Frequently Asked Questions

A sustainable business is concerned about the social, environmental, and economic impacts associated with its current and future operations and the ability of the business to meet present needs while ensuring its and others' long-term survival.

We believe the UN's sustainable development goals best represent the areas that need attention globally, although Colton Alexander works primarily with businesses in water, food, energy, and waste.

No. Colton Alexander, LLC is an affiliate of a broker dealer. A Broker Dealer is a company that a registered investment professional is required to affiliate with to buy and sell investment products on behalf of investors. The Securities and Exchange Commission (SEC) delegates the supervision of financial advisors to the Financial Industry Regulatory Authority (FINRA). FINRA requires us to choose a broker dealer to partner with on your behalf. Colton Alexander chose the broker dealer Weild & Co. 

https://www.weildco.com/ Member FINRA | SIPC.

We have chosen to work with Weild & Co., an independent broker/dealer, which means our firm also remains independent. We may act in your best interest, without pressure to promote a particular product or strategy. It is a model that differs from some other firms, who are accountable not only to clients, but also to the parent company that employs them.

Weild & Co. was founded by David Weild IV, the former Vice Chairman of NASDAQ who headed a Top 10 investment bank and is known as "The father of the JOBS Act", to give investment bankers, placement agents, and other human capital the tools required to prosper while driving better outcomes for corporate clients and their investors.

Colton Alexander can be a strategic asset of your company, measured by the contributions we're making to the long-term success of the enterprise. 

Legal fees for capital raises, M&A deals, and strategic transactions can be expensive when, often, they need not be. 

Having managed hundreds of outside counsel, we've seen extensive legal expertise throughout the United States, Canada, and the UK. 

We do not take referral fees and only have an incentive to refer and manage outside counsel best suited to handle the particular matter. 

Specifically, we can:

· Assist with choosing the firm that provides the right value for the work to be done and the desired outcome

· Establish a baseline budget for each matter

· Leverage resources efficiently (i.e., Is a partner needed or will an associate or paralegal, an internal resource, or a non-attorney outside vendor work?)

· Negotiate rates

· Manage expenses

· Update and strengthen outside counsel guidelines.

You should be continually planning, positioning yourself, and networking to prepare for future fundraises. Luckily many activities that you should focus on to make yourself more attractive to an investor are the same things that will help make your company attractive to customers. Companies that use us for full-service preparation and capital raising services typically engage us 8 – 10 months before their preferred closing date. We also offer bespoke services that can help strengthen your position at any point.

In a typical 8-month engagement, we spend the first two months researching and planning. We create a marketing strategy, build an investor database, and connect with our distribution network to "preview your deal." We market your deal in months 3 and 4. This is when you can expect to have conference calls with interested parties. In months 5 and 6, we typically have early negotiations and letters of intent. In months 7 and 8, there will be due diligence, deeper negotiations, and closing.

We have found three things that make a significant impact on funding readiness. First, all messaging and materials should be clear and concise. Investors have very little time and do not want to study your materials to understand what you do and what problem you solve. Second, no matter what stage your company is in, you should have something that shows customer validation. If you are pre-revenue, you should talk to prospective customers and conduct market research to show support for your business. Finally, be transparent. The team supporting you and prospective investors should know the risks associated with your company. It is always best to be upfront about all aspects of your company that way we can work to mitigate risks. It is also essential to create a relationship based on trust with potential investors, and withholding information makes that impossible. 

The time needed depends on how quickly you can provide all needed information to us as part of our due diligence review and drafting process. For straightforward bridge financings such as convertible notes where we know the client well, those can usually be completed in as little as a few weeks. For more complicated financings such as preferred stock capital raises, those typically require at least a month, particularly where a private placement memorandum needs to be drafted (although private placement memoranda are less commonly used these days).

An unaccredited investor is any individual person who makes less than $200,000 annually (or less than $300,000 including a spouse), and also has a total net worth of less than $1 million (excluding the value of their primary residence).

