Random Thoughts

• There are a myriad of benefits to using an M&A firm to quarterback your project. So why us?  What do we bring to the table?  Hopefully, we have covered most of this such as longevity, experience, focus, etc.  One very important factor to us also is our reputation.  We have a good one and we won’t do anything to lose it.  That means full disclosure of material negative information on a timely basis.  That dovetails with an overall goal of “no surprises” during the project.  All benefit from this approach.  Finally, we are humble but confident, and always respectful of others.  We are strong believers in treating others as we would want to be treated and that value system is reflected in our clients’ opinions of our work.  We encourage you to read them.  We work hard to earn them.

• Buyers may be classified as strategic, where they generally are active in the industry and will keep what they acquire. Alternatively, another active participant is private equity.  The majority have a short term perspective in harvesting their investment, usually within a four – six year window.  We often find that clients automatically dismiss them as a good home for your business.  We will explain why they may in fact be a very good option to achieve your goals.  You then decide.

• Sellers who may have had value conversations with friends who have sold their business should always take what they hear with a grain of salt. Virtually all will tell you that they received a multiple that would only be reserved for multi-billion dollar high tech firms!  Nor do they clarify, “multiple of what?”  Most never talk about net working capital targets, escrows, holdbacks and earnouts, and who assumed cash and debt on the Balance Sheet.  Then, of course, there is also the question of value for what and when received, which is often never communicated.

• All transactions have two components – value and structure. They work hand in hand.  A transaction that is $25 million cash at close may be better for some sellers than a potential $30 million deal with $20 million at close and $10 million on an earnout.  Your specific circumstances will determine your best deal.  In general, our philosophy is “cash (at closing) is king”, but there are exceptions.

• Both buyers and sellers have the same goal – get the best deal possible. The smart ones know that the deal has to be fair to both sides.  A good advisor knows the value of finding common ground and when to stop pushing.

• Competent advisors are critical in obtaining a good result. In addition to your M&A advisor, you want an experienced M&A attorney and a capable outside accountant who is up to speed on GAAP financial statement presentation, tax consequences of various deal structures, as well as the allocation of the purchase price reported to the IRS.

• The M&A process is a long one. You will get real close to your advisor and need to be able to trust their advice.  Aside from experience and credentials, it is very important that you feel personally comfortable with your advisor, prior to choosing them to represent you.  Take enough time to reach that conclusion.