01
PRE-SALE ASSESSMENT
Establish value and saleability expectations
The Pre-Sale Assessment is a no-obligation and confidential assessment of your business to determine value and saleability. It is our first look at your business and becomes our initial point of reference. The objective of the Pre-Sale Assessment is to understand your exit strategy, determined the value and saleability of your business, establish the most probable selling price, and identify how long the sale will take.
The process consists of a series of meetings where we learn about your business to understand growth potential, what drives value, threats and risks, and opportunities to increase value before we go to market. It is an opportunity for you, to see exactly how we work and validate our capability. During this period, clients often learn things about their business that they may not have previously known.
Once the assessment is complete, we will present our assessment of value and saleability, along with our recommendations of how to maximize the value of your business. With these facts, you can decide if it makes sense to proceed. If you decide to proceed, an Engagement Agreement will be formalized and signed to progress to the next step.
02
Sale Ready Preparation
Preparing the business for sale to reach maximum value
The Sale Ready is an optional program developed to maximize the value of your business. As a result of our Pre-Sale Assessment, we will have recommendations to increase value, decrease risk and properly prepare you personally to maximize the sale. You may choose to implement only the recommendations that significantly impact value or you may choose to implement them all for maximum value. The choice is ultimately yours.
The Sale Ready program involves defining your exit objectives, developing an exit strategy and detailing a tax plan to maximize the net proceeds of the sale. Over a 12 week period, we will analyze the 10 key pillars of your business to determine the top 100 value drivers, establish your discretionary earnings, determine growth opportunities, discover untapped potential profit and identify risks that may devalue the business.
The objective is simple, the more we know about your goals, the more effectively we can position the sale to achieve them. The more we understand your business, the better we will be able to speak intelligently about its earnings, operational capabilities, growth potential, and negotiate the best deal possible for everyone.
It comes as no surprise that a Sale Ready business is easier to sell and achieves a higher valuation.
03
Document Preparation
Compiling sale disclosure and due diligence documentation
Selling your business will require you to disclose information about your business to a buyer. This information consists of financial statements, licenses, insurance policies, customer and vendor contacts, insurance documents, employment agreements, asset lists, etc. Properly preparing the disclosure documentation will provide for a seamless and quick sale process.
Preparing the documentation early helps capture potential issues that may arise later in the process and possibly derail the deal. There is nothing worse than being at the tail end of the negotiation to realize a key contract is missing, a license is not transferable or a lien exists which might delay the sale. These types of issues can destroy confidence and jeopardize negotiations.
Preparing documentation in advance of engaging a buyer will save time, ensure the momentum of negotiations and allow you to keep running your business instead of searching for documents. Prepared documentation also protects you from the buyer claiming you did not disclose material aspects of the business. Remember that if a buyer is unsuccessful, they may claim they were misled and that you didn’t provide full disclosure about the business.
We know exactly what information a buyer needs and what documentation is required for each phase of the sale. Our process helps prepare what is essential to the sale, ensure proper disclosure and protect you.
04
Marketing & Advertising
CBS / CIM preparation and buyer analysis
The marketing stage is perhaps the highest risk to a seller as poor marketing and advertising can expose that your business is for sale. This exposure could have a serious impact on your business, customers, employees, lenders, and in fact, the entire sale process. The importance of a well-developed marketing plan is fundamental to attracting the right buyer while maintaining the confidentiality of the sale.
Our Marketing & Advertising process starts by developing a marketing strategy of how we intend to market the business, followed by a comprehensive buyer analysis so we know who we are marketing to and finally an advertising strategy to attract quality buyers.
Marketing strategies such as disclosing a selling price, conducting an auction with broad participation or a private auction, advertising locally or globally, confidentiality, or how aggressive to advertise are all examples of what we will consider.
Advertising strategies vary based on the business, but can include contacting CEOs directly, contacting competitors, mailing or emailing teaser sheets, marketing to our existing buyer pools, our M&A partners, Private Equity, and global groups of buyers. We use multiple tactics and multiple advertising sources simultaneously to make sure the highest impact is achieved.
05
Engaging Buyers
Contact, qualify and document interested parties
We believe that attracting the right buyers requires a focus on quality over quantity. Accepting to negotiate with poorly qualified buyers can lead to months of frustrating negotiations, lost time, lost money, and the risk of your confidential information being exposed to the wrong buyer.
This is especially important when conducting a broadly marketed sale and engaging multiple buyers at a time. Buyers will be relentless in asking for detailed information about you and your business. This stage needs to be handle properly to keep buyers informed, engaged, and motivated while maintaining confidentiality. Since we know precisely what buyers need and will have prepared it in advance, we can quickly qualify numerous buyers at the same time and engage them quickly to progress to the offer stage.
Our multi-layer screening process personally contacts, profiles, and documents every potential candidate to provide you with the facts so you can identify the winners and filter out the tire kickers. We will make sure you know about each buyer's objectives, synergies, motivation, and financial capability to confirm they are an ideal buyer.
We screen and qualify buyers every day and have become very good judges of those who are ready to buy and those who are shopping for a deal. This experience when combined with our screening process, is what allows us to find you the ideal buyer.
06
Offers & Negotiations
Negotiate a non-binding commitment to acquire the business
Receiving an offer is perhaps one of, if not the most exciting part of the sale process. There is nothing more special than to experience multiple buyers expressing interest to buy your business.
