Description
Our paper about success strategies for a challenging business environment.
founded in 1994 by a local
attorney named Don Harris
with seed capital provided by
his father’s church – the An-
tioch Progressive Baptist
Church. Nehemiah has been
the nation’s largest provider
of down payment assistance.
We also have a community
reinvestment fund that raises
institutional capital to provide
low cost lending for real es-
tate development in under-
served communities across
the United States. Addition-
ally, we have a real estate
equity fund called the Nehe-
miah Sacramento Valley
Fund that is a $30 million real
3 7 2 1 D O U G L A S B L V D . - S U I T E 3 5 0 - R O S E V I L L E , C A 9 5 6 6 1 - ( 9 1 6 ) 9 6 0 - 5 3 5 5 - WWW. D C A P A R T N E R S . C O M
S T R A T E GI C A D V I S OR Y ? ME R GE R S & A QU I S I T I ON S ? P R I V A T E E QUI T Y
L E A D E R S I N T H E C O MMU N I T Y
C H A L L E N G I N G B U S I N E S S E N V I R O N ME N T
We work with a lot of compa-
nies in all industries and
across all segments of com-
pany and industry life cycles.
Over the past several months,
there have been very few of
these companies who have
remained unaffected by the
current economic climate -
some directly and others more
indirectly - but nearly all would
agree that these are indeed
very challenging times to run
a business.
However, as with all great
challenges, sometimes it is
the difficult times that bring
out the best in us and cause
us to accomplish things that
we never thought possible. In
our travels we are witnessing
some very inspiring success
stories, and we thought it
made sense to share some of
these success strategies with
you in case any of these
strategies might apply to your
business.
INSIDE
THIS ISSUE
Scott Syphax, President & CEO of Nehemiah Corporation of CA
the Federal Home Loan
Bank of San Francisco. Mr.
Syphax is a member of the
Los Angeles Business Coun-
cil and serves on the Advi-
sory Board for the College of
Business at California State
University, Sacramento.
Tell us a little bit about
Nehemiah Corporation of
America.
Nehemiah Corporation of
America is a national com-
munity development corpo-
ration that seeks to provide
opportunities for wealth crea-
tion for working class indi-
viduals and family. It was
S U C C E S S S T R AT E G I E S F O R A
Page 1
Featured Article:
“Success Strategies
For a Challenging
Business
Environment”
F A L L 2 0 0 8
S U C C E S S , P A G E 3
Who is he: President and
CEO of Nehemiah Corpora-
tion of California, a Sacra-
mento based non-profit,
founded in 1997. Currently,
he serves as Chairman of
the Financial Solvency
Board for the California State
Department of Managed
Health Care, and a Commis-
sioner for the Sacramento
County Civil Service Com-
mission. He also serves as
a Vice Chairman of the Cor-
porate Fund Board for the
John F. Kennedy Center for
the Performing Arts in Wash-
ington, D.C, and has been
appointed by the Bush Ad-
ministration as a Director of
This is critical for a number of
reasons: 1) it will help you
identify customer pain points
and opportunities for you to
provide additional products or
services, 2) it will help to pre-
serve your existing business
volume, 3) it will give you
insights as to what your com-
petition is doing and, 4) it will
give you a sense for how they
are doing financially to help
you manage your credit risk
with them.
Find the Pain
As stated above, one benefit
of getting intimate with your
customers is that they will
share their current business
challenges and opportunities
with you. As you listen, you
may uncover additional op-
portunities for you to increase
your business relationship
with that customer. One com-
pany, in a struggling industry,
increased revenue 15% this
Page 4
Regional
M&A Market
Page 1
Leaders in the
Community
Rally the Troops
With food and energy costs
skyrocketing and unemploy-
ment in the region at 7.5%,
most people have several
friends or relatives who have
lost their jobs, lost their homes,
or are struggling to make ends
meet for one reason or another.
Let them know your commit-
ment to them, your vision for
the Company, what their role is
in ensuring the company’s suc-
cess, and why that success is
important to them. In tough
times, it is important to set short
-term achievable goals whose
accomplishment you can cele-
brate. If you need to implement
a cost reduction strategy, it is
best to do that first, and then
share the reasons behind the
cuts and sell them on why
those cuts are in their, and the
Company’s best interest.
