M&A Deals - Sell Side Considerations

M&A Deals - Sell Side Considerations

With regard to M&A deals, as an owner of a middle market private company, it is important that you seek the assistance of a boutique investment bank to help you sell your business. Having a team of advisors with decades of M&A experience will help you understand the value of your business, as well as help you attain the maximum value through a sale.

Considerations Before A Sale Is Launched
One of the most important considerations before selling your business is to determine the best time to pursue an M&A transaction. Your M&A advisors will assist you in this regard. Many entrepreneurs delay the process, most of the time to their detriment. Many entrepreneurs want to launch one or more new products or develop one more sales channel or do something that they think will make their business more attractive to buyers. However, while the entrepreneur is focused on projects like these, they miss a seller’s market or don’t realize that a dangerous competitor is in the process of taking their largest customer. It’s a shame when these things happen, particularly because the entrepreneur has spent years building a valuable business. And, then in the final moments, they lose a large percentage of the value.

In all M&A deals, the seller is concerned with confidentiality. The M&A advisor should have a strong Non-Disclosure Agreement to protect the seller’s business. In addition, the seller and the financial advisor need to determine whether or not a broad based approach of contacting a large number of buyers is right for the company. In most cases, contacting a large number of potential buyers will yield the best results. But, in particular cases, a seller may want to deploy a more limited process. The seller and the M&A advisor need to discuss the pros and cons of each approach and agree how the company should be marketed.

Considerations During A Sale
It is important for the seller to be prepared to address any issues that may arise during the transaction with regard to the company’s operations, technology, human resources, and financials. The due diligence that potential buyers will conduct undoubtedly will raise questions about the selling company. The buyer needs to fully understand the intricate details of the business being purchased. Sellers usually find this part of the process of selling their business to be daunting, which makes it invaluable to have an experienced team of advisors helping to answer questions and ease any concerns the buyers might have raised.

Considerations After The Sale
After an M&A deal is completed, the buyer is faced with integration and how to run the new business efficiently. Issues regarding employee retention, disparate compensation strategies, and more will need to be addressed. Most of the time, the buyer will address these issues directly; however, it’s important that the seller to help, particularly if it’s requested. A smooth transition will preserve the seller’s legacy, protect the entrepreneur’s former employees, and provide former customers with the best on-going customer service. A good M&A advisor can help guide the seller through this process and find the appropriate level of involvement for the departing entrepreneur.