Aethlon Capital Advised Sirloin Stockade Of Kansas On Sale Of 16 Restaurants

Aethlon advised and negotiated the sale of Sirloin Stockade of Kansas, Inc., headquartered in Hutchinson, Kansas, to Kelly Investment Group of San Diego, California. As part of the transaction, which closed on June 4th, Kelly Investment Group acquired 16 Sirloin Stockade, Montana Mike’s and Coyote Canyon brand restaurants in Kansas and Oklahoma.”Aethlon played a critical role in the sale of my company” said Gale Premer, CEO of Sirloin Stockade of Kansas. “The team understood our industry and accurately communicated the essence of our business to potential buyers. There was a strong sense of partnership and collaboration with the Aethlon team throughout the process, and we were glad to have them as our representative.”

“We are very pleased to have advised Mr. Premer on the sale of his restaurants,” said Sima Griffith, managing principal of Aethlon Capital. “The Aethlon team conducted a broad marketing process to both strategic and financial buyers that resulted in a positive outcome for our client.”

“Aethlon was engaged as the company’s exclusive sell-side advisor because of our strong industry knowledge, relevant buyer relationships and sell-side advisory expertise,” she said.

Kelly Investment Group will retain current staff members at all 16 restaurants.

About Sirloin Stockade of Kansas, Inc.

Sirloin Stockade of Kansas operated 16 Sirloin Stockade, Montana Mike’s and Coyote Canyon brand restaurants in Kansas and Oklahoma. Gale Premer became a franchisee of Sirloin Stockade in 1975 and also served as chairman and CEO of Stockade Companies, the franchisor of the three restaurant concepts.

About Kelly Investment Group

Headquartered in San Diego, California, Kelly Investment Group invests in asset-based businesses and real estate properties across the United States. For additional information, visit: www.KellyInvestmentGroup.com.

Encouraging Entrepreneurs

Some thoughts on promoting the creation of new business in Minnesota.
July 28, 2013
by Sima Griffith – Guest Commentary Twin Cities Business

Recent reports that Minnesotans ranked last in creating new businesses was alarming to many of us. New business creation is vital to Minnesota because it increases employment, stimulates business activity, generates income for the state, and fosters a vibrant economy.

I have had the privilege of working with, and raising capital for, a number of notable Minnesota entrepreneurs. I’ve learned that there are three primary ingredients that create and foster entrepreneurial activities: an entrepreneurial spirit, availability of capital, and a nurturing environment—which includes an educated work force, a research university, and local organizations that foster entrepreneurship. The missing ingredient in Minnesota today is venture capital.

Entrepreneurial spirit: What gives someone the courage to start a new business? The entrepreneurial spirit often comes from having role models who have successfully built a company. The founders of Cirrus Aviation, Alan and Dale Klapmeier, had parents who ran a highly successful nursing home business and an uncle who owned a boat manufacturing company in Mora, Minnesota. When they first got started, the Klapmeier brothers borrowed buckets of resin from their uncle’s boat company to build their first prototype airplanes.

Being around other entrepreneurs also ignites the entrepreneurial spirit. If you live and work in Silicon Valley, a hotbed of high-tech innovation and development, you are more likely to catch the entrepreneurial bug. Your business is also more likely to receive funding, as one-third of all venture capital funding goes to Silicon Valley–based companies. We need to create that sort of environment in Minnesota.

Availability of capital

A rapidly growing company in a capital-intensive business requires millions of dollars of investment. The first outside round of capital for Cirrus came from local CEOs like the late Bill Kuban, CEO of Kurt Manufacturing, and the late Buzz Kaplan, CEO of the Owatonna Tool Company, both of whom recognized the growth opportunity for a company with new technology.

In past years, entrepreneurs could often count on some of the early investors in companies like Medtronic, St. Jude Medical, and Control Data to fund their ventures. Many of these “angels” have left Minnesota. While there are a number of angel and venture capital funds still in Minnesota, we need more high-net-worth investors to fill the funding gap.

In the 1980s and ’90s, Minnesota was home to a number of investment banks that raised capital for early-stage companies. Today, there are far fewer. Three of the five boutique banks merged, and one focuses mostly on money management. Starting a new investment bank is challenging, especially given the increased regulation and oversight of the industry. There are also fewer commercial banks willing to lend money to early stage companies.

Collaborative and nurturing environment

Minnesota is fortunate to be home to the University of Minnesota, which generates an abundance of new research and technology. Dr. Benjamin Liu, founder and CEO of MSP, an innovative company that manufactures instruments that measure nanoparticles, used technology he developed at the U of M to start his company. One of the main reasons MSP attracted private equity capital was its large patent portfolio.

