Benefit Corporation Report 2019
Annual report on Keene Advisors' public benefit.
Keene Advisors was incorporated in Massachusetts in July 2015. We elected to become a benefit corporation at formation, which means that in addition to creating value for our clients and pursuing financial success, we have also committed to generate a material, positive impact on society and the environment. We report our public benefit annually.
Homebuilding in Uncertain Times
Industry report by Keene Advisors
In this report, Keene presents the deep effects of the Great Recession on builders. We find that the Great Recession reshuffled the homebuilding industry. Analysis of how the top 50 builders weathered the recession and strategies for companies impacted or looking to invest for growth.
While it is too soon to draw any parallels between the coronavirus pandemic and prior recessions, it is prudent to recognize the potential risks for the economy and homebuilders. In prior downturns, quick and decisive action was critical to navigate challenging markets and position for the eventual recovery.
There are many strategic alternatives available to homebuilders that are experiencing the impact of coronavirus. Defensive strategies are likely to be more appropriate for those deeply impacted by the virus, while offensive strategies may be prudent for those with stronger balance sheets or that have been less impacted by the virus.
Click below to access the full report or read on for selected strategies.
Defensive Strategies:
Maximize Liquidity
Draw down revolving credit facility
Defer land acquisition and development
Raise new junior capital
Raise capital from existing investors
Extend maturities of existing debt
Sell land & lots
Reduce headcount
Covenant Relief
Pursue waivers for covenant violations
Amend agreements
Deleverage
Raise equity from new investors
Rights offering from existing investors
Convert debt to equity
Sell land & lots or divisions
Strategic Mergers
Merge with competitors to gain efficiencies of scale, rationalize expenses, etc.
Merge with a peer with a stronger balance sheet, liquidity, and access to capital
Offensive Strategies
Acquire Distressed Land and Lots
Acquire land and lots from builders and developers (earlier in cycle)
Acquire from banks (later in cycle)
Invest in Struggling Builders
Invest to provide liquidity and / or deleverage the balance sheet
Invest senior equity or debt to generate a sufficient return for the risk
Invest in “fulcrum” to gain effective control
Acquire Builders
Acquisition of stock or assets to consolidate market share or enter new markets
Acquisition through a bankruptcy court (i.e. a Section 363 sale process)
Strategic Mergers
Merge with competitors to gain efficiencies of scale, rationalize expenses, etc.
Merge with or acquire competitors to gain market share and accelerate growth
Navigating the Market During the Covid—19 Crisis and Beyond
Blog post by Founder and President, Travis Borden
Find out what strategies publicly traded companies are pursuing in the face of market disruption, which ones they might turn to if the downturn is protracted and what they might do once the recovery gets underway.
In the current environment, public companies are following similar playbooks to preserve cash and position themselves for long-term success. Their actions offer some lessons for private and family owned businesses struggling in the current environment. In the great recession, quick decisive action was critical for companies to survive the downturn and thrive in the recovery. At Keene Advisors, we expect quick decisive action to be critical for companies in this environment too.
Public companies, executives and Boards are taking decisive action, including to:
1. Maximize liquidity
a. Drawing down on their revolving credit facilities
b. Temporarily pausing share repurchase programs
c. Pursuing divestitures of non-core assets
d. Considering changes to dividend policies
e. Extending trade payables
f. Accelerating collection of receivables and liquidation of inventory
2. Reduce costs
a. Cutting executive compensation and/or discretionary compensation
b. Cutting Board of Directors cash retainers / compensation
c. Closing offices, retail stores, distribution centers, etc.
d. Furloughing or laying-off employees
3. Develop processes and procedures to keep employees safe
a. Implementing processes and procedures to promote social distancing
b. Implementing remote work and telecommuting programs
c. Increasing direct employee communications
d. Providing additional PTO
4. Develop new solutions and delivery methods for customers
a. Developing alternative distribution models to meet customers emerging needs and promote healthy and safe interactions between customers and employees
b. Adding additional customer support (call centers, etc.)