Get Intimate with your Cus-
tomers
Page 3
Turnaround
Management
Services
“A forest does not grow back
until it has had its cleansing
fire. I think that we are about
two-thirds of the way through
the cleansing fire…”
- Syphax on the rebound of
the Sacramento economy
S Y P H A X , P A G E 2
estate equity fund. The fund makes
equity investments into innovative
real estate development projects in
underserved communities throughout
the Sacramento metropolitan region.
We also have Nehemiah Ventures,
which is the holding company for
downtown Sacramento’s second larg-
est real estate development. The
project will ultimately provide 3,000
units of housing, 1,000,000 square
feet of office space and over 20 acres
of parks. Nehemiah operates in
4,900 cities in every state and terri-
tory except for Guam.
What provided you with the inspi-
ration to join the organization?
I heard about Nehemiah while I was
in the healthcare world. I heard how
they were helping people have their
shot at the American Dream that were
being left out. As a person who had
struggled, whose family did not have
the means to help him to buy his first
home, I really identified with the vision
of the program. So, I volunteered to
help them out. I was volunteering
there for over a year when the foun-
der of Nehemiah said – you know,
you work so many hours here that I
feel like I should pay you something.
I became an employee and was
eventually asked to be the CEO.
How many people have you helped
put into a home since Nehemiah’s
inception?
Since the creation of the program in
1997, we have put over 320,000 fami-
lies into home ownership and given
away over $1.5 billion in grants to
those families. The financial assis-
tance comes from our innovative
business model which essentially
raises money from the real estate
sector and provides down payment
grants to deserving families who are
otherwise qualified for home owner-
ship.
Given that, why have the FHA and
HUD opposed DPA in the past?
Frankly, the government does not like
competition. We are more effective
than the FHA, or state or local gov-
ernments in putting people into home
ownership. Let me give you an ex-
ample: in a good year, a state govern-
ment housing finance agency might
be able to put 1,000 families into
home ownership. This past Septem-
ber, Nehemiah – with only 38 employ-
ees in the U.S. – put over 15,000
families into home ownership. With-
Page 2
more than just take the information at
face value. The second thing that I
would do is interview three different
realtors and three different mortgage
professionals. On the mortgage side, I
would interview somebody that worked
for a bank, somebody that worked for a
credit union, and a mortgage broker. I
would then compare and contrast the
advice of those folks. Finally, I would
explore – and ask the lending profes-
sionals for their advice on – both gov-
ernmental and non-governmental pro-
grams that might be available to me
that I am qualified for. It is important to
remember that you may not be able to
take advantage of all that you have
learned, but you should learn all that
you might take advantage of. Ulti-
mately, you need to be in the driver’s
seat when making the decision.
What is your prognostication for the
out a single dime of direct government
subsidy. We are just a more effective
bang for the buck.
Given the current market conditions
and the changed landscape for
DPA, what will the next chapter look
like for Nehemiah?
First of all, our real estate development
projects have continued to grow – de-
spite market conditions. Second, while
the landscape has changed, we are
utilizing our brand strength and net-
work of almost 200,000 realtors, mort-
gage professionals and homebuilders
to continue to evaluate opportunities to
provide down payment assistance help
to the families that we have historically
served.
Are you disappointed or energized
by some of the changes in the mar-
ket?
I am actually very energized – in the
sense that there has not been a better
market in over a decade for home
ownership among working families.
The decline in values has opened up
home ownership opportunities for fami-
lies that were either completely locked
out of the market or forced to take
products that were eventually going to
harm them. Our mission now is to find
out how to effectively connect those
families, who can take advantage of
this market, to the opportunity that
presents itself.
What advice would you give to a
first time homebuyer looking to buy
a home in this market?
The first thing that I would do is take a
course in home ownership education.
Before you start working with any real
estate professional, you need to be
smart enough to understand not only
what they say, but to be able to do
eventual rebound of the Sacramento
economy?
A forest does not grow back until it has
had its cleansing fire. I think that we
are probably about two thirds of the
way through the cleansing fire, but we
are not done yet. Ultimately, asset
values have to line up with incomes. I
do not think that we are completely
there yet. I still think that there is some
excess value in the middle-tier and
upper-tier of the housing market in this
community. Also, we have not seen
the market correction in the commer-
cial area – particularly around retail.
