Materials Article for Composite News 03-12-03

by Bruce Woodry

From an economic cycle standpoint, materials companies, including composites, are at or near historical valuation low points. This means from a purchase standpoint, this is a perfect time to buy, but poor time to sell or refinance.   Companies can only grow as fast as their funding will allow, and under-funded companies soon fall victim to competitive pressure from companies more adequately capitalized.

In today's environment, funding a company is difficult and can take between six and nine months.  Materials companies, composites fabricators and suppliers are competing for financing against other materials companies as well as other types of investments. Therefore, it's imperative to plan long in advance, and to develop a well presented package to a lender or investor to assure a competitive advantage in the very competitive corporate development process.

Part of the strategic corporate development process should address various options, and financially model the outcome of each. Financial modeling of operations, improvements and transaction costs will quickly determine whether and what type of a transaction is viable, if it can provide investor grade returns or support lending requirements. Having credible, outside advisors who are not subject to internal company political fluxuations and can challenge the underlying assumptions and financial pro forma forecasts can be critical to the process. 

In view of this outlook, we suggest that companies with insufficient capitalization address a wide range of corporate development options, including strategic alliances and merger activities in addition to fundraising.  Conversely, if the company is fortunate enough to be in a good capital position, we recommend strategic acquisitions at the current favorable valuations.  In either case, Sigma Capital is poised to assist investors, buyers and sellers through advisory and representational services.

About Sigma Capital Group, Inc.: Sigma Capital Group is a ten-year-old boutique investment bank located in Raleigh, North Carolina, adjacent to Research Triangle Park, that has built a strong reputation for improving shareholder value through corporate development activities. Sigma Capital provides advisory and representational services to clients in the Aerospace and Advanced Materials industry sectors with transaction values primarily in the $5M to $50M range.

Bruce Woodry is an investment banker for Sigma Capital Group in Raleigh NC. For additional information, contact:

Sigma Capital Group, Inc.

Bruce Woodry,  Chairman and CEO

email: woodry@sigmacapital.net