Does My M&A Broker Truly Understand 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.
Who Has Been a Potential Buyer?
As you undertake discussions with M&A intermediaries, it is beneficial to both you and them that you disclose any possible buyers – 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. Now that your company is available for acquisition, all possible buyers should be contacted. Companies that previously inquired about buying your business may be top prospect buyers.
What Is the Role of Our M&A Broker?
M&A brokers, investment bankers and business brokers are responsible for managing the 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 mean “unsellable,” and in many cases that business can be sold, and the company and its jobs may be salvaged and reinvigorated.
How Will We Communicate with Our M&A Broker?
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 will be handled promptly. Both should take calls from the other or return them as promptly as possible. Experienced M&A brokers, investment bankers and business brokers know that, when selling a business or purchasing one, time delays can kill opportunities.
Are We Doing Our Part in Preparing the CIM?
The confidential information memorandum (CIM) should be a complete document. Important sections will take careful thought from the business seller. In areas such as analysis of the competition, any of the company’s competitive advantages – 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 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 important to get a head start.
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. But that is not always the case; watch out for the lawyer for either side 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 that they want the business sale to work. Changing to a knowledgeable M&A counsel who is a deal-focused team player is always an option.