That wave is coming.
What are your future aspirations?
To write a book on the opportunity that
this country provides – opportunity that
many of us take for granted. Also, to
volunteer to teach the importance of
entrepreneurship and civic leadership
to young people. •
S Y P H A X :
Hometown
Detroit, Michigan
Education
Bachelor’s degree in Business Administration from CSU Sacramento with a concentration in
Real Estate Development; graduate of the Sacramento Entrepreneurship Academy; Execu-
tive Fellow of the Coro Foundation; Fellow of the American Leadership Forum.
Hobbies
Spending time with his children; reading comic books; entrepreneurship.
Most influential people
Parents; Steve Thompson (former boss at the California Medical Association); Senator
Robert Presley.
Most influential books
The Bible; the Autobiography of Malcolm X; Think and Grow Rich
Favorite Restaurant
Del Posto in New York, NY
First Job
Night club promoter
Page 3
S U C C E S S :
past year using this simple yet effective strategy.
Price Strategically
It may sound counter-intuitive to increase pricing during diffi-
cult economic times, but for many companies it may be ex-
actly the right thing to do. For a Company with 10% operat-
ing margins, a modest 5% increase in pricing (which all goes
straight to the bottom line) represents a 50% increase in net
income. This can be effective if there are high customer
switching costs or if you have a unique ability to solve your
customers’ needs. Increasing fuel, commodity, food, health-
care, and other costs provide a rationale for such price in-
creases without alienating your customers.
By contrast, if you have a high fixed-cost, but low variable-
cost business, you may want to price extra aggressively in
this market to attract new customers who will now switch sup-
pliers due to price because of their own business challenges.
This will allow you to increase market share during the down-
turn and emerge as a stronger, more dominant company.
Diversify into new Markets
Whether new product extensions, new geographies or new
market segments, a diversification strategy can help leverage
investments you have already made. The weakness of the
dollar in many overseas markets makes US produces goods
and services appear as bargains to many foreign buyers. You
should also look for vulnerabilities in your competition and
step in to exploit them whenever you can.
Focus
The counterbalance to ‘diversification’ is ‘focus’. In many
circumstances, a slowdown is a time for your to re-examine
all of your initiatives and business practices and focus on
those core business initiatives that are currently profitable
and key to your long-term success. Since you may have more
limited resources to invest, it is critical that those resources
are channeled into the most critical and most impactful areas
of your business. You may have fewer staff, and if those
staff members are spread too thin, they may do nothing well,
customers may get frustrated and leave, and you will find
yourself in a difficult downward spiral.
Cut Costs
Look at your business and separate the “need to haves” from
the “nice to haves”. A market downturn is not a time for the
latter category of expenses. Focus your energies on those
areas of your business that enhance product quality, opera-
tional efficiency and customer intimacy. Where possible,
looks for ways to convert fixed costs to variable costs (such
as outsourcing non-core functions); this will allow you to bet-
ter weather a revenue decline and also provide better visibility
on exactly what it costs you to perform that function.
Partner with Suppliers
Discuss your issues with your suppliers, and seek assistance
from them. They have a vested interest in your success, and
will often times provide more assistance- whether in the form
of new client referrals, pricing concessions, extended pay-
ment terms, etc. – than you ever expected. They know things
are tough all over and you will not be the first one to ask for
their help. Your competitors may already be getting help from
them, putting you at a marked disadvantage for not asking for
concessions.
Communicate Proactively
Nothing is more scary to people – customers, suppliers or employ-
ees – than the fear of the unknown. In these unusual times, it is im-
portant to proactively communicate with people both the good news
and bad news so that they can know exactly where things stand,
what is at stake, and what their responsibilities are to make them
better. In reality, things are rarely as bad as people fear they “might
be”, so alleviating their fears will allow them to focus on the tasks at
hand, and will go a long way toward building the loyalty that will sus-
tain you through good times and bad.
Acquire Struggling Competitors
For companies who are faring better than their competitors, now is a
great time to act as a market consolidator. In many cases you can
acquire companies for little or no cash…they just want to take care
of their employees, their customers, their reputation, and have a
hope for a better future. Put together a compelling vision of where
you are taking your company and be willing to share that vision with
struggling competitors. By exploiting this market opportunity, you
can emerge from the downturn as a more dominant player.
