Investment Bankers & M&A Advisors
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One of my previous companies, Facility Relocations, Inc. (FRI), was very successful in providing "office move management services" as companies moved and consolidated their offices around Atlanta. FRI partnered with Coldwell Banker Commercial (CBC) who rolled in a range of FRI’s services as part of CBC's “package” when leasing office space to tenants.
In essence, CBC created a competitive advantage by offering a "full-service solution" to not only find office space but also to ease their client’s transition into the new location. Their clients really liked this enhanced service. As a result of this partnership, we collectively "hit it out of the ballpark". CBC closed a lot of deals, and FRI got a lot of work.
Likewise, sell-side investment bankers may create a competitive advantage in endorsing our services to help prepare the business for sale, as well as help assure success after deal-closing.
Investment Bankers: Get more clients (See True Story)
Investment Bankers can create a competitive advantage by offering to include a portion of our services in their fees and provide a sell-side "full-service solution":
- We help in preparing the business for sale, working with the Owner/CEO to optimize the value of the business and reduce risks.
- Investment Bankers "go to market" and sell the business.
- We assist in integrating the business into the buyer's organization so that Earn-outs and other future payments are received.
Selling a business can be a long and detailed process. However, an Owner or CEO who is “ready” with an attractive business greatly increases the odds that the business will find an eager buyer. After the deal-closing, proactive steps need to be taken to help assure that the seller receives future payments from Earn-Outs, Seller Notes, etc.
Selling a business is a complex process of evaluating management, staff, customers, stockholders, intellectual property, processes, and goodwill. We utilize our Deal Readiness Rating® Methodology of an initial assessment, value creation, and risk mitigation to position the business for sale. Buyers, such as corporations, private equity firms, and family offices will quickly recognize any attempt to hide issues, conceal problems or quickly stage the business, so adequate preparation is essential. Below are the steps for preparing a business for sale:
- Conduct a Business Operations/Risk Assessment
- Determine a Range of Value
- Prepare a Detailed Business Strategic Plan
- Implement Optimization Action Plans
- Project Manage the Optimization Process
- Consult an M&A Advisor or Investment Banker
- Compile Due Diligence Information
In well-published studies, between 70% -90% of M&A deals fail to meet expectations, with poor integration being a primary culprit. Depending on the M&A deal terms, contingent payments, such as Earn-Outs, Seller notes, Claw-Backs, Escrows, Buyer Stock, etc., may be part of the Sellers' proceeds. If Sellers are actively involved in the post-merger integration process during the critical first 100 days, they will be able to ensure the likelihood of receiving future payments, as well as promote their teams' involvement with the acquiring company after deal-closing.
- Earn-Outs - For Sellers, the best chance at influencing the earn-out occurs if they take a strong role in merger integration, ensuring the retention of key Seller employees, and remain involved with the company to have a direct impact on the earn-out metrics.
- Seller Notes - Here again, it is in the Seller’s best interests to provide as much influence as possible going forward so that the Buyer will succeed and future note payments will be received.
- Buyer Stock - Being involved in the merger integration provides the Seller the opportunity to influence the success of the company and the corresponding value of the stock.
- Escrows - By the Seller being involved in the post merger integration process via our services, the Seller is able to be more aware of issues concerning representations and warranties that may arise.
Studies have proven that over 70% of M&A deals fail to meet expectations with inadequate merger integration being a major culprit.
- When deals fail, sellers don't receive future payments and investment bankers may not receive the associated commissions on those payments.
- Our Project:100 Days® Merger Integration Methodology, starting at $50k, helps make deals successful, so future payments are actually realized.
- View our integration management consulting services as similar to legal and accounting fees paid at closing.
- Our services are a form of "M&A Deal Insurance" to help ensure a successful outcome.
Our professionals serve as independent, expert advisors for support in preparing a business for sale and in successfully integrating the business into the buyer's organization.