Perspectives From a Business Seller:
An Interview with Dave Otfinoski
Dave Otfinoski is the founder and former CEO of
By Bill Quish, CEPA
Senior Managing Director, Lyons Solutions LLC
Bill: What emotions and concerns did you face as you contemplated the sale of your business and how did you overcome them?
Dave: In the back of my mind I always pictured one of my children taking over the business one day. So when I considered the idea of selling the business a little part of me felt I was being disloyal to my kid’s future. However, I ultimately realized that by selling, I was enabling myself to take out some of the value from the sale of the business and put that money away for my family’s future. At the same time, I realized the business needed an owner with more means than I had so that the business could reach its potential. I also came to realize that my children really needed (and wanted) to do something they loved and were passionate about, which very well may not mean working in dad’s business.
Bill: Why did you engage a Merger and Acquisition advisor to help you sell your business rather than doing it on your own?
Dave: I’m not sure how anyone can effectively run their own business and do all that is involved in preparing to take the business to market. I know I couldn’t have. For me it was never a question – the real question for me was finding the right partner to work with me to help find good buyers for our business. Fortunately we found the right M&A advisor to help us most appropriately present our business to the investing community, which resulted in a successful transaction. As well, I realized through the process that selling a business was not my business – having an advisor that did this on a full time basis, and had the proven know-how to navigate the process, made the entire experience go more smoothly while enabling me to get a higher price for my business.
Bill: How instrumental was your Merger and Acquisition advisor in helping you getting your business sold?
Dave: The M&A advisors where critical in helping us pull together the prospectus that best displayed our organization, and they were very helpful in ensuring we properly portrayed our financials. I found that our financials prior to selling were managed for internal purposes, which is the case in most privately held companies. When it came time to show the financials of the company to the investing community we needed the help of experienced professionals to ensure they were done in the manner that were familiar to private equity investors, and larger strategic buyers. In this regard, the advisors we selected were of tremendous help. The fact that they had financials background, including a CPA on their team, was of great help. Also, we found that the advisors had a network of additional experts they could bring in to support the process. Finally, our advisors did a terrific job negotiating the business aspects of the transaction, ensuring the final agreements properly reflected the Letter of Intent and protecting my best interests.
Bill: How did you manage to keep your focus on running the business while responding to the demands of the business sale process?
Dave: For me the answer was to work with highly qualified M&A advisors who took the time to understand our business, and I pulled in a key member of our senior team to help in the process. Eventually, we brought other team members into the process during the due diligence period. In essence we spread the work load so no one person was too distracted from our main focus of running the business. It really is a large undertaking to take a business to market, so there does need to be a plan in place as to how it will be done while maintaining operational excellence in the day-to-day business. We mapped out this plan early in the process with the help of our advisors, and were able to maintain a high level of operational focus, while gathering the necessary information and materials to bring the business to market and eventually through due diligence to consummate a transaction.
Bill: If you were to sell your company again, what would you do differently?
Dave: Not a lot. I was very pleased with the process and the advisors we selected. I did take a long time in selecting the advisors (we interviewed 4 different M&A firms). In retrospect I would have moved the process along quicker in the selection process. I really knew who I wanted to use early on, but took a lot of time to re-consider if I really wanted to sell. I also may have incorporated a few less members of my senior team in the due diligence process. I think it became a little too distracting for some members of the team. One of the issues we encountered was that our CPA wasn’t up to the task of providing timely and accurate due diligence financial information. I waited too long to bring in a more capable firm to help us out with this.
Bill: What advice do you have for business owners who are considering selling their business?
Dave: Conduct a thorough analysis prior to going to market. Ensure that your personal and professional motives are in sync. Don’t try to do this by yourself, it’s a process different from anything you’ve probably ever done before. I would recommend hiring an M&A advisor with Exit Planning expertise early in this process to help you think through all your options for an exit strategy – it will be money well spent. It’s also no small consideration to ensure your wife or husband understands the strategy and is in agreement. Once you’re confident you know the direction you’d like to take, then build the go-to-market plan with help from your advisor. At this point think through all possible buyers for your business, and build as complete a list as possible. Also, hiring an advisor with a strong list of private equity contacts will be very helpful down the road. Have a complete, cohesive offering memorandum, along with accurate and well done financials, will be helpful in making the company look more attractive and professional. This will also answer many questions up front for potential buyers. As well, don’t be in a rush; it takes time to sell a business. Be prepared for many conference calls and meetings with prospective buyers – have thick skin in this process. The real potential buyers will ask the tough questions, which is only appropriate. Finally, have a plan in place for after the business sells. Most business owners are active, aggressive people – have some ideas as to what will be the next chapter of your life. Good luck!
If you're thinking about selling your business, call Bill Quish at (860) 391-8672.
© Copyright 2011 Bill Quish. All Rights Reserved.