An accredited investor is an individual person with an annual income exceeding $200,000 (or $300,000 for joint income), for the last two years with the expectation of earning the same or higher income in the current year.

A person may also be considered an accredited investor if their net worth exceeds $1 million (excluding the value of their primary residence), either individually or jointly with their spouse.

An entity is an accredited investor if it is a private business development company or an organization (think banks, insurance companies, brokers, and trusts) with assets exceeding $5 million.

Colton Alexander does not invest directly in its clients as an investment banking firm. Instead, we represent the client by marketing their business to many parties to get the best price and terms available from the marketplace. Colton Alexander has separate business operations whereby private investments are made through a private investment company but these entities are distinctly separate and follow all regulations and processes to maintain such separation.

Under United States securities laws, and the securities laws of each individual state (or "blue sky" laws), offers and sales of securities have to be registered or exempt from registration. Generally, registered offerings are too cost prohibitive for startup companies. This means a startup needs to issue securities under an exemption from registration. The most widely available and used exemptions depend or mostly on limiting the offering to only "accredited" investors, but not every entrepreneur has a rich aunt or uncle in the family who qualifies as an accredited investor. Some exemptions permit offering to non-accredited investors, but depend on those investors still being "sophisticated." An investor can qualify as a non-accredited but "sophisticated" investor if the investor, either alone or with a "purchaser representative," (as defined by the SEC) has enough knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment. While your mother and best friend, and second cousin may be brilliant and may even run their own businesses, they may lack the sophistication the SEC requires to meet exemption requirements. Determining whether to include non-accredited investors, whether sophisticated or not, in the offering at the outset is important because it will affect which exemptions from registration are available for the offering and on what basis.

No. As a company, Colton Alexander does not provide tax advisory services or legal counsel. But, for every client and every project, Colton Alexander often assembles the team roles needed for the transaction at hand and has a large network of trusted tax, legal, and other sspecialized professionals to support client needs.

It is always best to sell a business when you want to do so rather than when you have to. That means you go to market when you and the company are fully prepared. In a perfect scenario, you may time your exit to match the solid performance of your business with peak selling cycles in the private capital markets. The earlier you start the planning process, the more control you will have over this decision.

Yes, but it is probably not in your best interest. While you are an expert at running your company, you probably are not as knowledgeable about the M&A process. Selling a company is time consuming and very emotional. This business most likely represents your life's work. You have an emotional attachment. If you normally use terms such as earn out, working capital gate, hurdle rate, and mezzanine, it is probably a good idea to call and discuss your situation with a competent intermediary. You do not want to make a mistake and leave a chunk of your hard-earned nest egg on the table at closing.

There are many methods and metrics to determine the value to your company. Sometimes we use many simultaneously. Tax value, Estate Value, Enterprise Value, Discounted Cash Flow, Multiples of EBITDA, etc. all are valid ways to tell what a company may be worth. But, the real question is to whom does the value matter, and in what context? The number your CPA gives you might be appropriate for tax planning purposes, but it does not reflect the possible selling price for your company. In an M&A scenario, the acquirer determines value. An M&A advisor, like Colton Alexader, will use various methods to help you understand how the market will appreciate your company and what that market may be willing to pay you for it.

Colton Alexander customizes the process for each company. Typically, we start with phone calls and meetings to determine owner strategy and expectations. We then collect data and prepare marketing materials to attract potential buyers and investors. Our advisors work with those buyers and investors to answer questions, and request offers for your business. We work to negotiate term sheets and complete the Letter of Intent. The next step is to help manage the due diligence process, to ensure the buyer/investor has enough information to feel comfortable with the deal, and to secure financing. The entire process requires an enormous amount of legal paperwork, and other forms of documentation. We work with the lawyers and accountants involved, to ensure that they have what they need to prepare an appropriate sale agreement. This simple summary of major tasks only highlights what is involved. Call us. We will be happy to answer questions.

