Philosophy

What Entrepreneurs Should Expect

The success of our business model is grounded in the principle of “trust” due to our committment to the highest ethical standards. Trust has to be earned. Newcastle is committed to a transparent project development and investment process characterized by creating open two-way communication and defining clear expectations among constituents and other stakeholders. Our consolidation and partnership philosophy is based on structuring mutually beneficial transactions utilizing the following key principles:

Flexible Timing

We frequently develop relationships with business owners and executives before they are ready to consolidate and invest and/or bring in outside capital, sometimes over a year in advance of a consolidation transaction. While our approach to deal making is patient, we always act quickly and decisively when the time is right for several small financial services companies to consolidate and raise capital – through a minority investment and equity stake.

Maximize Shareholder Value

We believe that bringing in the right strategic financial partner should be the beginning – not the end – of the value creation process for companies’ shareholders. We work in unison with business owners to provide the right balance of growth capital and succession planning liquidity, our primary goal being to sustain the consolidation’s long-term appreciation in value so that business owners and executives (as shareholders in the consolidation) can take “two bites at the apple".

Aligned Incentives

Aligning the incentives of the consolidation consitiuents (entrepreneurial sellers) with those of Newcastle, other stakeholders and the investors is the single most important factor in building enterprise value and determining investment success. 

A major objective of our consolidation projects is to achieve a fully tax advantaged transaction for the sellers.  When possible, we engineer tax free stock exchange transactions with ongoing equity incentives for subsidiary growth and increased corporate  value at liquidity so all parties have a strong incentive to remain active and committed to increasing shareholder value.

Respect for Company Culture

The best entrepreneurs instill a distinctive culture within their companies. As board-level partners, we value the importance of preserving and enhancing internal company cultures while strengthening the company’s identity, position and reputation within its community and industry. Preservation of business owner relationships with:

• Employees
• Customers
• Suppliers

is key to preserving value, and creating a highly desirable M&A target.

Tax Efficient Transactions

We focus on structuring transactions to optimize after-tax proceeds available to a company and its owners. In most cases, we can implement highly efficient tax structures to achieve entrepreneurs’ financial objectives.

Post Merger Value Creation

Unlike many traditional M&A transactions which only attempt to create value through aggregation of revenue, economies of scale and operating efficiencies, our SEM process places substantial emphasis on increasing enterprise value after the merger.  This is done by instilling a process driven "corporate" management philosophy which is usually a paradigm shift for those accustomed to an entrepreneurial culture.  To insure this outcome, we outsource the services of professional psychologists and transition coaches as facilitators to conduct ongoing structured workshops with former owner-executives, managers and employees. 

Our goal is to transition entrepreneurs to a process and systems driven corporate culture while preserving the entrepreneurial values, employee, customer and supplier relationships and overall productivity of the healthy pre-consolidation constituents.

Employ Industry Experts

Of the many criteria we employ in selecting our consolidation projects, one of the most important is our ability to recruit excellent SEM consultants with domain expertise in the sector  under consideration.

Together with NCC management, our SEM team's wealth of industry experience and knowledge guides each consolidation's performance. 

Built for Scalability 

We apply "project development" principles to consolidations to efficiently:

• Monitor costs
• Manage tasks
• Mitigate risk
• Maximize returns

Each step of the SEM consolidation is

• Controllable
• Measurable
• Assessable
• Replicable

Once a merger event is completed, we re-engage our SEM team to carry out additional consolidation projects in the same industry sector.  

In this way, we are able to

• Continually improve our SEM project efficiency and effectiveness with less direct oversight; and
• Create our own deal flow.