In addition to the university, Minnesota is also home to the Collaborative, Twin Cities Angels, the Minnesota Angel Network, the Minnesota Cup, Angel PolleNation, and a number of angel groups that facilitate funding for entrepreneurs. While these groups play a critical role, there still isn’t sufficient funding for our state’s newest ventures.

We have plenty of entrepreneurs and organizations to support them. What we need are more investors willing to step up to the plate and fund Minnesota’s new businesses. We at Aethlon Capital encourage the current generation of CEOs and business leaders to invest in promising companies. These young companies will benefit from both your investment and experience. And the state of Minnesota will prosper.

Adam Palmer Joins Aethlon Capital

Aethlon Capital, LLC, a Minneapolis-based investment bank, announced today that Adam Palmer has joined the firm as an associate.

Palmer will be involved in valuation analysis and in supporting Aethlon’s M&A, financing, and strategic advisory services in a variety of industries, including manufacturing, food and beverage, technology, and consumer products.

“Adam Palmer will be a valued team member,“ said Sima Griffith, managing principal of Aethlon.

“We are eager to have him help us expand our business of representing business owners on the sale or financing of their companies.”

About Adam Palmer

Prior to Aethlon, Adam was the director of operations of a manufacturing company in Minnesota, which, under his guidance, was acquired by a strategic buyer in 2009.

Palmer received his MBA from the Carlson School of Management at the University of Minnesota. He has BS degrees in economics and English from the University of Wisconsin-La Crosse.

2012: A Big Year for Deals

An Article by the Star Tribune

by Neal St. Anthony and Patrick Kennedy

 

At a conference of dealmakers last October, Sima Griffith of Aethlon Capital in Minneapolis ticked off several reasons that cash-rich public companies, private equity shops and eager sellers would get together in the last several weeks of 2012.
The next day, Ecolab, aiming to get bigger in the oil-and-gas trade, announced a $2.2 billion purchase of Champion Technologies.

Then in December, Northern Tool & Equipment, the Burnsville-based retailer of tools, generators and trailers, announced it planned to pay $215 million to acquire retailers the Sportsman’s Guide and the Golf Warehouse. And then the deals just kept coming.

In all, 107 Minnesota-connected merger transactions were struck in the fourth quarter, the biggest quarter of the year.

It was a strong comeback year for mergers and acquisitions in Minnesota and nationally said Matthew Knopf, who heads the M&A practice at law firm Dorsey & Whitney. I worked on six transactions that were determined to close by the end of December and five of the six closed. I hadn’t seen that kind of frenetic pace for a number of years.

The drive to finish deals was hastened by the fiscal cliff debate and the fate of long-term capital gains rates. (Taxes on dividends and long-term capital gains remained the same for most taxpayers, but for high-income earners and couples, the long-term capital gains rate moved from 15 percent to 20 percent for 2013.)

But Knopf also said deals are getting done because, more than three years into the economic recovery, buyers have gained confidence in the future and sellers of “strong businesses that performed through the recession are getting favorable prices and there is capital … to support them. They vary by sector, but we are seeing sale prices at healthy multiples of earnings.”

And John Potter, the Minneapolis-based national deals partner at PricewaterhouseCoopers, said the M&A business looks good for 2013 thanks to “improving corporate confidence, increasing private equity activity from both a buy- and sell-side perspective, and relatively healthy debt markets.”

A recent PwC survey found that 90 percent of top executives expect to see the same or a higher level of acquisitions this year. Active merger and IPO markets are indicative of growing business confidence that has slowly recovered since the Great Recession bottom of March 2009.

Minnesota deals top 300

For the year, Minnesota companies participated as buyers or sellers in 338 deals, the most since 2008. Nationally, mergers and acquisitions hit a five-year high of 11,993.

Other, Minnesota-related big-deals in the last months of 2012 included:

  • UnitedHealth Group’s bid to buy Brazil’s largest health care company for nearly $5 billion, giving UnitedHealth a big stake in that fast-growing Latin American hub. The Minnetonka-based insurance giant will acquire a 90 percent stake of Amil Participacoes, the top health insurer and hospital operator in Brazil. The growing middle class is creating demand for more health care services and private insurance.
  • Medtronic will pay $816 million for China Kanghui Holdings Inc., an orthopedic implant maker. The deal marks a big bid by Medtronic to generate 20 percent of its revenue from fast-growing emerging markets.
  • Minneapolis-bred Caribou Coffee, is ending its 20-year run as an independent company through a $340 million sale to a privately held German food concern. The Benckiser Group is expected to expand Caribou’s bagged coffee retail sales through grocers and other retailers.

