Industry Insights

Proper AWARENESS is Critical: Know what technical and personal information will be required by the Buyer(s)!

Create a Book on your business – It’s ALL about Demonstrating that your business has “A Differentiated Value in the Market Place!”

1. Detailed listing of Standard Operating Procedures by activity: dates, names, skills, dependencies, expected outcomes, etc.
2. Thorough financial analysis (Ref. No. 2 + 3 below)
3. Detail the status on any current or pending litigation (Ref., No. 4 below)
4. Include the company
   1. Business Plan
   2. Organization Chart
   3. Employee Roster with respective annual base compensation & bonus program
   4. Marketing Plan
      1. Describe what does the firm Stands For and its Core Values
         1. Core company values that they can see in action in order for a customer to feel comfortable in their purchase decision
         2. Repeat the core company values circa associated elements: e.g., packaging, product placement, sales / retail experience and collateral marketing materials
      2. Reinforce “Message Consistency”
         1. Products can always be counted on to Deliver the defined Performance
         2. Everything related to the Marketing efforts must be unified in look and feel
         3. Create an aura around the Company and its Products
            1. Show visuals of products that creates a unique emotional connection
            2. Promote the Brand reputation to build on customer loyalty, emotions and monetization opportunities
      3. Product Placement, Leverage and Value Proposition
      4. Product “experiences”
      5. Customer list
      6. Supplier list by commodity
      7. Key marketing materials

Scrub your numbers and insure their conformance to GAAP (the Buyer will do a forensic analysis of the past five years of your company financial statements). Demonstrated excellent bookkeeping is critical!

1. Income Statement Review
   1. Define your Revenue base By Quarter for the past five years
   2. Demonstrate Customer Revenue by:
      1. Customer by year
      2. Market by year
      3. Seasonality
   3. Demonstrate Market revenue by:
      1. Type
      2. Geography
      3. Price point
   4. Demonstrate product revenue by:
      1. 80/20 analysis
      2. Price point
   5. Demonstrate Seasonality & Purchase History
      1. Customers
      2. Markets
      3. Products
   6. Define:
      1. Pending / outstanding unrecorded liabilities: e.g.,
         1. Employee paid time off
         2. Employee vacations
         3. Product warranty claims
      2. In-process guarantee liabilities
      3. Tax non-compliance issues: e.g.,
         1. Sales & Use
         2. Personal property
         3. Payroll
         4. Certifications
2. Balance Sheet Review
   1. Depreciation schedules must be current
   2. Paid in Capital schedule must be current
   3. Asset valuations must have adequate reserves
   4. Define cash set aside for equipment maintenance and replacement

Have at least five (5) years of monthly bank statements organized for Buyer review.

Prepare Ratio Analytics (Develop Data Tables & Corresponding Graphs)

1. By Quarter for the past five years
2. By month for the past 36 month

Conclude and/or bring current any litigation either in process or pending for the firm

1. Categories: e.g.,
   1. Employment
   2. Environmental
   3. Class Action
   4. Product liability
2. Insure that your documentation is current

Update your Web Site (Insure that all:)

1. Pages are functional
2. Links do connect
3. Images display properly
4. Material is organized to flow effortlessly through the site
5. Content is SEO’d to accelerate load times and search mobility
6. Hosting activity is optimized

Realize both your Market and the Value of your business in that Market

1. Have a professional valuation performed on your business
   1. EBITDA multiples
   2. Liquidation analysis

Understand the Sale Process

1. From the onset of this process - insure Full Disclosure on Everything!
2. Interview, vet and hire a:
   1. Commercial Broker
   2. CPA auditor
   3. M&A attorney

Understand the types of Buyers for your business

1. Strategic - examine for a positive trends in GM, EBIT and EBITDA - A history of New Product Development, an active Service Department, annual customer maintenance / service contracts, differentiated technology, demonstrated market share and methodologies to drive Brand recognition / awareness
2. Financial - examine for continuous period free flow cash, increasing revenue streams from all types of revenue - product sales, Service department sales, service & maintenance contracts, a h4 management team and well-defined and practices internal systems)
3. Internal – examine for a company with generally h4 Revenue, EBIT and EBITDA - Solid Balance Sheet, a sound corporate culture and diverse product lines / markets / customer base

Do Due Diligence on the candidate Buyer(s)

Define and facilitate an easy transfer of ownership

1. Relate any relationships in place that define your relationships and agreements that are in place that are vital to the business … and how same would be transferred to a new owner
2. Audit and update your personal social media presence to validate your work history
3. Have a prepared explanation as to “Why you are selling the business”
4. Start to uncouple yourself from the identity of the business

Finally

1. Take care of yourself: mentally, physically and emotionally
2. Cultivate Loyalty: keep your employees motivated, happy and in the know
3. Have a sense of humor: you will need it as the Buyer Examination intensifies
4. Remember your responsibilities: Live up to the honor of leading your company and its employees … as success or failure depends on you!
5. Trust your Guts: you have the best instinct for the timing, buyer and offer