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Brian Renstrom
Title: Managing Partner, Massachusetts Advisory Practice, BlumShapiro
Age: 58
Industry experience: 37 years
With more than 35 years of experience, Brian Renstrom knows the ins and outs of the M&A business, including how firms can make themselves more attractive to buyers. That doesn’t just mean through growth and earnings, but also how a company positions itself regarding technology, cybersecurity and preparation. Renstrom is the managing partner of the Massachusetts advisory practice at BlumShapiro. The mechanical engineering major from Worcester Polytechnic Institute was immediately recruited out of college by the firm Arthur Anderson, where he spent the first 22 years of his career. His next step was to become a partner at PWC from 2002 to 2004. Following the sale of PWC’s consulting group to IBM, Renstrom sought a new challenge, and joined BlumShapiro to launch the firm’s advisory practice. Banker & Tradesman caught up with Renstrom to discuss M&As and how firms can position themselves for a better transaction.
Q: What can businesses do to make themselves more appealing for a merger, acquisition or expansion?
A: Whether it’s a lending institution such as a bank, a private equity firm seeking to acquire a business or a strategic buyer looking to merge with an existing company, the key items these groups usually look for include the company’s growth opportunities, historical business performance and financial predictability. For the business seeking to be acquired or financed, it’s important to have a minimum of three years audited or reviewed financial statements on hand for evaluation. Ideally, the statements will help make the case that the company is managing itself in terms of controls, costs and steady profit performance.
Lending institutions and potential buyers like to see strong evidence of discipline when it comes to budgeting, and that the business has a serious, well-defined plan for accomplishing its goals in the marketplace. Many businesses only undertake this level of evaluation when determining to sell or not once or twice in their life cycles, so it’s helpful to have professional support in preparing.
Q: What advice would you offer to a business looking to improve its appeal for a merger or acquisition?
A: The business should be able to show and support a record of strong, predictable performance, which leads to the believability of its future success. While you can’t always predict how a business will do based on how it has done in the past, a strong record of performance puts the business owner in a much better position when it comes to negotiating.
Having a solid team in place is also a must, which includes sound leadership, with appropriate skill sets and capabilities from the team across sales, finance and operations. A company must have and follow a viable and realistic strategic plan, the vision as to where the company is targeted to go, the opportunities for growth and a track record showing success in achieving its goals. Ownership needs to be fully accountable to stakeholders and show that there is a mechanism in place for self-evaluation and self-improvement – and to communicate this in a comprehensive manner. This process should be a part of every company’s DNA.
Q: What is the role of financial software reporting and process improvement in evaluating the health of a business as it prepares for capital to expand?
A: Financial reporting and process improvement should be core competencies of the business as they provide evidence that the business is measuring and managing itself to ensure future success. Any business seeking to merge or be acquired cannot afford to be operating with older systems and older technology. Having proper software in place is an important step in showing that the business is going in the right direction. Improving productivity and the ability to leverage technology is an important part of every business. A business with older systems and older technology is at an extreme disadvantage in today’s market. Business decision-makers should take advantage of the newer, better technologies available, as they bring real additional value to the business. Doing so will further help from a cost perspective as well, in that many current manual tasks can now be accomplished through software.
Specifically, companies should leverage cloud-based solutions to include products allowing for seamless integration with vendors and customers. In the last three to four years, there have been great advances in these solutions on the market, which can both improve the cost structure for the business and also improve the timeliness and visibility of business transactions.
Q: In evaluating any business, what are the risks and needs to evaluate cybersecurity, product viability and so forth in evaluating the worth of a business?
A: We see a heightened increase in the emphasis that private equity and other lenders are placing on how a company deals with cybersecurity issues. They want to understand if a company has taken the appropriate actions to assess itself and its cyber risks. What kind of mitigation plan is in place to address issues that arise? What steps has the company taken to make itself less vulnerable to cyberattacks? Is there an ongoing education or training of the firm’s employees?
Q: What other ways are there to streamline business processes and evaluate outsourcing of finance operations, IT, cybersecurity and human resources?
A: For a business seeking to be acquired or to merge with another company, it makes sense to take advantage of professional advice in the marketplace. With regard to company tax structure, having the right team to advise that has a strong understanding of the new tax rules and regulations will result in the best way for tax maximization for both the seller and the buyer. The same can be said about both human resources and cybersecurity. As one example, here in Massachusetts the issue of noncompete covenants in the case of a merger or acquisition requires the evaluation of an expert, and few companies have that level of expertise in-house. The same is certainly true of cybersecurity; any business with an infrastructure that is seen as vulnerable to attack becomes a less attractive candidate for acquisition.
Renstrom’s Five Favorite Golf Courses:
- Myopia Hunt Club
- The Country Club Brookline
- Fisher’s Island
- Shelter Harbor
- Hyannisport
