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M&A on the brain


.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Eric Lohmeier was in his 20s and running with the big players of the financial world when he realized they were ignoring the middle ground of mergers and acquisitions.

The middle ground is occupied by businesses with revenues of $10 million to $100 million. The owners of those companies needed advice when they were ready to sell out, or when suitors came calling.

Lohmeier, now 35, is the managing director of NCP Inc., a three-person investment banking and commercial finance firm that operates out of the Brown-Camp Lofts in downtown Des Moines.

The company serves an advisory role in the middle ground of mergers and acquisitions.

In the past year, NCP has completed three mergers and acquisitions worth $100 million, and that’s where the company has found a sweet spot in the financial scene, accounting for about 60 percent or more of its business.

Lohmeier returned to Central Iowa after a youth-charged spin around a career that he thought would take him to the land of excitement and entertainment in San Francisco, New York City, maybe Washington, D.C.

It took some time – after buying a home in Des Moines and finding himself the father of two daughters – before he could say with any conviction to his wife, Sarah, “We’re probably staying.”

Up to that point, she might have kept a bag packed.

Sarah has had a few years to adjust to a life that is all work when a deal is on.

Case in point is the two weeks that passed after the birth of his second daughter, Isabella, before Lohmeier could spend quality time with the family.

Isabella was born on Friday, July 27, 2007; good thing it was the last day of the week or Lohmeier might have missed the delivery.

NCP was at the tail end of the acquisition of Cessford Construction Co. by Oldcastle Materials, a division of CRH plc, based near Dublin, Ireland.

Given that there are no sure things in such transactions, Lohmeier was back at his desk the following Monday.

The deal closed two weeks later, and the Lohmeier family took a breather.

“I’m lucky it was Isabella,” Lohmeier said. “Sarah had been around long enough that she had seen all this before.”

Maybe too energetic to teach

Lohmeier likes the hectic pace, pressure and occasional drama of mergers and acquisitions. It adds up to a lifestyle that can be “addicting,” he said.

He is not quite a pinball, but spend a little time with him and NCP colleagues Brett Peterson and Leo Skeffington and you get the impression that deciding to stay in one place required some deep thinking.

It was that quality that a Simpson College economics professor spotted when he advised Lohmeier not to follow in his footsteps.

Instead, Lohmeier obtained a master of business administration degree at the University of Iowa, landed first an internship and then a job in Chicago and figured he had seen the last of Iowa.

From the mid-1990s to 2001, Lohmeier worked as a senior equity research analyst for First Union Corp., which through a merger became Wachovia Securities LLC.

“I worked the investment banking model from a large company universe – $200 million to multibillion-dollar companies and large real estate investment trusts,” he said.

It was a dizzying lifestyle for a twenty-something single person. He worked long hours and got to see the inside of complicated deals.

“Not only was I able to cut my teeth and learn the finance industry inside out and all the accounting conventions and kind of all the little tricks of the trade — and that really in and of itself was the best graduate education I got,” Lohmeier said. “But the other side of that was that I really got to see from the bleeding edge how you structured transactions, how you raised money all the way from straight equity to straight debt and hybrids and kind of everything you could possibly see from a capital structure.

“The mid-90s to 2001 was a very hot time, not unlike the last four or five years. There was a lot of wheeling and dealing, and I was a part of that, and it was exciting.”

A ‘layover’ in Iowa

By April 2001, Lohmeier was following his financial specialist muse to a job in San Francisco, one of the cities on his list of most desirable places. He had negotiated a three-month break that he used to go snowboarding in Europe and visit family in Altoona.

He also was weighing a suggestion by Greater Des Moines financial adviser William Goodwin to check in with him when Lohmeier got to town.

Lohmeier and Goodwin’s son, Chip, were buddies in Chicago and both had worked for First Union.

As it turned out, the elder Goodwin lined up a couple of financial consulting jobs for his son and Lohmeier. Lohmeier’s planned layover dragged on longer than expected.

Lohmeier observed the changes taking place in Greater Des Moines; the place was taking on a more cosmopolitan feel. He began dating Sarah.

He pondered the “burnout” factor that seemed to afflict players in the world of high finance.