All in all, while the current market environment has provided many
challenges, we are encouraged and impressed by the many compa-
nies who are employing these and other strategies to indeed make
lemonade out of the current abundance of seemingly endless lem-
ons. •
DCA Partners offers comprehensive turnaround and restructuring ser?
vices, having advised some of the region’s most successful and most
promising businesses. Turnaround and restructuring services are spe?
cifically customized to every individual situation, but generally include:
• Comprehensive strategic assessment of the business
• Compilation of alternative turnaround strategies
• Detailed financial modeling and sensitivity analysis
• Development of contingency plan
• Negotiation with bankers, landlords and other creditors
• Evaluation of financing opportunities
• Pursuit of financing and other strategic relationships
• Evaluation of potential M&A transactions
• Expense reduction strategies
• Revenue enhancement action plans
• Development of action plan and team accountability
• Communication strategy to maintain internal and external
goodwill
To learn more, contact Curt Rocca at [email protected]
D C A T U R N A R O U N D &
R E S T R U C T U R I N G S E R V I C E S
2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08
Rollover Equity 5.5% 2.7% 4.7% 2.7% 2.3% 2.5% 2.1% 2.6% 2.2%
PE Firm Equity 35.1% 37.3% 34.8% 32.4% 29.8% 31.1% 30.9% 39.3% 39.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
%
E
q
u
i
t
y
C
o
n
t
r
i
b
u
t
i
o
n
Average Middle?Market LBO Equity Contribution
A B O U T D C A P A R T N E R S
Page 4
3721 Douglas Blvd., Suite 350 Roseville, CA 95661 • (916) 960-5355 main • [email protected] • www.dcapartners.com
Since 2001, DCA Partners has earned its reputation as one of the nation’s finest middle market investment banking firms, delivering exceptional re-
sults for clients in a wide variety of industry sectors. With offices in Roseville, CA and Phoenix, AZ, DCA works primarily with companies in the
broader Northern and Central California regions, as well as certain adjacent underserved markets across the western U.S. We will also advise and
invest in companies outside our targeted geography where our Partners possess particular
industry expertise.
Investment Banking The firm specializes in providing private and public growth companies with both buy-side and sell-side merger and acquisitions
advisory services, as well as financial advisory and opinion services.
Private Equity Through the firm’s affiliated private equity fund, DCA Capital Partners, the firm also makes direct investments in promising middle–
market growth businesses in DCA’s defined areas of focus.
R E G I O N A L M& A MA R K E T
2008 has proved to be a challenging year for the regional
M&A landscape. While select companies will still manage
to successfully be sold and/or raise capital, we believe the
overall M&A environment has decisively shifted to a more
buyer-friendly market. According to a study by BDO Stoy
Hayward, due to the current economic conditions, private
equity firms are holding their investments longer, citing that
over 70% of these firms have already delayed commenc-
ing a sale process. Those firms with rock-solid balance
sheets and healthy cash reserves will find themselves able
to weather the economic downturn and potentially in the
right position to purchase other companies at attractive
prices. The credit markets, however, remain exceptionally
tight, forcing potential buyers to use more equity to fund
transactions (the average equity required in middle-market
leveraged buyout deals has risen from 33% in 2007 to 42%
in 2Q08, according to S&P). The weak public equity mar-
kets in 2008 have also created unique buying opportuni-
ties. During the first nine months of 2008, unsolicited/
hostile takeover transactions have increased to 22.5% of
total US deal volume, up from 5.8% last year (in the last
decade, only 2001 at 23.7% saw a higher percentage).
While the overall current M&A environment favors the
buyer, in the private early-stage equity markets, we believe
venture capital firms are beginning to tighten the purse
strings, largely driven by concern of the potential impact of
a severe economic downturn, a virtually non-existent IPO
window, and uncertain future financing options for their
portfolio companies. According to the National Venture
Capital Association (NVCA), VC deal volume in the US
was down 8% y/y in 3Q08 and down 12% sequentially.
“We have yet to see the full impact of the capital markets
crisis in the venture capital performance numbers,” said
Mark Heesen, president of the NVCA. •
Source: National Venture Capital Association
Source: S&P, For transactions with EBITDA of $50mm or less. Excludes Media, Telecom, Energy and Utility Deals.
