January 2024 | Embarc Newsletter
Welcome to Embarc Advisors’ inaugural newsletter. As we step into 2024, we wanted to take a moment to express our sincere appreciation for your continued trust and collaboration. At Embarc, we are committed to delivering value to our clients through our expertise in corporate finance and prowess in problem-solving – whether it be M&A, Financial Due Diligence, or FP&A and CFO services. Your continued success remains our top priority, and we look forward to another year of partnership, growth, and shared success. Wishing you a prosperous and fulfilling year ahead. One in five startups will fail in their first year. Half of them will fail within five years. The hard truth is that starting a business is an uphill battle, and many never make it to their break-even point.
Key Trends to Watch For
Mergers and Acquisitions (M&A)
2024 is going to be a big year for M&A. Rate hikes have ended. The economy is on track for a soft landing and there is potential for rate cuts in the near future. All of this is conducive to reinvigorating the M&A environment which dipped in 2023. Large PE-backed platforms are gearing up to exit and realize their returns. Medium to high-quality middle market firms will continue to see a lot of interest from potential buyers that have a record amount of dry powder to deploy.
Financial Planning and Analysis (FP&A)
High-quality financial management is becoming more important than ever as we leave behind ZIRP and Growth-at-All-Cost in the rear-view mirror. Managing key metrics, re-examining unit economics, and charting a path to profitability is once again becoming a prominent topic among startups. An increasing number of bootstrapped companies are realizing that Strategic Finance is different from bookkeeping, controllership, and accounting – driving more demand for higher-level FP&A and CFO advisory.
Financial Due Diligence | Quality of Earnings
Awareness of a Seller’s Quality of Earnings in the middle market continues to grow but is still far from table stakes. With higher interest rates, the margin for error reduces, and buyer due diligence is getting more rigorous. Seller’s need to prepare accordingly.
Embarc Advisors Spotlight
Great Advisory Without Great Fees
We are advocating for a new approach to M&A advisory services by introducing an hourly-based fee model with no success fee. We have found that this model better aligns our incentives with clients’ needs and ensures that advisory services are tailored to their situation.
The traditional success-fee model is criticized for potentially pushing advisors to prioritize closing deals over achieving the best outcomes for clients. Our structure allows us to provide focused attention, better results, lower costs, and a more patient approach to negotiations. Our model has been well-received by the market, and we doubled in size despite a slowdown in M&A deal activity in 2023. Perhaps on a more telling note, we have been successful across a number of projects that were previously unable to close a deal with a traditional investment bank.
Our hourly fee model allows us to bring top-tier talent to deals of all sizes; as small as $5M up to $100M including startups and middle-market businesses. Historically, these businesses have been priced out of the market, as top advisors prefer to work on larger transactions (that carry larger fees). Embarc’s innovative approach disrupts this 100-year-old model, allowing smaller businesses to access to comparable level of expertise and guidance. By focusing on hourly billing, we ensure that clients receive dedicated attention regardless of the deal’s size.
We have seen a lot of interest from companies that have already received interest from prospective buyers – some already had LOIs. Given the high likelihood of deal-close, our Time & Materials based approach allowed these clients to receive high-quality advice without paying a huge fee. Our fees are typically a fraction of the IB success fee, ultimately benefiting startups and founder-owned businesses in the middle market.
To find out more about Embarc Advisors and the hourly fee structure, please click here.
Discover a New Way to Build and Execute Business Strategy
Our firm is taking a different approach to financial advisory. Get in touch with our team if you’re interested in learning more about how we can help your business take that next step.