The challenge is that no two offers are the same and comparing apples to apples can be difficult. Additionally, offers at this stage are most often non binding and the buyer reserves the right to change their interest as more information is revealed. Some buyers employ a tactic of providing a vague but bullish offer only to drive down value later in the due diligence process.
We have extensive experience in negotiation and know exactly what should be in an offer. We meticulously control the offer process to ensure each buyer has the information they need to provide a comprehensive and quality offer. We work with each buyer to refine their offer to ensure it meets your expectations. Most importantly, we review each offer with you in detail to identify any issues that may lead to problems later in the process.
We know that even though buyers submit an offer, the negotiations continue and will evolve as the deal progresses. Our custom-developed Term Sheet document captures the negotiation progression after the offer to keep track of what each party has agreed to. This helps avoid negotiation backtracking, enables legal counsel to understand what has been negotiated and expedites preparation of the Purchase Agreement.
07
Due Diligence
Discovery period for the buyer to validate facts about the business
Once an offer has been accepted, the due diligence phase commences. It is the point where the buyer and their advisors are allocated a period of time to validate what has been disclosed and conduct a deeper analysis of the business. The due diligence phase has a history of being the most difficult phase and is typically where deals collapse. This is often caused by incomplete disclosure, which leads to assumptions or misinterpretations by the buyer.
We know that the best way to achieve success in the due diligence stage is through a well informed buyer. The more a buyer knows about the business, the clearer their understanding is of what they are buying and the fewer surprises there are later. There is also a lesser chance they will change their mind or their offer. That said, providing too much information early on could be dangerous if the buyer doesn't buy your business. There is a balance act of providing proper disclosure of the facts while withholding specific details until due diligence.
Knowing this, we spend a considerable amount of time preparing the disclosure documentation well in advance of engaging any buyer. We know what most buyers need to conduct due diligence and compile it into a secure and controlled data room early in the process. Once we reach the due diligence stage, we can quickly release due diligence documentation, as required. This expedites the due diligence process and keeps deal momentum while accurately controlling your most sensitive and confidential information. For our clients the due diligence process is most often uneventful because we'd done our work beforehand.
08
Purchase Agreement
Binding agreement between buyer and seller
The final phase of the negotiation process involves reducing the exact details of all the negotiations into a definitive Purchase Agreement which is often either an Asset Purchase Agreement or a Share Purchase Agreement. The Purchase Agreement is the binding document detailing the terms and conditions of the sale. The Purchase Agreement also includes additional documents and schedules such as financials, contracts, lease assignments, employee agreements, non-compete agreements, etc.
The Purchase Agreement also defines the price allocation which has tax implications for both buyer and seller. The price allocation is the breakdown of what portion of the purchase price is allocated to each of the asset classes of the sale. Careful attention must be placed in negotiating the price allocation.
Perhaps the most important consideration of the Purchase Agreement are the liabilities, representation and warranties made by the parties as these tend to survive well after the closing date. Other considerations include Material Adverse Effects, permitted liens, indemnifications, working capital mechanics, performance guarantees, etc.
We intermediate the entire Purchase Agreement process from exchanging information, assisting either parties counsel, preparing schedules, issue resolutions, negotiation and final review. We do this to ensure accuracy in the final document and to expedite the process. Our process also keeps you well informed so you know precisely what you will be agreeing to.
09
Closing Process
Closing conditions and regulatory documentation
The Closing Phase is the period of time whereby the Purchase Agreement has been signed but the transfer of the assets and funds has not yet taken place. At this time, each party's counsel is busy finalizing closing documents. There may also be closing conditions that need to be satisfied or waived before the closing date. In some rare instances, the final signing and closing process all happen on the same date.
The challenge with the closing period is that the buyer has committed to purchase the business (subject to possible conditions) but does not have control over what is taking place in the business. The seller does not have the funds in hand yet and is often hesitant to make decisions that could affect the buyer or the company's performance. The buyer wants to begin transitioning while the seller is reluctant until payment is received. During this time both parties are usually on edge and feel vulnerable. Without proper coordination, the transition and performance of the business could be impacted both before and after the close.
We have been in both the buyer and seller's shoes, therefore, understand their needs and have the expertise to engage both in a mutual "soft" transition strategy. A “soft” transition allows the buyer to preplan the major aspects of the transition and support the seller who continues to make the decisions necessary to operate the business. Simultaneously, our team continues to assist to close any conditions and support the lawyers to ensure the closing timeline is met. Our closing checklist helps make sure the closing is fully executed as planned.
10
Exit Transition
Training and transition of the business to the buyer
In almost all negotiations, the seller is formally obligated to assist the buyer in transitioning the business. This means onboarding the buyer in all aspects of the business including client retention, vendor account transitions, employee retention, vehicle registrations, service contracts, information technology assets, and intellectual property transfer, just to name a few.
It also includes training the buyer in the seller's daily duties and responsibilities so the buyer can continue to operate the business without interruption. Without a proper transition plan, many details can be missed affecting the performance of the business and dragging out the transition until any concerns are settled.
We know that the immediate success of the business is directly proportional to the quality of the transition. We place great emphasis on a developing your transition plan with you early in the sale process and then negotiate that plan with the buyer in the offer phase. The transition plan outlines exactly the training and support you will be providing right down the the hours of operation and how much you will be paid.
The transition plan ensures the buyer gets the training and support they need to assume control and you remain confident that the transition is defined and limited and does not extend beyond what was agreed. This is especially important if you are owed money after the sale (vendor loan, holdback, etc.). Remember that the more successful the buyer is, the less risk there is to payment defaults or disclosure recourse.