Source: Thomson Reuters
doc_984325676.pdf
Our paper about success strategies for a challenging business environment.
founded in 1994 by a local
attorney named Don Harris
with seed capital provided by
his father’s church – the An-
tioch Progressive Baptist
Church. Nehemiah has been
the nation’s largest provider
of down payment assistance.
We also have a community
reinvestment fund that raises
institutional capital to provide
low cost lending for real es-
tate development in under-
served communities across
the United States. Addition-
ally, we have a real estate
equity fund called the Nehe-
miah Sacramento Valley
Fund that is a $30 million real
3 7 2 1 D O U G L A S B L V D . - S U I T E 3 5 0 - R O S E V I L L E , C A 9 5 6 6 1 - ( 9 1 6 ) 9 6 0 - 5 3 5 5 - WWW. D C A P A R T N E R S . C O M
S T R A T E GI C A D V I S OR Y ? ME R GE R S & A QU I S I T I ON S ? P R I V A T E E QUI T Y
L E A D E R S I N T H E C O MMU N I T Y
C H A L L E N G I N G B U S I N E S S E N V I R O N ME N T
We work with a lot of compa-
nies in all industries and
across all segments of com-
pany and industry life cycles.
Over the past several months,
there have been very few of
these companies who have
remained unaffected by the
current economic climate -
some directly and others more
indirectly - but nearly all would
agree that these are indeed
very challenging times to run
a business.
However, as with all great
challenges, sometimes it is
the difficult times that bring
out the best in us and cause
us to accomplish things that
we never thought possible. In
our travels we are witnessing
some very inspiring success
stories, and we thought it
made sense to share some of
these success strategies with
you in case any of these
strategies might apply to your
business.
INSIDE
THIS ISSUE
Scott Syphax, President & CEO of Nehemiah Corporation of CA
the Federal Home Loan
Bank of San Francisco. Mr.
Syphax is a member of the
Los Angeles Business Coun-
cil and serves on the Advi-
sory Board for the College of
Business at California State
University, Sacramento.
Tell us a little bit about
Nehemiah Corporation of
America.
Nehemiah Corporation of
America is a national com-
munity development corpo-
ration that seeks to provide
opportunities for wealth crea-
tion for working class indi-
viduals and family. It was
S U C C E S S S T R AT E G I E S F O R A
Page 1
Featured Article:
“Success Strategies
For a Challenging
Business
Environment”
F A L L 2 0 0 8
S U C C E S S , P A G E 3
Who is he: President and
CEO of Nehemiah Corpora-
tion of California, a Sacra-
mento based non-profit,
founded in 1997. Currently,
he serves as Chairman of
the Financial Solvency
Board for the California State
Department of Managed
Health Care, and a Commis-
sioner for the Sacramento
County Civil Service Com-
mission. He also serves as
a Vice Chairman of the Cor-
porate Fund Board for the
John F. Kennedy Center for
the Performing Arts in Wash-
ington, D.C, and has been
appointed by the Bush Ad-
ministration as a Director of
This is critical for a number of
reasons: 1) it will help you
identify customer pain points
and opportunities for you to
provide additional products or
services, 2) it will help to pre-
serve your existing business
volume, 3) it will give you
insights as to what your com-
petition is doing and, 4) it will
give you a sense for how they
are doing financially to help
you manage your credit risk
with them.
Find the Pain
As stated above, one benefit
of getting intimate with your
customers is that they will
share their current business
challenges and opportunities
with you. As you listen, you
may uncover additional op-
portunities for you to increase
your business relationship
with that customer. One com-
pany, in a struggling industry,
increased revenue 15% this
Page 4
Regional
M&A Market
Page 1
Leaders in the
Community
Rally the Troops
With food and energy costs
skyrocketing and unemploy-
ment in the region at 7.5%,
most people have several
friends or relatives who have
lost their jobs, lost their homes,
or are struggling to make ends
meet for one reason or another.
Let them know your commit-
ment to them, your vision for
the Company, what their role is
in ensuring the company’s suc-
cess, and why that success is
important to them. In tough
times, it is important to set short
-term achievable goals whose
accomplishment you can cele-
brate. If you need to implement
a cost reduction strategy, it is
best to do that first, and then
share the reasons behind the
cuts and sell them on why
those cuts are in their, and the
Company’s best interest.
