VIEWpoint Issue 2 | 2022
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Before embarking on a sale, companies should try to visualize the kind of buyer they want. At the same time, they need to determine whether they’re capable of attracting that ideal candidate.
Seller checklists, one internal and one external, can make this process easier. Although the two lists complement each other, they offer different perspectives: One helps you focus on buyers’ qualities, the other on your own company’s. The M&A advisors at Doeren Mayhew explain.
Your company should take between three and six months to assess your buyer preferences. Below are some basic considerations that belong on your external checklist:
Once you’ve determined these and other qualities you want in a buyer, list some prospects and rank them by category. None is likely to offer everything you want, but your M&A advisors can help you weigh the merits of each and suggest other potential buyers you may not have considered.
As you’re making your external checklist, conduct a thorough self-evaluation. Put yourself in a prospective buyer’s shoes: What advantages does your company offer and, conversely, what qualities might raise red flags?
Among the items to evaluate on your internal checklist are:
As you list your company’s competitive advantages, think of how you can emphasize these to prospective buyers. At the same time, try to minimize disadvantages. In some cases, this may mean waiting a year or two before entering the M&A market.
Running your internal and external checklists concurrently, you can narrow down the list of potential buyers to the most appealing prospects. At the same time, your internal survey will help determine how best to attract these candidates and allow you to find and potentially eliminate flaws that could turn them away.
For example, if your top buyer candidate has a history of being debt-phobic and your internal checklist reveals you have an above-market-average debt load, you’ve located a potential deal-killing conflict. If the buyer is still your top choice, your company now has a direct incentive to improve its debt ratio before contacting the company for a potential deal.
It’s one thing to create a buyer wish list and another to find the ideal candidate ready and willing to acquire your company at a fair price. But internal and external checklists can help you focus on the deal process ahead and identify what’s important to you and to potential buyers. Doeren Mayhew’s M&A advisors in Michigan, Houston or Ft. Lauderdale can help you to prep your business for sale to maximize your deal terms.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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