Merger and acquisition funding facilitates business transitions in Alaska: Alaska Native corporations, private equity groups, professional firms, and baby boomers fuel transactions.

• Author: Barbour, Tracy
• Position: FINANCIAL SERVICES

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Last year, when Tiffany Tutiakoff acquired Northwest Strategies, she became president and CEO of the state's only privately Native-owned and managed communications agency. It was a rewarding move by Tutiakoff, who had worked at Northwest Strategies for eleven of the nearly thirty years it has existed in Alaska.

To finance the deal, Tutiakoff turned to a former client and lender: Alaska Growth Capital (AGC) BIDCO, Inc. AGC was the ideal funding partner. "I was already familiar with the company, and it had a great track record for service," she says. "I felt comfortable knowing Alaska Growth Capital, a subsidiary of Arctic Slope Regional Corporation, was Alaska Native-owned and socially and fiscally responsible to my fellow Alaska Native people. I felt like the business had my best interests at heart."

In fact, Tutiakoff says her experience working with AGC was better than she expected. "This was a major business decision for me, yet the team made it feel easy," she explains. "They were patient, helpful, and kind. Navigating the ins and outs of an acquisition can be daunting, but I never felt rushed or pressured to move at a pace faster than I was comfortable with."

The sale of Northwest Strategies exemplifies the growing number of companies involved in mergers and acquisitions in Alaska. Financiers like AGC, First National Bank Alaska, KeyBank, Northrim, and Wells Fargo are funding a variety of these transactions--although primarily in the area of acquisitions. Many of the recent deals have been dominated by Alaska Native corporations making new investments, private equity firms capitalizing on opportunities in Alaska, and business owners selling to competitors, family members, and employees.

Flexible Financing Options

AGC frequently sees acquisitions relating to service-based businesses, such as marketing agencies, law firms, and medical and dental offices. "These types of businesses typically have a proven cash flow and brand or name recognition," says Jesse Janssen, vice present of lending at AGC.

Restaurants and retail stores have also been part of the mix, along with companies transitioning ownership to the next generation. "As baby boomers are reaching the age of retirement, we are seeing a lot of generation-based sales to children or other family members," Janssen explains. AGC can finance mergers and acquisitions for companies in almost any industry and for qualified projects up to $10 million. It offers term debt from five to twenty-five years to support a leveraged buy-out. "The transaction can be 100 percent funded by AGC in some cases," Janssen says. "In other cases, we can fund a portion of a project in conjunction with owner carryback or in partnership with another lender."

During its ninety-four-year history in Alaska, First National has financed a wide variety of mergers and acquisitions. Like AGC, recent transactions at the bank have centered on Native corporations acquiring complementary businesses and retiring owners selling to relatives, competitors, and employees, according to Jay Page, a vice president in First National's corporate lending division.

In fact, business acquisitions involving employees--often structured as an employee stock ownership plan (ESOP)--are becoming increasingly common. And it's only natural, given the bond owners often have with their longstanding employees. "I think there's an affinity over the decades for your longtime employees," Page says. "You come to know them and their families...