on a range of transaction

a transaction. A well-designed tax struc-

advisory services, including buy-side and sell-

ture adds a significant amount of value for

side financial due diligence, normalized work-

the seller, since it can generate a higher

ing capital, and divestiture exit readiness.

THE PORTFOLIO SOUND DECISIONS // Kristine Gunn, Human Capital Consultant, Insperity SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

The Secret to Managing Merging Workforces

O

ne of the biggest reasons mergers and acquisitions fail is due to poor change management. As a result, how acquiring companies interact with employees and manage the change process can be the secret to success as two organizations merge.

Effective change management is key to a successful merger or acquisition.

Questions to Consider

• Learn about the acquisition—its his-

When putting a change management plan

tory, its culture and its processes. How

together, consider how human capital

do those fit in moving forward?

infrastructure will be affected.

• What will the organization chart of

• Do you have an employee handbook that highlights processes and guide-

the merged or acquired organization

lines that may be different from how

look like? Determine job titles and the

things were handled previously?

reporting hierarchy.

• Do you have the right people in the

There will be stumbling blocks along

right jobs? Which managers will you

the way—they’re bound to happen in an

need and in what key roles?

endeavor this complex. But, in dealing

• Do you need to reorganize? Is there overlap on positions?

• Review the compensation plan. What benefits and payroll systems are in place, how will they change and how will you tell the workforce about those changes?

• What is the performance evaluation and reward system? Do you need to do a skills inventory or audit the staff ?

with human capital management, take note of these potential pitfalls: • Not involving a human resources professional early on • Not thoroughly understanding employee needs and concerns • Not engaging and guiding the leadership team • Not carving out enough time and resources for a successful integration

THE PORTFOLIO SOUND DECISIONS // Kristine Gunn, Human Capital Consultant, Insperity SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

Outsourcing An experienced human capital service provider can handle day-to-day tasks such as payroll and benefits administration, or go further and help develop a strategic Kristine Gunn

plan for merging workforces. Outsourcing these key elements can free you up to focus on the financial and legal details of the merger or acquisition.

Discover how ACG members can tap into the depth and breadth of experience of Insperity’s business performance consultants at insperity.com/acg. // Kristine Gunn is a human capital consultant at Insperity, the human capital solutions provider for ACG. An executive coach and organizational consultant, Gunn works with executive teams, senior staff and line managers facing diverse strategic business challenges such as fast growth, market shifts, mergers and acquisitions, and developing the next generation of leadership.

To speak with an Insperity representative, please contact Nate Olsen.

THE INSPERITYACG PARTNERSHIP // ACG in April entered a partnership with human resources services management firm Insperity Inc. to offer association members a custom solution to manage administration of payroll, a 401K plan, health insurance and other complex benefits—for their own firms and their portfolio companies. Insperity offers: • A more streamlined and systematic way to manage human resource needs.

• Access to numerous Insperity products and services, including workforce optimization, workforce synchronization, payroll services, time and attendance, organizational planning, expense management and financial services.

• Services that enable business owners and key decision-makers to spend less time focused on the administrative aspects of operating their companies and more time developing the business.

THE PORTFOLIO MID-MARKET TRENDS // Armand Hensen, Managing Director, Grant Thornton

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

PE Firms Must Face Cyberthreat

T

he cybersecurity industry is expected to reach $200 billion by 2020, underscoring a very real threat. Consider the egregious cyberattacks endured by prominent U.S. retailers Home Depot and Target, or those JPMorgan has been trying unsuccessfully to fend off. Because technology is used more frequently, IT systems are increasingly susceptible.

PE firms should recognize their vulnerability and take proactive measures against threats.

Private equity firms are not immune. In

information exchanged when a firm is

fact, PE professionals’ access to sensitive

learning more about a potential target

information about portfolio companies,

company. One breach can ruin a portfolio

coupled with their insatiable need for

company’s reputation beyond repair or

analytical data, makes their firms a prime

shake investor confidence in a private

target for hackers. The question is: What

equity firm, impacting the ability to raise

are private equity firms doing to protect

a future fund.

themselves against the threat? The answer: Many could be doing more.

