M&A Deals – Sell Side Considerations
M&A Deals – Sell Side Considerations
With regard to transactions in the middle market, when an entrepreneur begins the sales process of their company, he or she can easily become consumed by the process. This should be one of the most important sell side considerations for an entrepreneur, i.e., how not to get over involved in the process.
In order to complete a successful sale, the entrepreneur must maintain his or her focus on what’s most important, that being the business. This is why it is so critical to have a well-experienced M&A firm handle your transaction. Typically, boutique M&A firms offer middle market companies the best level of service for their transactions. They know how to mitigate the time and effort that an entrepreneur will have to make to the completion of a successful transaction.
The continued strong performance of the company plays an important role in a successful sale, which is why it’s one of the more important sell side considerations. When entrepreneurs neglect their companies during the sales process, they are putting the value of the company at risk. During the sales process for the company, potential acquirers will watch the financial performance of the company closely and will react negatively to any “slip up” in revenues. While a buyer may fully understand that this hiccup in performance was because of management’s focus on the sales process, they won’t hesitate to use this as an opportunity to negotiate a reduction in the value. The best way to avoid this scenario is to make sure that the M&A firm is managing the sales process so that the entrepreneur can stay focused on his or her business.
A knowledgeable financial advisor or boutique M&A firm will be able to tell entrepreneurs what materials potential buyers will want to see and may even populate a data room with such data. Getting this information ready in advance will reduce the stress of numerous data requests from a buyer once due diligence is in full swing.
Throughout the sales process entrepreneurs should always expect the unexpected. An experienced M&A advisor will be able to guide entrepreneurs through the M&A process, which is not always a straight line. As a buyer conducts its due diligence, unforeseen flaws are likely to be discovered. When this occurs, the most effective way to ease a potential buyer’s fears is to present a company that is continuing to perform well. This will not only keep the sales process moving, but will also preserve the value for the business by preventing a price negotiation.
Entrepreneurs selling their business can often times feel like they are performing a juggling act and it may seem as if there are too many things to keep an eye on. This is actually another one of those very important sell side considerations. An experienced boutique M&A firm can be the extra set of hands the entrepreneur needs to maintain the company’s financial performance while also executing a successful sale. With this type of teamwork, the highest value for the business will be obtained and the sales process can be completed in the most efficient manner.
At the risk of being redundant, it’s important for the entrepreneur to make sure that they are hiring a well-qualified M&A advisor with years of experience. They will know how to guide the entrepreneur through a variety of circumstances that always creep into M&A transactions, but are not fatal to completing a successful transaction. There are many sell side considerations and Versailles Group, a boutique M&A firm or investment bank would be happy to explain how to accomplish the best possible results in the sale of your company.