5. Others
a. Rescheduling investor meetings
b. Eliminating forward guidance
c. Updating risk disclosures
d. Announcing donations to charities
If the market downturn is protracted, public companies will likely pursue more dramatic measures, including:
1. Debt relief
a. Pursuing waivers for covenant violations
b. Amending credit agreements and bond indentures agreements
c. Extending maturities of existing debt
d. Tendering for debt trading at a discount
2. Deleveraging
a. Raising equity from new investors (registered offerings, PIPEs, etc.)
b. Selling non-core assets and businesses
3. Strategic mergers and acquisitions
a. Merging with or acquiring competitors to gain efficiencies of scale, rationalize expenses, etc.
b. Merging with companies with stronger a balance sheet to secure liquidity and access to capital
4. Sale transaction
a. Sell to a larger, better capitalized company to preserve value for stakeholders
5. Out-of-court restructuring
a. Negotiating deals / workout among creditors and the company typically utilizing exchange offers, rights offerings and other tools
6. Bankruptcy – Chapter 11 and Chapter 7
a. Plan of Reorganization
b. Section 363 Sale Process
As the economy begins to recover, companies will begin exploring strategies to grow and enhance value for stakeholders, including:
1. Raising growth capital
a. Raising junior capital (debt and equity) to capitalize on organic and acquisition-driven market opportunities
2. Strategic acquisitions
a. Acquiring competitors to gain market share and accelerate growth
3. Returning capital to shareholders
a. Reinstating / initiating share buybacks to capitalize on lower prices
b. Reinstating / increasing dividends
Our team at Keene Advisors combines investment banking, consulting and operating experience to help you navigate strategies through any economic environment or business cycle. If you would like to discuss how COVID-19 is impacting your business and how to position your company to thrive, please contact us at 617-765-2054 or Info@KeeneAdvisors.com.
Benefit Corporation Report 2018
Annual report on Keene Advisors' public benefit.
Keene Advisors was incorporated in Massachusetts in July 2015. We elected to become a benefit corporation at formation, which means that in addition to creating value for our clients and pursuing financial success, we have also committed to generate a material, positive impact on society and the environment. We report our public benefit annually.
The Rise of Benefit and Certified B-Corporations
It all begins with an idea.
A Journey Towards Sustainable Business
In recent years, the business world has seen a significant shift towards sustainability and social responsibility, with Benefit Corporations and Certified B-Corporations leading the charge. These entities stand out not just for their profitability but for their commitment to broader social and environmental goals. This article delves into the differences between Benefit Corporations and Certified B-Corps, discusses the history and unique characteristics of Certified B-Corporations, and examines why B-Corporation Certification has grown in popularity.
Benefit Corporations and Certified B-Corporations: Different Structures with Diverging Levels of Rigor
Benefit Corporations and Certified B-Corporations often get conflated, but they represent distinct concepts within the realm of socially responsible business. A Benefit Corporation is a legal status in the U.S. that allows for-profit companies to prioritize social and environmental goals. This legal framework changes how a company can be held accountable by shareholders, broadening the company’s fiduciary duty to include non-financial interests. Benefit Corporations publish an annual “Benefit Report” that assesses their social and environmental performance, but there are rarely consequences for noncompliance.
On the other hand, a Certified B-Corporation is a distinction granted by the nonprofit B Lab to companies that meet rigorous standards of social and environmental performance, accountability, and transparency. A company does not need to be incorporated as a Benefit Corporation to become a Certified B-Corporation. The B Lab Certification process is rigorous and must be renewed every three years. Companies are required to meet high standards relating to social and environmental performance and adhere to transparency and accountability expectations.
Since Benefit Corporations and Certified C-Corporations both represent a declaration and commitment to socially responsible business practices, they are often referred to collectively as “B-Corporations.” However, the intensive nature of receiving and maintaining the Certified B-Corporation distinction is generally more rigorous and what we will focus on with the rest of this discussion.
The Origins of Certified B-Corporations
The concept of B-Corporation Certification emerged in the mid-2000s as a response to growing concerns about environmental sustainability and social inequality. Three friends—Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy—founded B Lab, the organization behind B-Corp Certification, in 2006. They recognized a need for a certification that would not only identify companies striving for more than just profit but also help consumers, investors, and policymakers to support these businesses. The first group of 82 Certified B-Corporations was announced in 2007, marking the beginning of a global movement towards ethical business practices.