You can’t lump all PE firms together,

The severity of cyberthreats is not lost on federal regulators. In April, the Securities and Exchange Commission

but most are not proactive about

issued an update to its Cyber Security

cyber protection. Cybersecurity is an

Guidance, urging investment firms to

afterthought, second to dealmaking and

review cybersecurity practices in addition

running portfolio companies, and it is not

to considering the nature and location of

yet viewed as a large enough financial

sensitive information. The agency also

threat to merit serious attention. The truth

suggested assessing internal and external

is, private equity firms have cyberrisk at

threats to financial and information

many levels.

systems regularly and understanding the

First is risk at the fund level, based on a firm’s internal technology. Second is

impact of a compromised system.

Private equity firms are now starting to

portfolio-level risk stemming from various

identify their weaknesses around IT. But

technologies used by portfolio companies

cybersecurity needs be incorporated into

and their third-party providers. Finally,

the overall operational risk assessment

there is risk during due diligence based

process. At Grant Thornton, we’ve

on the volume of sensitive electronic

historically managed acquisition due

THE PORTFOLIO MID-MARKET TRENDS // Armand Hensen, Managing Director, Grant Thornton

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

diligence, where the PE firm’s focus has

Armand Hensen

Cybersecurity must be part of an ongo-

not been on the cybersecurity posture at a

ing process and part of the private equity

target company. This trend is shifting, as

firm’s company strategy and acquisition

PE firms have started to request needed

due diligence process. PE firms need to un-

estimates of cybersecurity investments at

derstand and address the rapidly changing

potential targets.

landscape of cyberrisk. //

It is imperative that a private equity firm understand what sensitive data it

Armand Hensen, managing director in

retains when reviewing cyberthreats at

Grant Thornton’s Advisory Services practice,

the portfolio or fund level, who has access

specializes in information technology

to that data, and what protections and

risk management and security, including

procedures are in place. It’s also important

cybersecurity issues.

to tailor the cyber plan to each individual company profile.

For instance, a retail industry company has significant credit card data risk, health care businesses have patient data to secure, and manufacturers have intellectual property. It should also be noted that even if firms protect against a breach, there is no guarantee a breach will not occur. As such, it is equally necessary to have an incident response plan in place to rapidly mitigate further loss and to remain compliant with multiple domestic and international breach notification laws.

THE PORTFOLIO MID-MARKET TRENDS // Timothy Tufer, Partner, Deloitte

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

Spin Cycle: The Rise of Technology Sector Spinoffs

T

echnology giants regularly make headlines for billion-dollar-plus acquisitions, but the technology sector is seeing an increasing number of spinoffs and asset sales. In most cases, companies are shedding units to allow those businesses to have greater management attention, capture value not appreciated by the market, and increase strategic and financial flexibility.

A technology spinoff may have certain advantages over a sale, but successful execution requires careful planning.

Spinoffs are generally treated as tax-free

value in spinning off an asset so that it can

transactions for investors, which makes

receive the attention it needs but wouldn’t

them even more attractive. But recent

get if it had to continue competing for

events and reviews by the IRS suggest that

attention with the corporation’s “core”

companies can’t assume all spinoffs will

business offering.

be treated this way. The transactions must

But in many cases, even when the

still meet certain conditions. And even

company sees itself as unique, it’s

when they’re cleared, the spun-off entities

responding to a broader technology trend.

must avoid certain transactions for a

The pace of change is so great that failing

period of time.

to give a unit its independence, financial

The trend is unmistakable: From 2011

support and operational focus could prove

through 2014, the number of announced

disastrous to innovation and the goal of

U.S. technology sector spinoffs increased

growing it quickly.

by 71.4 percent. And investors have ben-

Many boards and executives recognize

efited significantly. Index funds that invest

that building the next software or hardware

in spun-off entities have outperformed

breakthrough internally is time- and

overall market indices meaningfully in the

energy-intensive. It can be an uncertain

last five years.

process, especially in large organizations,

It’s important to recognize that each

where business division managers may

of these spinoffs has to be understood on

want to focus on other priorities. In large

its own individual merits and qualities.

organizations, the competition for capital

Some are responsive to internal issues. For

can mean that promising ideas may not get

example, a technology company may see

needed support.

