Who best understands my business?
When interviewing M&A Brokers or investment bankers to advise you and manage the sale of your company, it is very important for you to outline your specific decision-making process for selecting an advisor and your requirements for a successful business sale. Without the information gleaned from that discussion, an intermediary will find it difficult to respond to your concerns and objectives.
Are there any potential buyers?
As you undertake discussions with mergers and acquisitions intermediaries, it is beneficial to both parties that you disclose any possible buyers – be that an individual or company – that has expressed an interest in purchasing your business. That’s any interest, whether the business was for sale at the time or not. It also does not matter how long ago the interest was there. All possible buyers should be contacted now that your company is available for acquisition. Companies who previously inquired about buying your business may be top prospect buyers.
Lack of communication?
Communication is a critical aspect of any business sale. With a seller and their M&A intermediary, both parties should have an expectation that all communication between them should be handled promptly. Both should take calls or return them as promptly as possible. Experienced M&A brokers, investment bankers and business brokers know time delays kill opportunities when selling a business or purchasing one.
Are the business seller and their intermediary cooperating on the confidential information memorandum, or CIM
The confidential information memorandum should be a complete document. Important sections will take careful thought from a business seller. In areas like analysis of the competition, any competitive advantages possessed by the company for sale – along with any deficiencies and ways the company can grow beyond its current status – should be detailed and fairly represented by the seller. Additionally, issues such as lawsuits or environmental concerns, should be included in the confidential information memorandum, or CIM.
Are financial disclosures adequate?
Providing last year’s financials should be an easy thing for most sellers to provide. That is just a start on what you’ll need when successfully selling a business. Five years of historical statements plus recent interim statements, plus projections for at least a year are the minimum needed. Additionally, it is a big advantage if the recent statements are audited. This may be an obstacle for small companies, so it is something to get a head-start on getting done.
Will the lawyers be advocates for deal-making?
In selling your business, do you want attorneys who are deal-makers or deal-breakers? In most cases, experienced M&A transaction attorneys from good firms will do excellent work and are very much deal-makers. Sometimes in business sales transactions, an attorney can become a deal-breaker rather than maker. Signs to watch out for is a lawyer attempting to take over the deal at an early stage. Both the seller and the potential buyer should be aware of this and each make it clear to their respective counsel, they want the business sale to work. Changing to a knowledgeable M&A counsel who is a team player is always an option.
M&A Brokers, investment bankers and business brokers are responsible managing divestiture of what may be their client’s largest asset. Most take a great deal of pride in what they do – professional Intermediaries realize that selling a business can provide vital financial security to the business owner. In the case of distressed businesses, the intermediary may undertake selling it. Distressed does not always equal “unsellable.” In many cases, that business can be sold. The company and its jobs may be salvaged and reinvigorated.
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Reprinted with edits with permission of Business Brokerage Press, Inc.