Kevin Price, Host of the Price of Business on Business Talk 1110 AM KTEK (on Bloomberg’s home in Houston) recently interviewed Dan Corredor.
About the interviewee
Dan Corredor is the managing partner for the Houston practice of Hardesty, LLC. He is a seasoned senior financial executive and Certified Public Accountant (CPA) who has held CFO and CEO positions in various industries such as oil and gas, petrochemical and regulated utilities.
Dan has worked and for both publicly traded and private companies, in the U.S. and in Latin America. He has been involved in more than 50 acquisitions as well as turnarounds, and high growth companies.
Tell me about your firm (number of employees, location, type of companies you work with, etc.).
Hardesty, LLC is a national executive services firm that provides on-demand financial management executives to companies ranging from emerging growth to large public entities. The Hardesty team is comprised of senior industry executives with broad corporate, operational and professional services experience. The CFO partners, principals and professional staff are CPAs or MBAs, who have extensive experience as CFOs, VP’s finance and corporate controllers as well as experience with Big Four or national public accounting firms. Hardesty has offices in Orange County, Los Angeles, San Francisco, Houston, Dallas and Atlanta.
What type and size of companies do you have as clients?
Hardesty clients range from pre-revenue emerging growth to large public companies. However, th core client base is in the middle market, companies with revenues ranging from $20 million to $500 million. Hardesty serves a wide range of industries with particular expertise in healthcare, oil & gas, aerospace & defense, manufacturing, retail, and education.
What comes to mind when you see this topic?
We are currently experiencing a unique and privileged cycle where M&A is extremely dynamic and active. There is a lot of liquidity across all sectors, commercial lending, public company balance sheets, equity groups and all types of funds. New private equity groups have formed in the last three years resulting in increased competition for deals. This seller’s market will likely last as long as interest rates are low and the current demand for oil continues.
What are the best practices when it comes to this issue?
Don’t get deal fever. Keep the valuation of the acquisition reasonable. With so much competition for deals, and pressure on equity groups and banks to complete deals, it’s easy to have “multiple creep” –an increase in purchase price over what you’d normally pay in a less stressful environment. Executives shouldn’t put weight into long term incentives if the purchase price is based on an aggressive multiple.
Have management team, especially a strong CFO with the right experience in place early in the process.
If you’re implementing or integrating a new system, be reasonable on the time needed to get it done. Most implementations fail due to unrealistic expectations.
Establish a budget process early and monitor it via rolling monthly forecasts. Start with a 13 week cash flow which can be adapted with change. Good forecasts are not static.
Don’t be cheap with working capital, it takes more than forecasted to accomplish goals.