You’re My Fourth Mergers & Acquisitions Call This Week!
By Jack Lyons, Mergers & Acquisitions Advisor and Certified Exit Planning Advisor (CEPA)
As a business owner you’re probably receiving a number of phone calls, letters and seminar invitations from merger and acquisition advisors like us who are trying to find out if you’d consider selling. Some of these merger & acquisition advisors represent buyers and some represent sellers. All merger & acquisition advisors get all or the majority of their pay when a sale happens. This means that these M&A brokers are not only seeking to court you, but are more importantly, seeking to qualify whether your company is worth the time and energy to represent either as or to a client. Unless a company is likely to engage in a merger & acquisition transaction, there is no reason for the merger & acquisition advisor to stay interested. The same is true for private equity firms that are seeking companies for their own account. Unless your company has the right characteristics, it is on to the next M&A target, which might represent the right characteristics.
How do these merger & acquisition advisors determine whether your company is right for them? They seek information about your motivation, size, gross margin, rate of profitability, customer base, management team, loyalty of your employees, effectiveness of your sales and marketing organization, market position, litigation history, compliance issues, etc. They want to make a judgment on your ability to compete now and in the future based on what they perceive your strengths, weaknesses, opportunities and threats as. In today’s mergers & acquisitions environment, getting a deal done is difficult in the best of cases and can be impossible in the worse of cases.
So what can you, as a company owner, do to make sure that you’ll make the best opportunity out of the chance to sell your company, when the time is right for you? The simple answer is to plan your exit, just like you’d plan an important business meeting or trip. If it were an important trip, you’d certainly plan where you want to go and how you’d get there; how long you’d be gone; where you’d stay; when you want to leave; and what help you would need, among other things. One of the things I’m always perplexed by is the fact that business owners have far more at stake when selling a business than when taking a business trip, yet most business owners give more thought to planning a business trip than planning their exit from the business.
The exit from a business can take many forms. An exit could involve selling the business to family members or employees, selling a portion of a business to a private equity group or outside investor, selling the business outright to a strategic buyer or merging with a competitor, going public, or exiting the business involuntarily through death or bankruptcy. Each avenue taken has its own plusses, minuses and ramifications. Do you know which merger & acquisition alternative is best for you and why?
Comprehensive exit planning considers each merger & acquisition alternative and involves setting goals that will allow you to leave your business on your terms, on your time schedule, and with the likelihood that you’ll be happy with the results. The exit planning process addresses business, personal, legal, insurance and wealth management questions. It also addresses the tax ramifications of a merger & acquisition with the goals of minimizing taxes, maximizing the value of the company and making sure that you are able to achieve your personal and financial goals.
Don’t be fooled into thinking that if you’ve done an estate plan you’ve covered your bases. Comprehensive exit planning is far more complicated than estate planning, even though estate planning is a part of comprehensive exit planning. If your business comprises a significant portion of your net worth, you owe it to yourself and your family to have a comprehensive exit plan. Take the first step to assure that you’ll be able to leave your business on your terms. Contact us today!
Jack Lyons is a Mergers & Acquisitions Advisor, a Certified Exit Planning Advisor (CEPA) and president of Lyons Solutions, LLC. He can be reached at 203-642-4141 or at email@example.com.
Copyright 2010 Jack Lyons. All Rights Reserved.