Cashing in on the sale of your business involves some intense preparation…

…MERGERS & ACQUISITIONS

Preparing Your Business for the Sale

The sale of a business can involve more intense underwriting scrutiny than a potential securities offering underwriting due diligence review.  The reason is simple: it can be very hard to unwind a sale transaction that hasn’t worked out for the buyer, so the buyer has to have a high degree of confidence that what’s under the hood of your business is just as good as the look from the outside.  Preparing your business for what happens AFTER you receive a term sheet is just as important as preparing your business for what happens BEFORE you receive a term sheet.  RTMS provides business management consulting and related underwriting due diligence services supporting both the sell-side of the transaction and the buy-side of the transaction.

Key Elements to RTMS’ Sell-Side Business Preparation Approach

RTMS uses a business process management approach that is tailored to the risk profile that is unique to each business.  No two deals are alike and we focus on the risk review in terms of the classic underwriting requirements and institutional investment “safe and sound” benchmarks.

Organizational Review

 Organizational documents of the business are that one thing that can hold up a closing and fixing some of the common corporate record errors can take time – time that holds up a closing or time that results in losing an otherwise interested and qualified buyer.  The organizational review encompasses operations efficiencies, future plans for growth, the G2M plan, and the organizational documents.  All of these documents, opinions, filings, and materials must be readily available in the digital deal room for review by the counterparty.

Valuation Review

 Valuation is everything and nothing.  Valuations are based on models and it is important to remember all models are subject to controversy.  A famous statistician once said, “…all models are wrong, but some are useful…”  The valuation review has to be a sober and relatively conservative assessment of the value of the continuing operations and income-producing assets of the business in light of the current market outlook.  The valuation report is used to set expectations as to the bid-ask price and frame the requirements for defining the terms owing to the payment of that sale price.

Risk Disclosure Review

 The risk disclosure is critical to the sale of a business where the sale is an asset sale transaction.  Why?  The underwriting review of asset sale transactions is particularly painstaking in nature.  This means all of the operating issues, management issues, market issues, regulatory issues, and related matters must be prepared in discrete documents that are ready for review in the digital deal room before the deal even goes to market.

Financial Forecasting

 A market assessment and attending financial forecast of the likely future cash flows from operating and non-operating activities has to be fully documented and in the digital deal room where qualified parties can review it.  Showing the upside in the deal is critical to the buyer’s assessment of the potential sale and the valuation (which is interdependent upon the financial forecast report).  The means and methods of the financial forecast’s preparation must be fully documented as well.

Deal Structure Options & Alternatives Review

 The final stretch in the BPM chain is to take the totality of information pertaining to the pending sale and generate deal structure options that serve as the goalposts to allow for efficient negotiations and a final set of transaction documents all parties can agree upon.

Start Getting Your Business Prepared

We are in it to win it – and that means the final outcome has to be an offer, price, and terms that work for you, work for the buyer, and work for the future of the company.  Any other approach is likely to end up with no buyer and no future.  Talk to us about getting your plan started on a pathway to maximize the opportunity for a successful outcome.