Investment Bank Targets Mid-Market, Private Firms As Tax Worries Swirl

Published by Family Wealth Report:

With many owners of mid-size and privately held firms wondering about the tax implications of selling their businesses – a topic that we have written about extensively – an investment bank is developing a market value assessment company.

Founders Advisors, a US investment bank based in Birmingham, Alabama, has formed a market value assessment company to evaluate and grade middle market private companies – areas of interest to family offices and other wealth management clients concerned about tax hikes.   

The new entity, Investment Grade Advisory, will advise and work with founders of middle market companies across the US to assess if they are investment grade relative to the private capital markets. This process allows business owners to identify areas of strength and deficiencies that can be addressed to drive value and make their companies more attractive and investment grade. 

The IGA team will be led by president Jon Hyman, a senior level global executive with more than 25 years of extensive experience across a broad spectrum of industries.

“Due to several market dynamics, it’s a profitable time in the mergers and acquisitions industry, with many business owners contemplating a sale or recapitalization due to concerns over taxes going up under the new administration” Zane Tarence, managing director of Founders Advisors and IGA advisory board member, said. “Even in this very strong M&A market, sometimes we find we are unable to assist owners because their business is not well positioned for a market process making it challenging to achieve their expected valuation, or even worse, is their company attractive enough to attract institutional capital?”

Tarence’s comments refer to Joe Biden’s administration wanting to raise capital gains taxes on HNW investors – among other measures – creating the dilemma for business owners thinking of selling up whether to hold on or act now and use a trust or other structure. (See articles on this topic here and here.)

Founders Advisors has developed business value enhancement tools including an assessment called LITE that “codifies over 150 years of investment banking experience.” With these tools, IGA helps owners “accurately appraise how well-positioned their business is to sell (in comparison to their peers and other industry players of similar size) and provide a comprehensive roadmap to help build and ultimately monetize the value created,” Founders Advisors said.

Hyman has served as executive managing director for a Dallas investment bank and has been the CEO for two private equity-owned companies. Additionally, Hyman served for more than 20 years in the US Army as a commissioned officer, earning the Bronze Star Medal in Desert Storm. He holds a master’s of business administration from Columbia Southern University and a bachelor’s degree in engineering from the US Military Academy at West Point. 

In addition to Hyman, the Investment Grade Advisory team includes –

— Brian Daley, executive vice president; 
— Joseph Vinar, analyst; 
— Zane Tarence, advisory board and managing director of Founders Advisors; 
— Wesley Legg, advisory board and president and chief compliance officer of Founders Advisors; and 
— Duane Donner, advisory board and founder and CEO of Founders Advisors.