THE PORTFOLIO MID-MARKET TRENDS // Timothy Tufer, Partner, Deloitte

SOUND DECISIONS

MID-MARKET TRENDS

TAP BUTTONS TO NAVIGATE COLUMNS

By spinning off a portion of the

Timothy Tufer

ownership of patents and intellectual

business to form two smaller, independent

property, branding strategy and

organizations, and following that with

governance structure. Certain projects

one or more strategic acquisitions, a

need to be assigned to one business or

corporation may be able to “build” quickly

another, and if one is “in-flight,” it may

what it needs to increase revenue and

need to be suspended until the spinoff is

market share.

complete. Employee relations are critical,

Of course, a spinoff is not the same as a

especially in projecting key steps and

sale. Selling an asset to another buyer may

milestones, and setting expectations

be recognition that the asset is no longer

around roles, compensation and strategy.

a strategic part of the business. It might

Cost structures need to be analyzed

not be big enough to be considered worthy

thoroughly to mitigate the risk of post-

of spinning off in any case. But with a

transaction bloat.

spinoff, investors in the original firm

In short, while many factors argue in

retain an interest in its growth. And there

favor of a spinoff over a sale—and tax

are tax implications to either approach.

costs are among the greatest—executing a

An outright sale can produce significant liquidity, but it may incur meaningful

spinoff successfully requires significant energy and attention. //

tax costs for the seller. A spinoff is often tax-free but doesn’t provide a meaningful

Timothy Tufer has more than 30 years of

boost to short-term liquidity. In fact, some

experience with Deloitte, with more than two

companies begin the process of a spinoff

decades supporting multinational businesses,

and an outright sale on parallel tracks,

SMBs and private equity investors in

allowing market conditions to dictate the

navigating the challenges of complicated

best strategy. If asset valuations decline, an

domestic and cross-border transactions. He

outright sale may be a preferable outcome.

has consulted on hundreds of transactions

If a company goes forward with a

and has served as an M&A transaction

spinoff, it needs to be prepared. A host

services lead while resident in the United

of issues can prove disruptive, if not

States, the Russian Federation, Japan and

catastrophic. Each business will require

Hong Kong.

its own dedicated blueprint for, among other things, future operating and organizational needs, legal structure,

Want to tap into the middle market?

LEARN ABOUT ADVERTISING OPPORTUNITIES IN MIDDLE MARKET GROWTH AND REACH 90,000+ MIDDLE-MARKET PROFESSIONALS. CONTACT US OR DOWNLOAD THE MEDIA KIT TO GET STARTED TODAY.

DOWNLOAD MEDIA KIT Contact Maggie Endres at mendres@acg.org // 312-957-4257

The official publication of

B-SIDE ANDRE CHAMPAGNE // CEO, Hollywood Trucks

SILVER SCREEN… “I love so many films for different purposes. In some of my favorite movies—like ‘Forrest Gump’—I love the great writing. Great acting and great writing take me further than any other aspect of a film.”

ANDRE CHAMPAGNE // Champagne in 2007 co-founded Louisiana-based Hollywood Trucks, which supplies the entertainment industry with state-of-the-art and eco-friendly transportation services. He now serves as CEO of the firm, which won ACG Louisiana’s Emerging Growth Company award in 2014 in recognition of its rapid expansion.