The fourth-quarter surge has led to a so-far-quiet January.

Right now everything is very quiet and bankers aren’t pitching much so the pipeline is light said Tim DeVries, managing general partner at Norwest Equity Partners, the region’s largest private-equity investor. I’m just not sure what is going to happen in 2013.

Pace expected to quicken

Rick Hartfiel, director of investment banking at Craig-Hallum Capital, the institutional research and banking firm, said the slow early weeks of this year will give way to more activity later in the quarter. The rising stock market increases confidence and makes it easier to go public and also allows large companies to use their stock — and record stockpiles of cash — to make acquisitions.

Craig-Hallum and Piper Jaffray were underwriters last year of Proto Labs’ first quarter IPO and an additional equity offering in the fourth quarter.

Shares of the Maple Plain-based company closed at $43 Friday, up 169 percent since it went public at $16 per share last February. Proto Labs makes custom parts for prototyping and short-run production for manufacturers around the globe. It boasts a recent market value of $1 billion.

Nationally, 130 companies went public last year in initial public offerings and 601 sold additional stock in public markets, the best numbers in five years.

The window is open for equity offerings, and we expect to see a pickup in late February and March after companies report their fourth quarter earnings and complete their year-end audits Hartfiel said. Investors are back to looking for new ideas.

Said Griffith, of Aethlon Capital: If the stock market and economy continue to perform well, we should see robust deal activity in 2013. There are hundreds of private-equity funds looking for companies to invest in and an abundance of publicly traded companies with strong balance sheets looking to grow via acquisition.

 

Author contact Info:

nstanthony@startribune.com • 612-673-7144
pkennedy@startribune.com • 612-673-7926
Original Article

2012 Shaping up as a Good Deal Year

An Article by the Star Tribune

by Neal St. Anthony and Patrick Kennedy

Investment banker Sima Griffith, a founder of Aethlon Capital, was prescient the other day on the state of the merger-and-acquisition business.

She predicted a brisk fourth quarter driven by cash-rich public companies seeking to expand in the IT, health care, food and energy sectors.

The next day, Ecolab announced that it wanted to get bigger in the oil-and-gas trade through a $2.2 billion purchase of Champion Technologies.

In September, an international pharmaceutical company said that it’s buying St. Paul-based CNS, a maker of an innovative delivery system to refill implantable drug pumps.

Overall, Minnesota-led deals slipped in the quarter that ended in September, but the fourth quarter looks strong for mergers and acquisitions, and could make 2012 the strongest year for deals since the 2008-09 recession.

One reason deals are likely in the fourth quarter is that capital gains taxes from the sale of long-held businesses and securities rise from 15 percent to at least 20 percent in January, creating an incentive to sell now.

I anticipate we will be seeing healthy increases in the number of deals completed in the fourth quarter as we all race to get deals closed before the end of the year and before long-term capital gains rates are scheduled to jump” Griffith said

There were 8,717 mergers and acquisitions announced nationally in the first nine months of this year, compared with 7,964 during the first three quarters of 2011, according to research by Dealogic and the Star Tribune.

Griffith said publicly traded companies are making acquisitions that expand their product offerings and add to their earnings per share.

Minnesota investment banks assisted in 202 transactions through Sept. 30, vs. 171 deals in the first nine months of 2011. The number of Minnesota-assisted deals slipped in the third quarter compared to the second quarter. But business is picking up.

Looking ahead, Wayzata-based Northern Oil and Gas is the subject of speculation that it will be taken over by big drillers on the North Dakota-Montana plains, where the company holds leases.

Year-end Push

“We’re really busy right now,” said Cary Musech, founder and managing principal of Tonka Bay, a private equity firm that manages $350 million largely invested for individuals and institutions in precision manufacturing firms, value-added distributors and dental clinics. “We’re buying from business owners.”

Musech said his firm is looking at companies with revenues of $20 million to $50 million, and paying five to seven times operating earnings for good companies.

“The banks are more conservative” compared with the pre-recession years of 2005 and 2006, he said. “But they are lending. It’s a good market.”

During the frothy dealmaking of the pre-recession years, financiers required minimal down payments. So-so private companies sold at eight times operating earnings amid the real estate and financial bubbles.

Reed Anderson, director of the Minneapolis corporate finance practice of national investment banker Houlihan Lokey, predicted a strong fourth quarter, partly for fundamental reasons and also because buyers want to sell before markets and the economy are disrupted by the so-called “fiscal cliff,” dramatic end-of-year federal spending cuts agreed to by Congress and President Obama in 2011 that economists say could lead to a recession.