Get Intimate with your Cus-
tomers
Page 3
Turnaround
Management
Services
“A forest does not grow back
until it has had its cleansing
fire. I think that we are about
two-thirds of the way through
the cleansing fire…”
- Syphax on the rebound of
the Sacramento economy
S Y P H A X , P A G E 2
estate equity fund. The fund makes
equity investments into innovative
real estate development projects in
underserved communities throughout
the Sacramento metropolitan region.
We also have Nehemiah Ventures,
which is the holding company for
downtown Sacramento’s second larg-
est real estate development. The
project will ultimately provide 3,000
units of housing, 1,000,000 square
feet of office space and over 20 acres
of parks. Nehemiah operates in
4,900 cities in every state and terri-
tory except for Guam.
What provided you with the inspi-
ration to join the organization?
I heard about Nehemiah while I was
in the healthcare world. I heard how
they were helping people have their
shot at the American Dream that were
being left out. As a person who had
struggled, whose family did not have
the means to help him to buy his first
home, I really identified with the vision
of the program. So, I volunteered to
help them out. I was volunteering
there for over a year when the foun-
der of Nehemiah said – you know,
you work so many hours here that I
feel like I should pay you something.
I became an employee and was
eventually asked to be the CEO.
How many people have you helped
put into a home since Nehemiah’s
inception?
Since the creation of the program in
1997, we have put over 320,000 fami-
lies into home ownership and given
away over $1.5 billion in grants to
those families. The financial assis-
tance comes from our innovative
business model which essentially
raises money from the real estate
sector and provides down payment
grants to deserving families who are
otherwise qualified for home owner-
ship.
Given that, why have the FHA and
HUD opposed DPA in the past?
Frankly, the government does not like
competition. We are more effective
than the FHA, or state or local gov-
ernments in putting people into home
ownership. Let me give you an ex-
ample: in a good year, a state govern-
ment housing finance agency might
be able to put 1,000 families into
home ownership. This past Septem-
ber, Nehemiah – with only 38 employ-
ees in the U.S. – put over 15,000
families into home ownership. With-
Page 2
more than just take the information at
face value. The second thing that I
would do is interview three different
realtors and three different mortgage
professionals. On the mortgage side, I
would interview somebody that worked
for a bank, somebody that worked for a
credit union, and a mortgage broker. I
would then compare and contrast the
advice of those folks. Finally, I would
explore – and ask the lending profes-
sionals for their advice on – both gov-
ernmental and non-governmental pro-
grams that might be available to me
that I am qualified for. It is important to
remember that you may not be able to
take advantage of all that you have
learned, but you should learn all that
you might take advantage of. Ulti-
mately, you need to be in the driver’s
seat when making the decision.
What is your prognostication for the
out a single dime of direct government
subsidy. We are just a more effective
bang for the buck.
Given the current market conditions
and the changed landscape for
DPA, what will the next chapter look
like for Nehemiah?
First of all, our real estate development
projects have continued to grow – de-
spite market conditions. Second, while
the landscape has changed, we are
utilizing our brand strength and net-
work of almost 200,000 realtors, mort-
gage professionals and homebuilders
to continue to evaluate opportunities to
provide down payment assistance help
to the families that we have historically
served.
Are you disappointed or energized
by some of the changes in the mar-
ket?
I am actually very energized – in the
sense that there has not been a better
market in over a decade for home
ownership among working families.
The decline in values has opened up
home ownership opportunities for fami-
lies that were either completely locked
out of the market or forced to take
products that were eventually going to
harm them. Our mission now is to find
out how to effectively connect those
families, who can take advantage of
this market, to the opportunity that
presents itself.
What advice would you give to a
first time homebuyer looking to buy
a home in this market?
The first thing that I would do is take a
course in home ownership education.
Before you start working with any real
estate professional, you need to be
smart enough to understand not only
what they say, but to be able to do
eventual rebound of the Sacramento
economy?
A forest does not grow back until it has
had its cleansing fire. I think that we
are probably about two thirds of the
way through the cleansing fire, but we
are not done yet. Ultimately, asset
values have to line up with incomes. I
do not think that we are completely
there yet. I still think that there is some
excess value in the middle-tier and
upper-tier of the housing market in this
community. Also, we have not seen
the market correction in the commer-
cial area – particularly around retail.
