(EDITOR’S NOTE: This is the first article in a two-part series based on an interview with Tom Wylly, Senior Partner with Brentwood Capital Advisors. Part 1 focuses on the firm that he joined in 2001, while Part 2 will discuss the Nashville entrepreneurial ecosystem.)
By Tom Ballard, Chief Alliance Officer, PYA
The numbers tell a pretty compelling story of success – about 80 transactions totaling roughly $5 billion in value since its founding 18 years ago.
“If we start something, there is a very high completion rate,” Tom Wylly, Senior Partner in Brentwood Capital Advisors (BCA), says in describing the investment banking firm that he joined in 2001, roughly two years after it was founded.
“We are in the business of bringing business owners what their options are and successfully executing the strategy they choose,” he says, noting that most owners don’t understand their best options in terms of either raising capital or exiting the business. “We give advice for free, and we are paid to execute. Ninety-five percent of our compensation comes from the success of the transactions.”
Wylly, a well-respected investment banker in Nashville, spent four years in commercial banking and 20 years as a Partner in corporate finance with J.C. Bradford & Company before he joined BCA.
“We’re serving customers nationally,” he says, citing a software company in Idaho and a healthcare firm in Nevada. That said, there is a clear concentration of current and former clients across the southern portion of the country as well as from the Great Lakes to the Gulf of Mexico.
Today, Wylly says BCA has a particular focus on three sectors – healthcare companies, both services and information technology; technology businesses, principally application software; and finally what he describes as “technology-enabled outsourcing businesses that help their customers improve performance.”
Yet, he quickly notes that “we want to work with great entrepreneurs who have successful, growing companies.”
The typical client has an enterprise value of $25 to $250 million.
“We give our clients feedback on valuation and what is doable, then who would be interested in partnering, and finally executing the process of getting that done,” Wylly explains.
BCA’s Senior Partner has four key areas of advice for those who plan to raise capital or prepare for an exit.
“You need to plan for it by making sure you are organizing and running the business in the way that ensures that you have strong financial controls in place and properly documented books and records,” Wylly says. “Next, get advice from someone who can look at the business from an outsider’s view.”
This second point is particularly important in his view. “You need someone who can look over your shoulder long before the exit to give you honest feedback about your management team, revenue model, growth prospects, sales pipeline, customer concentrations, customer contracts, and other potential factors like cost savings opportunities,” Wylly says. Act on this advice to increase your company’s value and improve the odds of a successful exit
“The earlier you plan an exit, the better,” he advises, noting that’s not six months in advance but more like three years.
“If you are committed to an exit, part of the preparation is tax and estate planning,” Wylly says. “The savings from early planning can be tremendous.”
His final suggestion focuses on who is going to run the business post-exit.
“The buyer will want to see that the business can succeed without you,” Wylly says. “Develop bench strength. Be sure the business is not dependent on you.”