There is hope that the short-term cuts will be averted after the November elections and that the president and Congress will agree to long-term federal spending cuts as envisioned by the Simpson-Bowles commission. A long-term debt-reduction package would serve as a stimulus for financial markets concerned about mounting U.S. borrowing.

But there also are signs of confidence.

Musech said Tonka Bay expects to have one-third of the $150 million investment pool it raised last December invested in new companies by December.

One example of optimism, Anderson said, is a recent deal in which Houlihan Lokey advised Minnesota Rubber and Plastics on its sale of a majority stake to Norwest Equity Partners in September.

“It’s a great example of a private equity group backing a management team to facilitate expansion in the medical field and abroad,” Anderson said. “Management is staying and keeping some equity.”

Minnesota Rubber, with 1,100 employees and nine facilities globally, designs and develops rubber and plastic components and assemblies for the automotive, plumbing, industrial, medical and other industries.

Although the deal terms were not disclosed, Minnesota Rubber CEO Jim Lande said Norwest’s capital investment “will provide us with the resources necessary to help continue our growth objectives, including growth in China and within the medical market.”

Reasons for hesitation

Bruce Engler, head of the M&A practice at Faegre Baker Daniels, is a little less sanguine about the fourth quarter.

“I think the fourth quarter is a tough call,” he said. “I sense that many potential buyers and sellers are hanging back due to concerns about the upcoming elections, the unresolved ‘fiscal cliff’ and the slowing global growth. I think most potential sellers have concluded that Congress will kick the can down the road again rather than risking a recession. Overall, I am optimistic that as some clarity develops on these issues, we will see a strong M&A market in 2013.”

Meanwhile, the public offering market has been decent. About 100 U.S. companies sold stock in public offerings so far this year, compared with 134 in all of 2011. And 443 publicly held companies already have raised additional equity capital from public buyers compared this year with nearly 500 all of last year.

Author contact Info:

nstanthony@startribune.com • 612-673-7144
pkennedy@startribune.com • 612-673-7926

Aethlon Capital Cautiously Optimistic

Finance & Commerce

by Mark Anderson, Staff Writer

Once again seeing investors looking for promising Minnesota companies

It’s going to be a tenuous climb back for the U.S. economy. For every hint of recovery — the Dow posting eight straight days in the black, for instance — the specter of 10 percent unemployment, waves of underwater commercial real estate loans, and imposing levels of federal debt makes it clear that it’s still hazardous out there.

But the signs of recovery do keep coming, as Aethlon Capital managing director Sima Griffith can testify. Investors are knocking at the door again, Griffith says, attracted by the opportunities emanating from the growing, small-to-mid-sized companies that her Minneapolis boutique investment bank serves.

“We started getting calls from private equity firms four or five months ago, and we’re hearing from a half dozen firms each day now,” Griffith said. “That’s a dramatic change from last year.”

Investors had virtually disappeared after the September 2008 collapse of Lehman Bros., and they stayed away for the next 12 months.

But investment bankers and private equity managers put that time in the wilderness to use, Griffith says: We’re learning to adapt to a much more conservative credit market. We’re all having to work harder to get deals done.

That turn-over-every-stone discipline is working, though, and it helped Aethlon complete its first deal of 2010 in February when it completed a $2.9 million private equity package for Minneapolis-based Coolibar Inc.

Coolibar produces sun-protective clothes and accessories, based on proprietary materials and technology developed in Australia.

That technology edge creates a big market opportunity in light of the growing awareness of the hazards of sun exposure – especially for legions of baby-boomers, Griffith says.

All these folks in their 40s through 70s didn’t use sun block, and now they’re struggling with wrinkled skin, melanoma and basal cell carcinoma.

We found many investors because they were worried about this, Griffith says. Some investors had been diagnosed with skin cancer; some were married to dermatologists. The list also included Cristie Kerr, the 2007 LPGA champion, who was very interested in the hazards associated with spending a life in the sun, Griffith says.

The task of finding investors may not require quite so much personal stake this year, as private equity funds — the traditional investment banking partners — continue to resume spending.

They’re in the hunt again in part because their investors are getting impatient for better returns, Griffith says. Their limited partners didn’t give those funds money just to keep it in the bank.

Banks are also contributing to the rebound by lending again, enabling their private equity clients to boost investment returns.

But banks aren’t lending as much as they did earlier this decade, when heavy leverage provided an opportunity for big returns, and they aren’t likely to return to those levels any time soon, Griffith says.