That wave is coming.
What are your future aspirations?
To write a book on the opportunity that
this country provides – opportunity that
many of us take for granted. Also, to
volunteer to teach the importance of
entrepreneurship and civic leadership
to young people. •
S Y P H A X :
Hometown
Detroit, Michigan
Education
Bachelor’s degree in Business Administration from CSU Sacramento with a concentration in
Real Estate Development; graduate of the Sacramento Entrepreneurship Academy; Execu-
tive Fellow of the Coro Foundation; Fellow of the American Leadership Forum.
Hobbies
Spending time with his children; reading comic books; entrepreneurship.
Most influential people
Parents; Steve Thompson (former boss at the California Medical Association); Senator
Robert Presley.
Most influential books
The Bible; the Autobiography of Malcolm X; Think and Grow Rich
Favorite Restaurant
Del Posto in New York, NY
First Job
Night club promoter
Page 3
S U C C E S S :
past year using this simple yet effective strategy.
Price Strategically
It may sound counter-intuitive to increase pricing during diffi-
cult economic times, but for many companies it may be ex-
actly the right thing to do. For a Company with 10% operat-
ing margins, a modest 5% increase in pricing (which all goes
straight to the bottom line) represents a 50% increase in net
income. This can be effective if there are high customer
switching costs or if you have a unique ability to solve your
customers’ needs. Increasing fuel, commodity, food, health-
care, and other costs provide a rationale for such price in-
creases without alienating your customers.
By contrast, if you have a high fixed-cost, but low variable-
cost business, you may want to price extra aggressively in
this market to attract new customers who will now switch sup-
pliers due to price because of their own business challenges.
This will allow you to increase market share during the down-
turn and emerge as a stronger, more dominant company.
Diversify into new Markets
Whether new product extensions, new geographies or new
market segments, a diversification strategy can help leverage
investments you have already made. The weakness of the
dollar in many overseas markets makes US produces goods
and services appear as bargains to many foreign buyers. You
should also look for vulnerabilities in your competition and
step in to exploit them whenever you can.
Focus
The counterbalance to ‘diversification’ is ‘focus’. In many
circumstances, a slowdown is a time for your to re-examine
all of your initiatives and business practices and focus on
those core business initiatives that are currently profitable
and key to your long-term success. Since you may have more
limited resources to invest, it is critical that those resources
are channeled into the most critical and most impactful areas
of your business. You may have fewer staff, and if those
staff members are spread too thin, they may do nothing well,
customers may get frustrated and leave, and you will find
yourself in a difficult downward spiral.
Cut Costs
Look at your business and separate the “need to haves” from
the “nice to haves”. A market downturn is not a time for the
latter category of expenses. Focus your energies on those
areas of your business that enhance product quality, opera-
tional efficiency and customer intimacy. Where possible,
looks for ways to convert fixed costs to variable costs (such
as outsourcing non-core functions); this will allow you to bet-
ter weather a revenue decline and also provide better visibility
on exactly what it costs you to perform that function.
Partner with Suppliers
Discuss your issues with your suppliers, and seek assistance
from them. They have a vested interest in your success, and
will often times provide more assistance- whether in the form
of new client referrals, pricing concessions, extended pay-
ment terms, etc. – than you ever expected. They know things
are tough all over and you will not be the first one to ask for
their help. Your competitors may already be getting help from
them, putting you at a marked disadvantage for not asking for
concessions.
Communicate Proactively
Nothing is more scary to people – customers, suppliers or employ-
ees – than the fear of the unknown. In these unusual times, it is im-
portant to proactively communicate with people both the good news
and bad news so that they can know exactly where things stand,
what is at stake, and what their responsibilities are to make them
better. In reality, things are rarely as bad as people fear they “might
be”, so alleviating their fears will allow them to focus on the tasks at
hand, and will go a long way toward building the loyalty that will sus-
tain you through good times and bad.
Acquire Struggling Competitors
For companies who are faring better than their competitors, now is a
great time to act as a market consolidator. In many cases you can
acquire companies for little or no cash…they just want to take care
of their employees, their customers, their reputation, and have a
hope for a better future. Put together a compelling vision of where
you are taking your company and be willing to share that vision with
struggling competitors. By exploiting this market opportunity, you
can emerge from the downturn as a more dominant player.