Characteristics of B-Corporations
B-Corporations are characterized by their commitment to creating public benefits in addition to shareholder value. This includes:
Environmental sustainability: Implementing practices that reduce waste, conserve energy, and decrease carbon footprints
Social equity: Ensuring fair wages, benefits, and working conditions for employees, and often engaging in community development and philanthropy
Transparency: Regularly reporting on their social and environmental impact with as much rigor as financial performance
The Growing Popularity of B-Corp Certification
The popularity of B-Corp Certification has surged for several reasons:
Consumer Demand
Today's consumers are more conscious of their purchasing decisions' social and environmental impacts. They increasingly prefer products and services from companies that demonstrate a commitment to positive change. B-Corp Certification helps consumers identify these companies more easily
Investor Interest
Investors are progressively recognizing the value of sustainable and responsible business practices. Many believe that companies focusing on social and environmental goals are better positioned for long-term success. As well, there has been an increasing number of declared “Impact Investors” who may specifically look to support businesses like Certified B-Corporations that align with their values and investment goals
Societal Impact
The challenges of climate change, social inequality, and environmental destruction have prompted a reevaluation of traditional business models. B-Corporations offer a framework for companies to contribute positively to society, encouraging a shift towards more sustainable and equitable economic systems
A Network of Support
Certified B-Corporations benefit from being part of a global community of like-minded businesses. This network provides opportunities for collaboration, sharing best practices, and mutual support, further encouraging companies to pursue or maintain certification
Examples of B-Corporations: Selected Private Companies
Company
Industry
Certified Since
Consumer Retail
December 2011
Consumer Retail
December 2015
Distribution
November 2015
Healthcare
June 2016
Farmer-owned Cooperative
October 2020
March 2021
Food
Fashion
October 2021
October 2010
Services
The Impact Journal
Special Issue - 100 Leading Impact Investors
Highlighting 100 of the leading impact investors, including leading venture capital firms, private equity firms, and family offices, changing the world by financing the search for solutions to some of the planet's most pressing challenges.
Capture Value with a Winning M&A Pipeline
An effective M&A pipeline is an important component of many companies' growth strategy. Over the past few years of advising companies and private equity firms, we have compiled a list of best practices and useful, customizable resources.
In M&A, much like in other aspects of life, discipline pays. Companies that prepare and thoughtfully execute on acquisition strategies can drive superior value. Companies that remain inactive in the field of mergers and acquisitions potentially miss out on additional value. Simply put, disciplined acquirers outperform.
A strong process is a hallmark of discipline. At Keene Advisors, I often help clients develop and execute on acquisition pipeline strategies. Throughout our assignments with clients spanning billion-dollar companies and middle market private equity firms, we have compiled best practices and resources to streamline the acquisition pipeline process. Read below for helpful guidance and scroll to the bottom to download customizable templates.
Define your universe. Determine the parameters—size, geography, capabilities—that define an attractive acquisition opportunity for your company. Be intentional in your search and keep specific criteria in focus as you assemble your pipeline.
Find your goldmine. In this context, a goldmine is a source of numerous attractive targets. These sources may include relevant expo exhibitor lists, business directories, industry association membership lists, public/private databases, regional business journal publications, etc.
Create a template. Maintain consistency and achieve efficiency by gathering pre-determined fields of information. Pursue a balance where each entry contains just enough information to conduct a quick evaluation of the target while remaining concise enough to allow easy navigation of the database.
Keep a scorecard. Rank targets based on how closely they adhere to the elements you are looking for in a potential acquisition and how actionable the opportunity appears to be. Identifying which companies rank “High” versus “Medium” or “Low” is useful when deciding how to deploy effort and resources in pursuit of a deal.
Match the talent to the task. A smart division of labor ensures everyone is delivering the highest-value work they can produce. Sometimes it means delegating to free up time better spent elsewhere; sometimes it means partnering to get the most efficient execution. Because timing and thoroughness are key in an acquisition process, commit to an agile process.
Luckily, there is no need to reinvent the wheel when it comes to building an acquisition pipeline. Leverage the resources we created to stay a step ahead in your own process. Click below to download an Excel template for a database of potential targets and a PowerPoint template for company profiles.
Mergers and Acquisitions, Capital Markets: 2018 in Review
Major Merger and Acquisition and Capital Markets Trends in 2018
Charts and reports providing a snapshot of the most relevant trends in M&A and capital markets in 2018, including IPO activity, leveraged loan issuance and shareholder activism.
Benefit Corporation Report 2017
Annual report on Keene Advisors' public benefit.
Keene Advisors was incorporated in Massachusetts in July 2015. We elected to become a benefit corporation at formation, which means that in addition to creating value for our clients and pursuing financial success, we have also committed to generate a material, positive impact on society and the environment. We report our public benefit annually.
The Impact Journal
Special Issue - International Women's Day 2018
The Impact Journal provides insights into trends in the capital markets, mergers & acquisitions and corporate finance for social enterprises and impact capital.