From the penthouse suite of The Milwaukee Center at 111 E. Kilbourn Ave., the investment bankers at Corporate Financial Advisors LLC help their clients navigate through big changes.
"The main thing we do is we help middle market companies – those with $3 million to $200 million in sales and value – solve problems," said Joe Sweeney, a managing director of CFA. "Things like, ‘Do I sell my business?’ ‘Do I buy another business?’ ‘Do I recap(italize)?’ or ‘Is a managed buyout right?’"
Most of CFA’s clients are in the process of taking their businesses to market, Sweeney said.
Over the past three years, CFA has cobbled together six to 10 deals per year, said Joe Froehlich, also a managing director of the firm. On average, deals take about six months to complete.
Some of the sales CFA has helped facilitate in recent years include: the March purchase of Badger Express Inc., a Fall River trucking and logistics firm, by a group of investors (see accompanying story); the 2004 sale of Town Bank to Wintrust Financial Corp.; the 2003 sale of Pewaukee-based Omni Tech Corp. to Micron PC; and the 2004 management buyout of Menomonee Falls-based Mero Structures Inc. (Mero Structures changed its name to Novum Structures LLC last week.)
All of those transactions, Froehlich and Sweeney said, are testaments to the firm’s team approach to doing business. Sweeney, Froehlich and Clay Brock, also a managing director, work in the firm’s downtown office. The three investment bankers routinely handle different parts of a transaction for clients, an approach they believe helps them navigate around roadblocks.
"Many things occur during negotiations or your due diligence. There are about 100 things that come up that can derail any deal, and they can be bad for your client," Brock said. "That’s the relationship-intensive part. To have more than one person who is capable of dealing with the different aspects is enormously powerful."
Brock, Sweeney and Froehlich each have managed companies in other stages of their careers and share their insights with their clients.
"Everyone here has owned and operated companies," Sweeney said. "We’ve lived in their shoes."
According to the three investment bankers, Froehlich’s strengths are in compiling financial figures and calculations; Sweeney is best at making personal connections with clients and key contacts; and Brock is best at describing value and identifying problems.
"Joe (Sweeney) is very good with issues related to people in business," Froehlich said. "During the transaction, he’s very good at anticipating problems and steering around them with people issues."
"Clay is very good strategically and analytically," Froehlich said. "He can take apart a situation, understand the drivers and do an analysis of what is happening."
The investment bankers say the human aspect of business is particularly important when a company is being sold, because many owners of small to mid-market companies have most of their net worth tied up in their businesses.
"You’re dealing with people’s No. 1 asset in their life, and you’re telling them how to maximize value," Sweeney said. "Most have 80 to 90 percent of their net worth in their business."
Sometimes, CFA’s clients have needs for additional capital, especially when a management group is trying to buy the company.
As a result, shortly after CFA formed in 1994, the company also established CFA Capital Partners, a merchant banking group that invests in privately held companies.
In special cases, CFA Capital Partners can partner in the purchase of a company, operating like a private equity group. Depending on the need of the client, CFA Capital Partners can purchase either a majority or minority share of the company.
"We pursue a select few deals that fall through the screens," Froehlich said.
Unlike a private equity group, CFA Capital Partners invests funds from its directors and their friends and family. Instead of needing to return capital on a firm timeline, the group can take a longer approach before it sees a return.
"Now we can do what’s right, without outside constraints," Brock said. "We are not driven by an external point in time."
"I love what I’m doing," Froehlich said. "And I’m doing what I want to be doing until I stop working. Investment banking is a fun and interesting business. You’re always dealing with entrepreneurs, and entrepreneurs are both a blast and incredibly frustrating to deal with."
"We like helping people buy and sell companies more than we like running companies ourselves," Sweeney said. "Part of maturation is helping others succeed more than succeeding yourself. We just happen to be in the M&A side of things. I can see myself doing this for a long, long time. Never say never, but we’ve got nine years on our lease."
Corporate Financial Advisors LLC
Locations: 111 E. Kilbourn Ave., Milwaukee;
N19 W24133 Riverwood Drive, Suite 170, Waukesha
Web Site: www.cfa-llc.com
Managing Directors: Joe Sweeney, Joe Froehlich, Clay Brock, Richard Bero and F. John Stark III
