MERGER AND ACQUISITION SERVICES
Selling a business is a significant event in the owner’s life. The success depends largely on your planning and selecting a professional advisor to manage the process. The steps in the sale of a business can be broadly outlined as follows:
Assessment and Valuation
We perform a diagnostic review and pricing analysis (Broker Opinion of Value) of your business. The diagnostic review will identify what can be accomplished in either the short or longer term to increase the value of the business and maximize the sales price. The Broker Opinion of Value includes a review of comparable transactions as well as return on investment criteria covering the buyer’s ability to finance the transaction.
THE MARKETING PLAN
The marketing plan includes advertising confidentially in a manner you approve and may also include reaching targeted potential buyers using a short blind profile, called an “investment teaser” describing the company without revealing its identity.
Confidential Information Memorandum
If a qualified buyer responds positively to the investment teaser, they would sign a non disclosure agreement and then receive the Confidential Information Memorandum (CIM). The CIM developed to provide the potential buyer with more relevant information about the opportunity and should serve as a starting point for validation in the buyer’s due diligence.
Development of the Buyer List and Outreach
Simultaneous with the development of the Marketing Plan, your advisor is developing a marketing outreach strategy. The materials are typically ready before the buyer outreach simply because when potential buyers respond either to the investment teaser or otherwise, you want to be able to respond with a CIM and avoid losing any momentum that started with the buyer’s inquiry.
There are several different kinds of buyers or inquirers and many may never qualify as buyers at all. The broker’s responsibility is to cull through the various “interested parties” and help the seller find the best candidate to buy the business.
This is preparation for meetings with the prospective buyer. This is an important step because the successful transaction will likely need to have some level of knowledge transfer between the seller and the buyer. The buyer will want to be comfortable that the seller will cooperate to ensure the buyer’s success. In addition, if the best solution to execute the transaction includes seller financing, the seller needs to be comfortable that the buyer can execute the plan and support the financed portion of the business. In order for most transactions to be successful, there needs to be some chemistry or connection between the seller and the buyer. In this regard, the buyer and the seller are truly interviewing each other.
Secure An Offer (Letter of Intent)
If the parties want to proceed, the broker secures an offer, works the offer to an acceptable result for both parties, helps resolve contingencies and monitors the due diligence efforts.
Due Diligence and Closing
Due diligence will include an inspection of the company’s records, usually financial, operational and legal. This can be time consuming and needs to be managed and stay on a timeline. There is an expression that “time kills all deals” and this is where the time is incurred and the deal may fall apart. A good M&A Advisor together with the attorneys for the parties are tasked with keeping the transaction moving.
These are services well worth understanding further and if you are genuinely interested in selling your business, it is time that you give us a call.