So private equity firms are looking for structures that can sweeten their investment. Some require earn-outs, where the price is pegged to how well the company performs going forward. Some require a dividend out of cash flow.

With reduced returns, investors are looking for anything that can mitigate their risk, Griffith says.

There’s another key investor segment that Aethlon works with — corporate strategic partners — and they’re returning. Those investors are looking for profitable ways to put their company’s cash to work, but they’re also looking for ways to leverage their existing business tools to create additional value.

Those are players who bring something more than a checkbook to the deal — maybe through their existing R&D or their distribution networks, Griffith says.

Those companies also have money in their pockets. Many came through the recession with belts tightened, expenditures down and cash building up on their balance sheets.

I was just talking to a senior executive at a major food company, and he said they’ve got $300 million in cash, and Wall Street is telling them they’ve got to put that to work, Griffith said.

Investors from both camps are looking for growth and for a clear market advantage — through technology or some other market edge, which is a criterion that Aethlon uses to select clients.

In this environment, they’re also looking for earnings. That helped Aethlon on its 2009 fundraising for GeoTek, a Stewartville, Minn., company that created a long-lasting composite material used to make cross-arms for utility poles.

GeoTek’s cross-arms appear to be part of the next generation for utility lines, and they’re likely to be in demand as the nation makes a major shift to a “smart” electrical grid.

But Griffith says GeoTek’s “high profitability” was a key factor in securing seven very competitive bids on its equity offering that close last year.

Aethlon is committed to its boutique approach, and adds no more than four clients in a year, often keeping them for up to 10 years. It aims to add value in many ways — its principals bring decades of executive experience with companies like General Mills and Honeywell, and that background helps them provide sound advice and customer connections to their clients.

The company now has two sales in the pipeline that Griffith expects to close early in 2010.

Despite the positive directions, Griffiths says she’s only “guardedly optimistic.”

Cash is returning, but confidence still wavers and buyers aren’t ready to boost their valuations on their target companies, especially smaller companies.

All that mean the recovery may be underway, but investors are also going to remain cautious and slow. “It’s just going to take much longer to get deals done,” Griffith says.

Snapshot: 3 Aethlon clients

Granite City Food & Brewery

Raised $14.1 million in equity from 2002 to 2004, and $66 million in debt in 2008 to fund a major expansion for the St. Cloud-based chain of casual restaurants and micro-breweries.

MSP Corp.

Raised $6 million in equity and $2.7 million in debt for the Shoreview-based firm, which designs and manufactures equipment to measure nano-particles and micro-particles. Applications are in pharmaceutical, semiconductor and air monitoring businesses.

Cirrus Design

Aethlon’s biggest client – the firm raised $110 million in equity over five years, then helped negotiate a $100 million sale of a controlling interest to Arcapita. Duluth-based Cirrus designs and manufactures innovative single-engine aircraft for the general-aviation industry.

Aethlon Capital Completes Equity Offering for Coolibar, Inc.

CNBC.com | 10 Feb 2010

MINNEAPOLIS, Feb 10, 2010 (BUSINESS WIRE) — Aethlon Capital today announced that it has completed an equity stock offering for Coolibar, Inc., a manufacturer and marketer of high quality sun protection products including sun protective clothes, sun hats, UltraViolet protection swimwear, sunglasses, and umbrellas. Coolibar is a private company based in Minneapolis, Minnesota.

Proceeds from the Series E Preferred equity, which totaled $2,937,500, will be used for new- customer acquisition, inventory purchases and initiating distribution channels domestically and overseas.

Aethlon did an excellent job helping us to attract investors in a very difficult economy, said Donna Avery, CEO of Coolibar, Inc. This funding will allow us to pursue key initiatives in brand development, product innovation, and sales growth. Our vision is to be the number one trusted brand for sun protection worldwide, said John Barrow, Coolibar’s founder. Sima Griffith and the Aethlon team have been tremendously supportive of that vision and this capital infusion will be instrumental in helping us achieve it. Commenting on the transaction, Sima Griffith, Managing Partner of Aethlon stated:

“Coolibar has strong growth potential as a result of an aging population, increasing rates of skin cancer and the growing awareness of the harmful effects of UV rays. This entrepreneurial company now has the capital and strategic partners it needs to take advantage of its market opportunities.”

About Coolibar, Inc.

Coolibar was founded in 2001 to bring Australia’s world-leading approaches to sun protection to the American market. The company has extensively redesigned Australian sun protective clothing styles to meet the tastes and needs of fashion- and health-conscious Americans. For information about Coolibar, go to www.coolibar.com or call 1-800-926-6509.