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Thought Leadership


Successfully completing any M&A or financing transaction is a complex process.  There are many factors that can impact the financial, strategic and legal implications in the future.  There are many parties involved and many issues and influences that can impact the transaction cadence and terms.  

We believe that “an ounce of preparation is worth a pound of result”.  The biggest impact you can have to ensure a successful outcome is to focus on the key aspects of the transaction that are in your control.  The following is an outline of the top things we believe can be done to ensure a successful outcome.  

  • Understand the Potential Market Value of Your Business or Target:  Before selling or buying a business, it is imperative to gain an understanding of value.  There are several methodologies utilized to establish a reasonable range of value, but ultimately the value is based on the strategic and financial impact to the buyer.  Understanding the key drivers of value and the variances in valuation between different buyers or capital sources is imperative before moving forward in developing a transaction execution strategy.
  • Update Your Business Plan:  Any transaction will be evaluated not only on historical performance also on expected performance and return on investment. Organization, growth opportunity, reputation, market conditions and industry leadership are some of the many intangible factors that can also drive value. Three years of historical financials and two to three years of projections are typical, depending on the type of business and transaction. Factoring in improvements, cost savings or growth benefits from an anticipated transaction are also important to take into account in the projections.  
  • Utilize Good Accounting and Corporate Records: Successful transactions are the result of a diligent approach to organizing, presenting and reviewing critical business data.  Well organized accounting, preferably audited financial, and corporate records are key.  If the books are not up to GAAP or have inaccuracies, due diligence will be much more exhaustive and the deal may not get completed.  In the case of family-owned and closely-held businesses, a tax minimization strategy by reducing profits may have been employed historically requiring restated financials to adjust for non-recurring personal expenses.  Also, a quality of earnings report may be a sufficient substitute for an audit.  
  • Approach the Right Targets:  It is imperative to match the targeted potential parties to a transaction to the business objectives and type of transaction.  For example, there may a strong case to run a limited process in the case of a sale or financing instead of a broad marketing or auction approach.  This strategy can minimize business disruption and expedite timing.  It can also thwart competitive issues and employee departure.  Furthermore, understanding the type of transaction or options will dictate the type of financial or strategic partners to approach.  And finally, knowing the financial and strategic players and how they may view the potential transaction is also important in determining who to approach
  •  Plan for The Economic Impact of the Transaction: In the case of private business owners, strategies can be established early on that can minimize the impact of or defer taxes that can yield millions of dollars of savings at the time of a transaction or over time.  In the case of corporate or institutional owners, tax analysis on the front end can significantly improve the financial impact of a transaction through thoughtful planning.
  • Maintain Focus on Your Business:  There is a risk that a company will miss their budget or projections during the transaction process. Many times running the business and working on a transaction process can be too much for a management team.  Missing projections slows the process down and puts the deal at risk.  
  • Weigh All Terms, Not Just Headline Price: M&A and financing deals are typically complex with dozens of negotiable terms that can have a material impact.  These include escrows, indemnities, preferences, and numerous financial and legal rights.  Although valuation and price drive any deal, structure and other terms materially impact the end result and should receive equal attention and scrutiny. 
  • Keep Things Moving; Time Kills Deals:  Set a timetable and execution strategy to complete your transaction. 
  • Selection the Right Advisors:  Objective third party advisors who have relevant expertise in similar transactions will be most effective in managing, negotiating and closing a favorable transaction. An experienced adviser not only increases the odds that the transaction will be concluded at the best terms with the fewest problems, but can also manage the relationships between the parties to keep things moving, diffuse and address issues, and ensure the parties have a healthy relationship post transaction.
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