Corporate Investment sell-side M&A advisors have tailored our business sales process into a step-by-step system designed to help in selling your business for maximum value.
Our professional intermediaries have years of experience acquired in selling 400+ businesses, with values in excess of $50 million, and we can put that experience to work for you. Our firm will consult with the business owner to clearly define the goals they hope to achieve in the transaction and design and execute our process that includes the following major steps:
1. Consulting and Valuation:
During a no-cost, no-obligation introductory consultation, we’ll learn more about your goals in the business transaction and about your business and its unique attributes. In this confidential conversation, we describe our process, how long that process will take and how we maintain confidentiality throughout. The next step is recasting the financial statements and the preparation of a calculation of the value of the business. We review the calculation of value and our proposal for services and fee arrangement with the business owner. If these are acceptable, we will enter into an exclusive arrangement with our client.
2. Preparing the Confidential Business Review:
Once you’ve engaged Corporate Investment, our team begins gathering the data on the business and prepares a Confidential Business Review (CBR). This document will only be seen by qualified buyers that have signed a non-disclosure agreement. We will have also prepared an “Executive Summary,” or “Blind Profile” of the business, which is a two-page document that provides an informational overview without disclosing the business name or any other identifying details.
The CBR contains information on the operations of the business, the organization, and financial performance that a qualified buyer will review. This document provides enough information for the buyer to understand and evaluate the business and will be used to aid the business owner in maintaining leverage over the process.
3. Buyer Search and Screening:
The Blind Profile and other materials will be used to market the business to our extensive network of prospective buyers. We will also market your business via selected websites on the internet and to strategic buyers directly. In this process, we go to great lengths to keep the identity of your business confidential, using generic phrases to describe the business and summary financial information.
Once inquiries begin arriving in response to our marketing efforts, we’ll begin the process of pre-screening buyers to ensure they’re serious and financially capable of purchasing your business. Each buyer will sign a Non-Disclosure (NDA) or confidentiality agreement and be interviewed before receiving the CBR. When a prospective buyer receives a well-prepared Confidential Business Review, they recognize that it’s a competitive process, and this provides leverage to our client in the subsequent meetings and negotiation.
4. Buyer/Seller Meetings
Once we have determined that a buyer is serious, we arrange a meeting in our office between the prospective buyer, our client, and the Corporate Investment professional who is leading the engagement. Our client will have discussions with the prospective buyer, to describe the business and answer questions from the buyer. This first meeting is generally brief and covers the history, overall strategy, industry, and basic operations of the business, without disclosing customer names, or employee information. A significant objective for this meeting is for the seller to be comfortable with the buyer, and that it’s a good “fit.” If the buyer and seller decide to move forward, the next step may include a site visit to the business, which can be done on weekends or after hours to maintain confidentiality. At this time, the buyer will have enough information to make an offer.
5. Offer to Purchase / Letter of Intent ( LOI)
The next step in the process is asking for an offer to purchase from a prospective buyer, which needs to be in writing, and the form for the offer is normally a Letter of Intent (LOI). This document outlines the details of the offer; not only the purchase price, but the payment terms, the timeline for due diligence, the terms of the non-compete agreement, the length of any “no shop” provisions, and any other critical issues unique to the business. Negotiating the LOI will be a critical step in the process and we believe the LOI should include a timeline, to keep the purchaser moving forward during due diligence. The LOI contains the important business points of the transaction and will provide the all-important roadmap to closing. Our extensive transaction experience will help guide you through this negotiation. Prior to the LOI, our client will have assembled the “deal team,” consisting of an attorney with experience in business sale transactions, a strong tax accountant and a wealth management advisor. A skilled, professional deal team is critical to responding to issues in a timely manner, and maintaining the momentum of the transaction to achieve a successful closing.
6. Due Diligence and Closing:
The Due Diligence period begins after both parties have agreed to and signed the Letter of Intent. The due diligence process is meant to confirm that the business was accurately represented to the purchaser prior to making their offer. Key issues include that revenue and earnings were fairly stated and other important issues such as customer makeup and strength of management team are as represented. This is the opportunity for the buyer to “look under the hood” of the business, and make sure the information presented was accurate. This review will include providing detailed financial statements, tax returns, general ledger detail, bank statements, and other financial documents. The financial review will be done first, followed by review of contracts with suppliers and customers, and leases or other legal documents, and employee information last. Due diligence must be done in a staged manner that protects the business as long as possible into the process, and maintains confidentiality.
Our motto for due diligence is: no surprises. The due diligence phase will usually take four to six weeks for most lower middle market businesses. During this time, the purchaser will engage an attorney to draft a purchase agreement, and will be obtaining bank financing if required. The seller’s attorney will assist them in negotiating the legal issues contained in the purchase agreement, making sure it tracks the LOI, while the accountant is managing the tax issues. Corporate Investment will continue to lead the seller’s deal team and insure that the transaction is closed successfully.