What does it look like to NOT be ready to sell your company
We are helping a client conduct a bolt-on acquisition. The seller decided to sell their company but is exhibiting all the signs of being ill-prepared. And the seller’s lack of preparation is causing them unnecessary stress, causing a deal structure that the Seller isn’t happy with but has to accept and is now putting the transaction in jeopardy.
Here are classic signs of being ill-prepared:
- - Not thinking through what internal resources will be needed to support a normal due diligence. This causes information to flow slowly to the buyer and in fragment pieces that make it difficult for the acquirer to review
- - Sending information to the acquirer but not thoroughly reviewing it prior to ensure it doesn’t conflict with other data or information provided. Example: operational data conflicting with financial data
- - Not having effective documentation of key business processes and scrambling to craft it to meet due diligence requirements
- - Not being able to provide non-operational data such as normal KPIs that should have been tracked to show historical performance – in essence conveying to the acquirer that there aren’t effective KPIs in place to manage the business
- - Not able to share a strategic plan of how the business can continue to grow – showing a lack of general planning disciplines
- - Seller not engaging with an M&A lawyer but preferring to use their long time business lawyer. Lack of M&A experience by seller counsel is causing delays and unproductive dialog with the acquirer’s seasoned M&A counsel – causing both acquirer and seller to incur unnecessary legal fees
- - Seller that is so engaged in the day to day running of their business they have little time to support the sale process.
You might laugh as you read this but unfortunately this happens more than you’d think. Conduct a due diligence dress rehearsal long before trying to sell your company. You’ll do yourself a great service by avoiding these common mistakes and increase your chances of having a smooth, euphoric exit event.