All in all, while the current market environment has provided many
challenges, we are encouraged and impressed by the many compa-
nies who are employing these and other strategies to indeed make
lemonade out of the current abundance of seemingly endless lem-
ons. •
DCA Partners offers comprehensive turnaround and restructuring ser?
vices, having advised some of the region’s most successful and most
promising businesses. Turnaround and restructuring services are spe?
cifically customized to every individual situation, but generally include:
• Comprehensive strategic assessment of the business
• Compilation of alternative turnaround strategies
• Detailed financial modeling and sensitivity analysis
• Development of contingency plan
• Negotiation with bankers, landlords and other creditors
• Evaluation of financing opportunities
• Pursuit of financing and other strategic relationships
• Evaluation of potential M&A transactions
• Expense reduction strategies
• Revenue enhancement action plans
• Development of action plan and team accountability
• Communication strategy to maintain internal and external
goodwill
To learn more, contact Curt Rocca at [email protected]
D C A T U R N A R O U N D &
R E S T R U C T U R I N G S E R V I C E S
2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08
Rollover Equity 5.5% 2.7% 4.7% 2.7% 2.3% 2.5% 2.1% 2.6% 2.2%
PE Firm Equity 35.1% 37.3% 34.8% 32.4% 29.8% 31.1% 30.9% 39.3% 39.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
%
E
q
u
i
t
y
C
o
n
t
r
i
b
u
t
i
o
n
Average Middle?Market LBO Equity Contribution
A B O U T D C A P A R T N E R S
Page 4
3721 Douglas Blvd., Suite 350 Roseville, CA 95661 • (916) 960-5355 main • [email protected] • www.dcapartners.com
Since 2001, DCA Partners has earned its reputation as one of the nation’s finest middle market investment banking firms, delivering exceptional re-
sults for clients in a wide variety of industry sectors. With offices in Roseville, CA and Phoenix, AZ, DCA works primarily with companies in the
broader Northern and Central California regions, as well as certain adjacent underserved markets across the western U.S. We will also advise and
invest in companies outside our targeted geography where our Partners possess particular
industry expertise.
Investment Banking The firm specializes in providing private and public growth companies with both buy-side and sell-side merger and acquisitions
advisory services, as well as financial advisory and opinion services.
Private Equity Through the firm’s affiliated private equity fund, DCA Capital Partners, the firm also makes direct investments in promising middle–
market growth businesses in DCA’s defined areas of focus.
R E G I O N A L M& A MA R K E T
2008 has proved to be a challenging year for the regional
M&A landscape. While select companies will still manage
to successfully be sold and/or raise capital, we believe the
overall M&A environment has decisively shifted to a more
buyer-friendly market. According to a study by BDO Stoy
Hayward, due to the current economic conditions, private
equity firms are holding their investments longer, citing that
over 70% of these firms have already delayed commenc-
ing a sale process. Those firms with rock-solid balance
sheets and healthy cash reserves will find themselves able
to weather the economic downturn and potentially in the
right position to purchase other companies at attractive
prices. The credit markets, however, remain exceptionally
tight, forcing potential buyers to use more equity to fund
transactions (the average equity required in middle-market
leveraged buyout deals has risen from 33% in 2007 to 42%
in 2Q08, according to S&P). The weak public equity mar-
kets in 2008 have also created unique buying opportuni-
ties. During the first nine months of 2008, unsolicited/
hostile takeover transactions have increased to 22.5% of
total US deal volume, up from 5.8% last year (in the last
decade, only 2001 at 23.7% saw a higher percentage).
While the overall current M&A environment favors the
buyer, in the private early-stage equity markets, we believe
venture capital firms are beginning to tighten the purse
strings, largely driven by concern of the potential impact of
a severe economic downturn, a virtually non-existent IPO
window, and uncertain future financing options for their
portfolio companies. According to the National Venture
Capital Association (NVCA), VC deal volume in the US
was down 8% y/y in 3Q08 and down 12% sequentially.
“We have yet to see the full impact of the capital markets
crisis in the venture capital performance numbers,” said
Mark Heesen, president of the NVCA. •
Source: National Venture Capital Association
Source: S&P, For transactions with EBITDA of $50mm or less. Excludes Media, Telecom, Energy and Utility Deals.
Source: Thomson Reuters
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