With Bill Goodwin as a mentor, Lohmeier and Chip Goodwin launched their own financial advisory firm, NCP.

Lohmeier obtained $80,000 through an unsecured, no-interest loan from someone he identifies as an “angel.”

Lohmeier zeroed in on those companies in the middle ground. Many are family-owned.

“This was truly a service where there was a void,” Lohmeier said.

One of those companies was Des Moines Asphalt & Paving Co., where Lohmeier had worked while in college.

Lohmeier figured his years working in a variety of capacities in highway paving gave him insights into the business. NCP represented Des Moines Asphalt in its purchase by Oldcastle, the same company that would later buy Cessford Construction.

The Des Moines Asphalt sale wrapped up by the end of 2001.

It had been a busy year. Lohmeier was staying put in Des Moines.

He found his way

Since that time, NCP has conducted more than 20 mergers and acquisitions of businesses in a range of industries.

Those deals include the sale of family-owned Wright Welding Supply Inc. of Des Moines to Pennsylvania-based Airgas Inc. and the acquisition of family-owned Hawkeye Glove Manufacturing Inc. of Fort Dodge, a U.S. Defense Department contractor, to Ansell Ltd., an Australian-based firm with its North American headquarters in New Jersey.

Lohmeier said that nearly two-thirds of NCP’s deals have an international investment component.

Over time, Chip Goodwin developed a preference for money management and left NCP. Lohmeier took over the controlling interest in NCP in 2005 and now presides over a business that lacks a receptionist, but includes Peterson, 23, as a financial analyst and Skeffington, 32, as vice president and a commercial finance specialist.

Lohemeier has turned some of his energy toward completing the 700 hours of additional training to become a certified financial analyst. Peterson is on the track, too, and Skeffington is working toward a doctorate.

NCP also has an advisory board that includes individuals from Wachovia Securities, Dodge & Cox Funds, Grant Thornton LLP and Macquarie Group Ltd.

Lohmeier said he paid off the $80,000 loan in a year’s time. The family has bought a home in the Waterbury neighborhood; he drops the kids off at pre-school when he isn’t chasing deals; he drives a Lexus. With grandparents living in the area, the Lohmeiers can enjoy some exotic vacations.

Working the deal

But the lifestyle and hard-edged persona of a mergers and acquisitions kingpin made famous by movies such as “Wall Street” is in his mind at deal time only.

Those deals can run up to 18 months from start to finish.

“It’s a long, hard, brutal process,” Lohmeier said.

NCP might be contacted because it is “warm” from a just-completed deal and word is out that the company is a contender. On the other hand, it could hear from attorneys and accountants about a company that is ready to sell.

Whatever the case, the trio attaches itself to the “bat phone,” constantly making inquiries about the company, its financials, its suitors and possible NCP competitors.

“We might spend half of our time just trying to pitch ourselves against other firms,” Lohmeier said.

Lohmeier and crew also spend a fair amount of time convincing company owners that only select individuals in their company need to know about a pending deal until it is completed.

In addition, they need to understand the company’s complete history, just to avoid embarrassments later in the process.

“We tell clients that there’s going to be some hair,” Lohmeier said.

In the final 90 days or so, companies are involved in due dillegence and signing contracts and wondering whether the deal will succeed.

When the final papers are signed, the parties discover their human side.

“Up to that point we are adversaries,” Lohmeier said. During the Cessford Construction deal, he didn’t let anyone representing Oldcastle know that his wife was pregnant.

More than M&A

Though mergers and acquisitions are its bread and butter, the company also reconstructs the finances of distressed businesses and dabbles in commercial and residential real estate projects.

Lohmeier follows another muse, lecturing at times before undergraduate and graduate business students at Iowa State University and the University of Iowa.

Last week, with the big boys of finance failing or merging or surviving on the government dole, Loh- meier was happy to have found his place as what he calls a “blue-collar investment banker.”

He believes that the big players ignored their core businesses and dabbled in too many risky ventures; they lost their way. Lohmeier might dream about being that big, but it’s just a dream.

“I’m not trying to be something that I’m not,” he said.

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