Legacy’s expertise covers the full range of services needed to complete strategic corporate transactions, including positioning and valuation, identifying potential acquirers or acquisitions, transaction “packaging”, meeting prep and execution, deal structure and terms negotiation for sale or purchase. Legacy’s services include in-depth market and feasibility analysis, extensive due diligence and valuation of client and target companies.
We take pride in the perspective that we use for sell-side engagements, because you may view your company very differently than your potential acquirer or strategic investor. To bridge that gap we start with an experienced, detailed, realistic look at your business. So when the potential acquirer asks themselves the inevitable question, “Is this the right match?” or “Should we buy this company?” the answer is an emphatic “Yes.” Choosing an advisor to engineer a company sale is one of the most important decisions in a manager’s career. At the outset, we huddle with management on strategy and positioning, because the acquirer’s structural considerations may include a wide range of compensation options: cash, stock, notes, earn-out and consulting or employment agreements.
Our sell-side process is as follows:
A level-set on owner objectives: strategic, personal and financial
Due diligence and valuation, to prepare for buyer scrutiny
Buyer identification is critical, and needs to consider both strategic and financial fit
Positioning – including material preparation – highlights our clients’ strengths and anticipates buyer questions and due diligence
Managing the “auction process” – buyer candidates provide formal indications of interest, and with multiple parties, a managed auction process is designed to maximize value
The negotiation process: Legacy is on the front lines. Our clients are able to run their business and then they join the process at key points. This approach maximizes success rate and value
Due diligence and closing: the buyer usually has intense due diligence requirements. Legacy continues to manage the process, including interaction with legal, accounting, etc., on through closing
Consider more than money when selling your business
Sure you want a big payoff, but when it comes to selling your business, money should not be the only consideration. You don’t want just any buyer, you want the best buyer. With the market we’re now experiencing, many sellers are getting multiple offers, but the buyers they choose aren’t always the ones offering the most money.
Would you consider a lower price for a buyer that fits the company’s culture? Would you consider an offer that’s a million dollars lower if it meant the difference between years of seller financing and cash at close?
It’s common for deal structures to include a variety of options which must be carefully considered and evaluated, long before you get to the negotiating table.
You may not realize it, but you’re positioning and negotiating from day one of a sale. Be sure your priorities are well thought out or you might give a buyer the wrong impression which can have serious consequences. There aren’t any wrong answers – your priorities should be what you feel is important.
A prospective buyer may ask how long you’ll stick around after the sale and you may casually respond that you’ll be around as long as needed. Then you find out that the buyer is thinking about a two year transition when you and your wife had been discussing a potential move to Florida.
Something like that could blow up a deal. Had your initial response been that you would be around three to six months and then could provide consulting services from Florida, the buyer would not be counting on long-term support. Remember, it’s always easier to give the buyer more than expected than take something away.
As a seller, there are some common decisions you may have to make:
Financing – Do you prefer a higher offer with some seller financing or a lower offer with cash at close?
Transition – Are you looking for a quick exit? Does the buyer expect a lengthy transition?
Employees – Sellers are often very protective of their employees. Will the buyer relocate or replace staff?
Ownership – Are you looking to maintain a minority stake for yourself or your family?
Legacy – Most sellers don’t want to cash out and watch the company erode. Ten years from now they want to look at a successful business that they had a hand in building.
Real Estate – Is the buyer interested in your building? Some sellers prefer to keep the real estate and draw rental income. If the buyer doesn’t want your facility, how soon can you fill it?
Trust – Do you trust the buyer? Some sellers will pass up higher offers to work with a buyer they feel better about.
Even if you know your preferences, you may not get everything you want when making a deal. A reputable business broker or intermediary will be sure that the right questions are asked to help you organize your thoughts, review your priorities and understand what the market will bear. In the end, you’ll find yourself in a better position to negotiate and close the deal—without sacrificing your goals.