“I BELIEVE PROTECTING THE ENVIRONMENT IS GOING TO BE A MANTRA THAT’S GOING TO BE A THROUGH LINE WITH EVERY SINGLE COMPANY AS WE PROCEED INTO THE FUTURE.”

INNER DRIVE… “Our greatest competition is the last vehicle we built. So we’re always focused on innovation and eco-technology, and forwardthinking in our marketplace.”

GOING GREEN… “We took a step back, we looked at the current units in the marketplace and noticed there really was a substantial area of growth for eco-technology-based vehicles.”

“EVERY DAY I WAKE UP THANKFUL AND EXCITED AND FEEL FORTUNATE TO GO TO WORK, TO GET TO DO WHAT I GET TO DO.”

BIGGER PURPOSE… “I feel like we’re doing something that is for the greater good, especially now that we’ve ventured into having vehicles run on nontoxic substrates, substantially reduced carbon footprints and fuels. I think that’s really the future.”

BEST PARTS OF THE JOB… “I truly enjoy the design, engineering and the implementation of eco-technology into the mobile assets. I also really enjoy the marketing aspects.”

FUTURE MARKETS… “It’s getting fun to look at (the business) in different markets and spaces and say, ‘Okay, how do we now design this asset to deploy into the disaster-relief market, or the military market, or on the medical side, or even just the commercial usage for it.’”

Content sponsored by

THE LADDER ACG MEMBERS ON THE MOVE

Scott Gluck

Scott Gluck, ACG’s outside

HGGC, a California-based

regulatory counsel, has joined

private equity firm, has

the law firm Duane Morris LLP

promoted Hudson Smith Jr.

in its Washington, D.C., office as

and Neil White to managing

special counsel in the corporate

director; meanwhile, Farouk

practice group. Gluck focuses

Hudson Smith Jr.

Hussein and Steven Leistner

on the regulatory, compliance

were promoted to principal.

and corporate activities of private

Smith, White and Leistner have

equity firms.

been with HGGC since 2009 while Hussein joined the firm

Brown Gibbons Lang & Company announced six

E. Robert Kent III

in 2012.

Neil White

additions to its investment

Ironwood Capital, a

banking and real estate groups.

Connecticut-based private

E. Robert Kent III, a member

equity firm, announced three

of ACG Philadelphia, joined

senior-level promotions at the

BGL as managing director to

firm: Marc Reich was named

lead its coverage of private

Marc Reich

chairman and chief executive

equity firms. Other new hires

officer; Carolyn Galiette was

include Justin Wolfort, who

named president and will

joined as director in the firm’s

continue as chief investment

Cleveland office, and David

officer; and Victor Budnick

Sastre, a new associate

became senior managing director.

in BGL’s Chicago office.

Meanwhile, BGL Real Estate

Christian Bienvenu joined

Advisors welcomed Katie

Bank of America Merrill Lynch

Mazur as associate, Anthony

as senior vice president and

Naticchioni as managing

senior client manager, serving

director in the industrials group,

middle-market companies with

and Ryan Butler as analyst in the multifamily group.

Christian Bienvenu

annual revenue of $50 million to $2 billion. Based in Denver, he is responsible for building relationships with clients to help them meet their financial goals.

THE LADDER ACG MEMBERS ON THE MOVE Lariat Partners, a Denver-based

Christopher Hebble has joined

private equity firm, has provided

investment bank Houlihan Lokey

growth capital to Pennsylvania-

as managing director in the

based LaMi Holdings LLC, a

firm’s capital markets group.

distributor and merchandiser of

Hebble is a board member of

non-edible, so-called “impulse” merchandise items—ice cream

Christopher Hebble

ACG Los Angeles and chair of the chapter’s ACG Cup, a

scoops, pet toys, etc.—to

case study competition for

grocery stores. Lariat’s

MBA students.

investment will help LaMi complete a new automated warehouse, improve sourcing, fund expansion-related expenditures and pursue growth opportunities.

