Discussion Topics

Introduction
Transaction Types
Potential Buyers
Current M&A Environment
Critical Seller Decisions
Creating Value in Your Business
Preparing Your Business for Sale
Selling Your Business – The Process
Financing the Deal
Transaction Types
Employee Stock Ownership Plan - ESOPs
Family Succession Sale
Partnerships
Stock Sale
Asset Purchase
Non-tax Issues – Stock vs. Asset Sale
 Cash/working capital
 Liabilities/Limiting assumed liabilities
 Assignment of critical contracts
 Transfer of licenses
Potential Buyers
Private Equity Groups (PEGs)
Strategic Corporate Buyers
High Net Worth Individuals
Potential Buyers - PEGS
Platform investments – larger investments in certain
categories
“Add-on” investments – smaller investments added to
platforms
Typically want to invest all money within 5 yrs. and
sell within 10 yrs.
Often want business owner to stay on for several years
Potential Buyers - Strategic
Have specific reasons for wanting to make a particular
purchase – distribution, new products, financial
leverage, new footprint
May be able to pay a premium due to synergy
Generally looking for companies in the same or related
industry
May have management team in place for transition
Critical Seller Decisions
Timing
Planning can take 2-3 yrs.
Sale process can take 6-18 mos.
Pre-sale self assessment
What are your motives
Desired outcome
Timeline
Financial
Buyer – what type of buyer do you want
Business Continuity
Prepare yourself – time, energy, disclosure, money
Keys to Success
Evaluate your business
Financial health of business
Non-financial aspects
SWOT analysis
Transferability
Take the time to improve where needed
Management team
Customer base
Brand
Balance sheet
Facilities
Preparing Your Business to Sell
Assemble your team
Accountant
Attorney
Financial planner
Estate planner
Banker
M&A Intermediary/Business Broker
Set the right expectations
Business valuation, real estate appraisal, equipment valuation
Perform pre-sale due diligence
Develop/update strategic plan and forecast
Selling Your Business –
The Process
Develop marketing materials
Offering Memorandum
Blind profile/teaser
Prepare target list of buyers
Launch campaign
Interview prospective buyers/screen
Manage due diligence/data room
Structuring and negotiating the deal
Close sale
Implement transition plan
 Financing the Deal
Financing Sources
Commercial banks
SBICs/SBA
Subordinated debt funds
Things Banks care about
Cash flow (EBITDA)
 Does not include Seller’s discretionary expenses
Personal Guarantees

earnings before interest, taxes, depreciation, and amortization

You have been a Wonderful Class

Wish you all the best for your futures