Recently, I wrote a blog providing an overview of the anatomy of a deal from a sell-side perspective, including my infographic breaking down the components of a transaction. For most sellers, approaching their M&A transaction can be daunting and frightening. M&A can be complex, and rarely are there “do-overs.” For this reason, I created my sell-side graphic in an attempt to simplify a complicated circumstance.
I cannot stress enough the need for pre-transaction planning. Think of it like staging your home before going to the market. Your home may sell without the staging, but with staging, your home likely will present better, and you may yield a higher price. Likewise, the dynamic of how an owner operates his/her business is not the same as to when the business sells. Frequently, items deemed unimportant during operations become focused issues in the sale. For example, a business may have a great team of sales folks that are helping the company grow; however, frequently, the business has not adequately locked up this sales’ team. A buyer will want this item addressed before closing. Addressing the sales’ team and their covenants during the sales process creates havoc, including having to discuss the deal (loss of confidentiality) and, in the worst case having the seller becoming leveraged by employees. Ideally, an owner should prepare for their transaction by reviewing their corporate governance, tax positions, employment and labor matters as well as personal estate planning at least a year in advance. Cleaning up and understanding positioning prior to transaction allows a business to understand its respective strengths and weakness, so there are no surprises with a buyer. It also allows a business to create a narrative around issues and talking points to rebut buyer inquiries.
ABOUT MIKE MERCURIO
Michael N. Mercurio is a leading attorney in the field of mergers and acquisitions (M&A). He serves as outside general counsel in buy-side and sell-side M&A, as well as in all business law and real estate law matters. As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on the many challenges, issues, and opportunities companies face throughout the business lifecycle—from start-up to eventual exit.
ABOUT OFFIT KURMAN
Offit Kurman, one of the fastest-growing, full-service law firms in the United States, serves dynamic businesses, individuals and families. With 15 offices and nearly 250 lawyers who counsel clients across more than 30 areas of practice, Offit Kurman helps maximize and protect business value and personal wealth by providing innovative and entrepreneurial counsel that focuses on clients’ business objectives, interests and goals. The firm is distinguished by the quality, breadth and global reach of its legal services and a unique operational structure that encourages a culture of collaboration. For more information, visit www.offitkurman.com.
DELAWARE | MARYLAND | NEW JERSEY | NEW YORK | NORTH CAROLINA | PENNSYLVANIA |SOUTH CAROLINA | VIRGINIA | WASHINGTON, DC