Victory Park Capital, an investment firm headquartered in Chicago, provided a $20 million credit facility and strategic equity investment to 7710 Holdings, a South Carolinabased provider of workers’ compensation insurance products and support services to fire departments working in suburban and rural regions throughout the United States.

To submit your promotions, job changes and other accomplishments, please send details and a high-resolution color photo to Associate Editor Kathryn Mulligan at kmulligan@acg.org.

IT’S THE SMALL THINGS MEDIA INDUSTRY TRENDS // A Media Family Reunion

1

GETTING GIGA WITH IT!

2

MOBILE IS RUNNING ON A 31B NETWORK

In August, more than 1 billion people used Facebook in a single day, a first for the company.

To put it in perspective, that number represents one in 7 people on Earth!

4

INSTA-GROWTH

5

MEDIA M&A NUMBERS ARE HIGH, DEF

6

DIGITAL MEDIA BUZZ FEEDS VC INVESTMENT

Mobile advertising rose 65% last year, becoming a $31.9 billion global industry, with spending on mobile display ads increasing 88% from 2013 to 2014 to reach $15.1 billion.

3

AND THAT’S THE WAY IT IS…

At the start of 2015, 39 of the top 50 digital news websites had more traffic to their sites and associated applications from mobile devices than from desktop computers. While cable news viewership is down 8%, network TV news is up 5% and local news is up 3%.

Instagram is the fastest-growing social media site. The number of U.S. adults using the photo sharing site grew 9% over 2014, which means 26% of all U.S. adults now use the service.

Q2 2015 deal value in the media and communications sector reached $76 billion, compared with $39 billion in Q1 2015, driven by deals in the cable ($63 billion), Internet and information ($6 billion), and communications ($3 billion) subsectors.

Last year, venture capital poured at least $683 million into digital media companies like Vox, Buzzfeed and Refinery29, worldwide—more than twice the $277 million invested in 2013.

