Be a more qualified Seller-be prepared!

One would not go into a business meeting (nor a social meeting, for that matter) without being prepared. In the M&A space, this principle absolutely applies to those desiring to sell their business, and its importance cannot be understated. A potential Seller that has its “package” organized and ready to go is a much more attractive target than the opposite. It’s a better “look” for possible acquirers, and that pays off typically with higher dollars and better terms and conditions.

What does this mean practically? The following is a non-exclusive list:

1. Complete, timely and accurate financial statements. No question there may be a red flag if a target does not have.
2. An organized operational system-suppliers, customers, human resources, technology and the like.
3. Legal house in order. Relationships evidenced where necessary by current, written, valid contracts. Corporate formalities observed and documented. Intellectual property properly protected.
4. A management plan, that can clearly explain the entity’s business, its strengths and weaknesses. An understanding of its place in the market, knowledge of the competition. A budget. 
5. A clear organization, where qualified individuals (properly compensated and incentivized), enable the company to function at the highest possible level.

Purchasers who are interested in acquiring businesses are, during the due diligence process, thoroughly reviewing all legal, financial and operational aspects of a company. A suitor generally has to “sell” the proposed acquisition to its investors, directors and other stakeholders, and make the business case for the acquisition. A Seller wants to make it as easy as possible for the Purchaser to do so….and having everything in order is undoubtedly a big plus. Insiders of a Purchaser that have to “vote” on a deal, with a significant number of open issues, missing documentation, incomplete information, et. al. are simply not as likely to green light and move forward. Conventional thinking is that an unprepared/disorganized Seller is negatively correlated to the operations of that company as a whole.

We understand that companies like to manage the legal spend. But engaging legal counsel to review and assist in the legal side of deal preparation, is generally dollars well spent. 

We are happy to help. Call us any time.

Michael Weis | Weis Burney LLC