M&A: Sell-Side Advisory

Sell-Side Due Diligence and Advisory

We offer seller-support services to private equity funds, stand-alone companies and investment banks representing companies in connection with the proposed sale. ValueScope is not a registered broker-dealer with the U.S. Securities and Exchange Commission. However, we advise and assist owners considering the sale of their company, with the following services:

• Determining the value of the business to be sold
• Preparing a pro forma financial model
• Preparing an information memorandum
• Preparing management presentation materials
• Identifying and ranking qualified prospective buyers
• Approaching prospective buyers on behalf of the seller on a confidential basis
• Coordinating buyer due diligence process
• Assisting the seller in evaluating offers and negotiating terms of the transaction
• Facilitating consummation of the transaction in conjunction with the seller's legal and tax advisors

Transaction Motivation

Each owner's dynamics is different; motivation to complete transactions include:

• Change in Lifestyle
• Portfolio Risk Reduction
• Market Dynamics and Competitive Changes
• Pressures dealing with External Issues
• The need to Grow the Business with External Capital

Potential Pitfalls

Negotiation Issues that Affect Management:

• Focus on the most important issues
• Take your eye off of management, customers and operating aspects of the business
• Moving too quickly to agree on details before major issues are resolved
• Letting the control of negotiations slip to the buyer
• Become emotionally involved

Why Owners Frequently Sell for Less:

• Inadequate analysis and documentation
• Market timing issues
• Failure to identify true buyers and create a competitive environment
• Negotiating with only one potential buyer

Importance of Timing

• Is the Market Ready?
• What Cycle is the M&A Market in?
• Inflation
• Buyers/Sellers
• Financing
• Interest Rates
• Stock Market
• U.S. Economy
• Taxes
• Exiting the Business Requires Analytics and Planning
• Timing
• Complete a transaction - 4 to 9 months
• Employment Requirements - 2 to 5 years

Preparing For A Transaction

• Maintain normalized business operations
• Perform a Balance Sheet review - bad debts, deferred taxes, inventory, receivables, payables and accruals, etc.
• Audit the Financial Statements
• Create management reports - budgets, sales people, customers, profitability by service lines, backlogs, etc.
• Remove personal assets from the balance sheet - such as autos, notes, life insurance, etc.
• Sell non-operating equipment, furniture and other assets
• Make sure payroll taxes and all federal and state filings are up to date
• Reconcile fixed assets to the books
• Pay overdue bills
• Implement a budgeting process and purchasing procedures
• Make the office and work areas look impressive - spruce up
• Do Not start up any expensive new initiatives
• Resolve legal disputes
• Make sure your contracts are assignable
• Execute non-compete contracts with key employees
• Make certain your licenses, trademarks and patents have been properly filed
• Update your corporate minute book