Studies show that prepared sellers generally own more satisfaction from the sale of their business. Planning for the sale of a company should begin the day you start the company, not the day you decide you want to cash out. Take the time to write out goals and objectives. Pay professionals to review your financials, and give advice on how to keep them accurate. Talk to M&A professionals to keep your finger on the pulse of the investment market your company resides within. You will gain insight into what your company may be worth, and when it makes sense to sell.

Things that reduce the value of a company are usually tied to factors increasing the risk associated with the investment. Incomplete and/or unreliable financial records are the greatest value detractors. Customer concentration and strong owner dependence are two other issues often cited as making a potential deal less attractive.

While many things can contribute to an increase in company value, overall risk to the investment has the greatest impact. Most often, we find these centered on consistent growth rates, recurring revenue streams, and strong synergies with other companies in the same industry.

Longer than you think. Actual timing depends on many factors, but you can expect to be involved in the process for 9-12 months if your company is small and considerably longer for a larger business. Companies with clean and reliable financials, documented processes and procedures, strong management teams, etc. sell more quickly and for more money than those without them. Careful preparation and competent professional advisors can shorten the timeline and increase seller satisfaction.

Yes. Whether your company is relatively new or has been around for decades, the potential of future revenue probably determines the value of your company. But, acquirers are allergic to risk, and most are hesitant to overpay for educated guesswork. Market or product exclusivity, reliable and repeatable processes, intellectual property, and long-term contracts help ensure the likelihood and reliability of the revenue potential of your company.

We help prepare you for the sale process, and the sales transaction. We advise you how buyers and investors will view your company, and what steps you should take to enhance its value. Because we are members of the private capital industry, we monitor the marketplace for selling cycles in the industries we work with, and advise you when the time is right. Most important, we look at your company with an objective eye, and manage the transaction process. This helps you keep revenue flowing, and protects you from spooking a buyer/investor with a drop off in sales before closing.

Yes! Because you have history with them, your Certified Public Accountant will be an important part of the deal team. Legal representation is another matter. You will need to supplement your regular legal counsel with one specialized in mergers and acquisitions. While Colton Alexander cannot replace legal counsel, we do help manage the legal team, and this helps hold down transaction and due diligence costs.

Yes. Audited statements are the standard for reliability and credibility. They may seem expensive, but they more than pay for themselves in the transfer process. Acquirers prefer and banks require them as part of sizable transactions. Having clean and credible books helps attract more attention from the buying community, and enhances the speed of processes normal to the transaction.

The process usually starts with a review of three to five years of financial records, including tax returns, asset schedules, management profiles, photos of facilities and equipment, summaries of intellectual property (patents, copyrights, etc.) documentation, copies of deeds and leases, and organizational papers. From there we determine what else must market your company.

A successful transaction requires the seller to maintain consistent operations and revenue generation throughout the process. Meanwhile, if your competition learns the business is for sale, they will naturally use the information against you, and your customers may stop buying from you. When employees prematurely learn about a potential sale, they often look for a new place to work, to protect themselves. Confidentiality agreements protect your business, and the integrity of the deal.

Call us! The Colton Alexander team will work to understand your needs, and help you fulfill your acquisition goals.

The first step is to set up an introductory meeting with one or more of our managing directors. During this meeting, you can learn more about our firm and we learn more about your company and the scope of work required. We will also explore if we are a good fit for each other. Our team only moves forward with companies we have a high probability of helping to a successful outcome. If we determine that we are a good fit, we will produce a proposal with pricing based on your unique situation and the scope of the work. For capital raises and M&A engagements, this typically includes a retainer, success fee, and warrants. For our bespoke services, there is a flat fee. 

At Colton Alexander, our team is invested in creating a better future for those that come after us. The UN's sustainable development goals best represent the areas that need attention globally.

Sustainability is a large part of our process. We begin by sourcing companies we believe will positively affect this planet. Our primary role is to prepare our clients for funding/sale and to help match them with the right investors or buyers. We advise our clients on the best ways to communicate their value, which includes how the company's sustainability goals will improve their bottom-line .   

We also have team members specializing in alternative financing methods for companies with a strong ESG component. They can advise companies that qualify on how to navigate this area.