—Larry Guthrie, director, communications & marketing, ACG Global

THE LEADERSHIP ACG DIRECTORS ACG BOARD OF DIRECTORS //

CHAPTER REPRESENTATIVE DIRECTORS //

DIRECTORS AT LARGE //

Chairman Richard Jaffe* Duane Morris LLP ACG Philadelphia Term expires 8/31/2016

Brent Baxter Clayton Capital Partners ACG St. Louis Term expires 8/31/2017

Jason Byrd The Charter Group ACG Western Michigan Term expires 8/31/2017

Robert Brighton Shutts & Bowen LLP ACG South Florida Term expires 8/31/2017

Ramsey Goodrich Carter Morse & Mathias ACG Connecticut Term expires 8/31/2016

Steve Castino Vestal & Wiler CPAs ACG Orlando Term expires 8/31/2018

Mark Hollis Centerfield Capital Partners ACG Indiana Term expires 8/31/2016

Karen Grexa KeyBank Business Capital ACG New Jersey Term expires 8/31/2017

Jay Jester Audax Group ACG Boston Term expires 8/31/2018

Jay Hansen O2 Investment Partners ACG Detroit Term expires 8/31/2017

Scott Linch Dixon Hughes Goodman ACG Charlotte Term expires 8/31/2018

Karin Kovacic Alcentra Capital ACG Connecticut Term expires 8/31/2018

Don Lipari McGladrey ACG New York Term expires 8/31/2017

Mark Lehman Parsons Behle & Latimer ACG Utah Term expires 8/31/2018

Cassandra Mott Thompson & Knight LLP ACG Houston Term expires 8/31/2016

Mike McVey Hylant Group ACG Columbus Term expires 8/31/2018

Martin Okner SHM Corporate Navigators ACG New York Term expires 8/31/2018

Walter O’Haire Valuation Research ACG San Francisco Term expires 8/31/2017

Gretchen Perkins Huron Capital Partners ACG Detroit Term expires 8/31/2016

Titus Schurink HPE Growth Capital ACG Holland Term expires 8/31/2018

Karen Tuleta Morgenthaler ACG Cleveland Term expires 8/31/2017

Mitch Woolery Kutak Rock LLP ACG Kansas City Term expires 8/31/2018

Thomas Turmell TMT Capital Partners LLC ACG Chicago Term expires 8/31/2018

Vice Chairman Jason Brown* Victory Park Capital ACG Los Angeles Term expires 8/31/2016 President & Chief Executive Officer Gary A. LaBranche, FASAE, CAE* ACG Global Chairman of Finance Angie MacPhee* RGL Forensics ACG Denver Term expires 8/31/2016 Secretary J.B. Dollison* Crutchfield Capital Corporation ACG Houston Term expires 8/31/2016 Immediate Past Chairman Doug Tatum* Newport Board Group ACG Atlanta Term expires 8/31/2016

ACG HONORARY DIRECTORS // Robert G. Coffey Alan B. Gelband *denotes member of Executive Committee

ACG NEAR YOU ACG CHAPTERS ACG 101 Corridor acg.org/101

ACG Detroit acg.org/detroit

ACG Orlando acg.org/orlando

ACG Arizona acg.org/arizona

ACG Edmonton acg.org/edmonton

ACG Philadelphia acg.org/philadelphia

ACG Atlanta acg.org/atlanta

ACG France acg.org/paris

ACG Pittsburgh acg.org/pittsburgh

ACG Austria acg.org/austria

ACG Germany acg.org/germany

ACG Portland acg.org/portland

ACG Barcelona acg.org/barcelona

ACG Holland acg.org/holland

ACG Raleigh Durham acg.org/raleighdurham

ACG Boston acgboston.org

ACG Houston acg.org/houston

ACG Richmond acg.org/richmond

ACG Brasil acg.org/brazil

ACG Indiana acg.org/indiana

ACG San Diego acg.org/sandiego

ACG British Columbia acg.org/bc

ACG Kansas City acg.org/kc

ACG San Francisco acg.org/sanfrancisco

ACG Calgary acg.org/calgary

ACG Kentucky acg.org/kentucky

ACG Seattle acg.org/seattle

ACG Central Texas acg.org/centraltexas

ACG Los Angeles acgla.org

ACG Silicon Valley acg.org/sv

ACG Charlotte acg.org/charlotte

ACG Louisiana acg.org/louisiana

ACG South Florida acg.org/southflorida

ACG Chicago acgchicago.com

ACG Maryland acg.org/maryland

ACG St. Louis acg.org/stlouis

ACG China acg.org/china

ACG Minnesota acg.org/minnesota

ACG Tampa Bay acg.org/tampabay

ACG Cincinnati acg.org/cincinnati

ACG National Capital acgcapital.org

ACG Tennessee acg.org/tennessee

ACG Cleveland acg.org/cleveland

ACG Nebraska acg.org/nebraska

ACG Toronto acg.org/toronto

ACG Columbus acg.org/columbus

ACG New Jersey acg.org/newjersey

ACG UK acg.org/uk

ACG Connecticut acg.org/connecticut

ACG New York acg.org/nyc

ACG Utah acg.org/utah

ACG Dallas/Fort Worth acg.org/dfw

ACG North Florida acg.org/northflorida

ACG Western Michigan acg.org/wmich

ACG Denver acg.org/denver

ACG Orange County acg.org/occ

ACG Wisconsin acg.org/wisconsin

COUNTDOWN TO RETIREMENT

MONTHS

DAYS

HOURS

THANK YOU, CAROL JEZIERSKI! Your ten years of dedicated service, hard work and professionalism at ACG is your legacy. As employee #2 you helped to build the capacity of ACG Global to serve members and chapters and “Drive Middle Market Growth.” Hundreds of board and staff members will long remember your help and your thoughtful attention to their needs.

You helped to make today’s ACG possible, and in so doing have ensured its future success.

T HA N K Y O U A N D B E S T WI S H E S I N Y O U R R E T IR E ME N T !