Preparing a Company for the M&A Process – Part 1

03 Mar Preparing a Company for the M&A Process – Part 1

George and Dave discuss the investment banker’s perspective how to prepare your company for sale, even in difficult economic times. Dave explains the importance of educating the seller regarding the merger and acquisition process, generally, and emphasizes that the earlier a CEO starts laying groundwork even several years before an actual sale the more likely it becomes that the company is sold at a premium. George asks what a CEO should do to enhance enterprise value. Dave addresses the challenges of adjusting the way the seller operates a “family run” business, as well as defining the company’s “value proposition” for potential buyers. Dave and George identify common pitfalls faced by sellers, specifically: weak financial reporting (nothing more than tax returns); delaying much-needed improvements to operating procedures; and over-relying on “recast” financials rather than focusing on verifiable historical results. Dave emphasizes the importance of obtaining reviewed statements from a CPA firm, along with preparing a detailed management letter which puts data into the proper context.