As a government contractor, you have unique financing needs. The Government Services Group at Wells Fargo Capital Finance understands those needs and can provide accounts receivable financing to address them. Our solutions are ideal for companies that provide goods and services to federal, state, and municipal governments and their agencies.

With accounts receivable financing, your company can accelerate cash flow by selling government invoices to Wells Fargo Capital Finance. You receive cash quickly, with funds typically advanced within 48 hours of purchasing the invoices.

How you benefit

Working with us, you can benefit from:

• Financing that can adjust to your needs: Our financing solutions are typically covenant-free, provide increased cash flow, and can even include unbilled availability to support interim payrolls.
• Acquisition support: Our financing programs can be ideal for companies considering a merger or acquisition.
• Industry expertise: We have been assisting contractors since 1987 and understand how to work with government to meet your financing needs.
• Flexibility when you need it the most: We understand the challenges government contractors face, which means we can help you access financing that may not otherwise be available.

Put our strengths to work for you

Our accounts receivable financing facilities can support:

• New contracts
• Existing contracts
• Vendor and subcontractor obligations
• Existing bank debt
• Expansion into new markets
• Growth of staff

Contact us today

Michael Haas

602-381-2831

michael.haas@wellsfargo.com.

They don’t call it the Great Recession for nothing. Our annual performance report of leading, listed security and security-connected businesses presents a stark picture, but surely not despairing.

Twenty-five comparable companies out of 66 reported an increase in sales for the previous full year. The previous year 53 reported greater sales growth. Yet to many observers earnings per share (EPS) are king. Broadly similar to the sales profile, 25 companies reported an increase in EPS compared with 31 the previous year. But the trend was down: 20 were lower and 13 reported a loss.

Finally, shareholders deserve earnings from those corporations poised to pay them. Dividends increased in 14 corporations (compared with 16 the previous year), five decreased, seven remained the same, and 40 are not paying dividends.

Maintaining momentum with dialogue and the flow of information is very important to the buyer and seller during negotiations. And the intensity of the momentum indicates the commitment each side has in completing the transaction. A buyer who keeps the momentum throughout the entire process – investing time, money and personnel resources to getting the transaction completed timely is sending the seller a message that the seller’s company is important. Keeping the momentum on the seller’s part is a way the seller tells the buyer that there’s a genuine interest in selling the company, and that the seller’s motivated enough for the buyer to make these necessary investments. However, most buyers and sellers are somewhat cautious in how they communicate this eagerness to complete a transaction, because of their concern that in doing so they may lose leverage in the negotiations.

In order to start and maintain the momentum, both the buyer and the seller have to be committed to the transaction; it cannot be a one-sided effort. As previously stated, each side maintains the momentum in order to show the other side that there’s interest, but both parties also maintain the momentum for its own benefit. Usually, there’s some time-line necessary to getting the deal closed in order for either side to enjoy the benefits of the transaction. Momentum Is Important to Both Sides

From the buyer’s perspective, momentum ensures that the transaction closes, which is very important to the buyer, especially if the seller’s company is a vital part of some strategic plan. For example, the buyer may need the company in order to enter a certain vertical account or geographic market, or it may provide an attractive return on investment. In either case, the longer the transaction takes to close, the longer it takes the buyer to start benefiting from the acquisition.

From the seller’s prospective, the momentum is vital to keeping the buyer interested in the deal, especially true for buyers who are pro-active in the acquisition market. If the buyer’s due diligence team must wait for information from the seller, or the seller’s attorney does not respond promptly to the buyer’s attorney on important purchase agreement issues, the buyer’s personnel will be assigned to other projects. Then the buyer’s team might not be available when the seller is ready to resume the process. If this scenario goes on long enough, frustration starts to set in; the momentum is slowed down, and the negotiations may even stop completely.

Organizing the Process to Maintain Momentum

Some of the steps in the negotiations require the buyer and/or seller to be pro-active and even sometimes aggressive in dealing with getting information or decisions on important issues from the other side. The buyer and seller are usually concerned that any eagerness they display could cause them to lose negotiating leverage in the transaction – and rightly so. Whatever the decision as to who is best to handle the steps, the following are some important steps in organizing the process and making sure the momentum is maintained:

• Assign a “point persons” to manage the activities for their respective side.
• Exchange detailed contact information for personnel assigned to the transaction.
• Meet with its respective attorneys, tax advisors, point person, and transaction manager to reinforce the reasons for doing the transaction.
• Engage in frequent communications between all the team members with decision makers and updating status to the entire team.
• Start accumulating the due diligence information BEFORE any buyer prospects are contacted.
• Seller should review the buyer’s standard purchase contract.

Regardless of the seller’s or buyer’s need or desire for a quick deal, momentum in the acquisition process should be about moving through each stage of the negotiations in an orderly fashion balancing the needs of both parties. And not so fast as to cause mistakes that may later prove costly to either side.

The economic downturn has cause companies from all sectors to make difficult decisions necessary to weather the impact making the advantages of the partial divestiture even more compelling. Large and small companies are considering selling part of the company as a way to raise cash in case the banks decide to limit or not renew the credit lines and the customers slow down on paying their invoices.

Companies are selling divisions or subsidiaries that no longer fit their core operations. The benefits to the seller can be dramatic: making cash available to pay down debt, getting rid of an unprofitable business unit, or in the case of a small closely-held company, offering the opportunity for the owner to slow down, but not get out of business entirely.

For the owners of the smaller company, the decision to sell, or not to sell, part of the company is often driven by emotion, rather than economic prudence. Smaller companies are owned by entrepreneurs who make all the decisions for their company and tend to measure their success in terms of gross volume. The entrepreneur is infatuated with bigness. Making the company smaller is usually not an option. Instead of selling unprofitable divisions, the owner keeps trying to fix them by infusing borrowed funds. This is expensive and has to be paid back. Such a rigid fixation on size often leads to financial problems for the entire company. But there have been some owners of closely-held companies that realized the importance of selling off part of the company when the timing was right. They proved that the advantages found in the partial divestiture were not a secret lost in the large conglomerates. They were able to recognize the value in selling off part of the company — whether it was a need to come up with quick cash, divest an unprofitable division, or just sell a majority of the company and keep the less stressful part to supplement income during retirement.

In preparing for this article, we reviewed the 150 plus security guard industry transactions our firm has managed. We have represented sellers of companies with annual sales as small as $1 million, as well as multi-billion dollar public conglomerates in selling off security guard divisions. Many of our seller/clients had multiple offices or divisions, which allowed for selling off part of the company without taking value away from the business that remained.

We were reminded from our review that over 100 of these 150 plus transactions had something to do with a partial divestiture; even though some of our seller/clients were small.  There is no company too large and few companies are too small to take advantage of a partial divestiture. The only requirement is that the company has “divisible units.” The partial divestiture provides needed capital in the form of equity, as opposed to loans that are expensive and have to be paid back…and helps the company reach their financial goals — first by downsizing through getting rid of unwanted separate units — then taking the proceeds and redirecting them into more profitable areas.

With today’s economic challenges, having sufficient cash on hand certainly helps the company weather the economic storm. After downsizing through selling off part of the company, the resulting company is usually built back to one larger than its original size — more focused and more profitable.