Sell-Side M&A Consulting

Early Sell Process Consideration

Many owners of small or middle market companies at one point in time think about selling, but don’t know where to start. Some end up sitting in front of a group of investment bankers, financial buyers or professional corporate M&A teams only to realize they don’t have all the knowledge or experience about the process and its “rules”. Consider this:

• Investment bankers and institutional investors buy and sell companies for a living, owner -operators excel in running companies but may only sell a company once in a life time.

• Owner-operators must prepare themselves and their companies for this process well in advance, in some case as much as 1-2 years before a transaction takes place.

• Owner- operators and board of directors are the experts and have the knowledge as well as experience to provide strategic direction and oversight for management during normal operation of a company

but

• Not all owner-operators or BOD are experts in M&A and therefor may need professional and objective insider advice throughout the process. 4Value Advisors are those insiders.

The 4Value Sell-Side M&A Process

Key Consideration

Most of the time the enterprise value for a M&A transaction is calculated as an “multiple” of EBITDA. Determining this multiple is an very important part of the process. There are controllable and uncontrollable drivers for the multiple but being aware of all of them is essential. Any institutional buyer will understand all those drivers and so should the seller to avoid surprises later in the process.

Determining the attractiveness of the industry and the company are two important activities that need to be carried out before entering the sale process. The industry may be unattractive for an investor at a certain point in time and the seller should be aware of it and maybe wait until the situation changes. Also, the company may be attractive right now but the seller should understand the sustainability of the current performance. There may be potential improvements that could make the company even more attractive at a later point in time. Both, the industry and company attractiveness do determine the multiple and may determine the right timing the kick off the sale process.

4Value Advisors’ detailed process helps to determine if a company is ready to be sold at maximum enterprise value. This process includes a “check list” of important factors that drive EBITDA as well as the EBITDA multiple as outline above but also includes an assessment of the “readiness” of a company to be sold. This assessment evaluates another set of factors including but not limited reporting capabilities, financial trends, KPIs, and work processes. In some cases we determine that those factors need to be worked upon for 1-2 years before a sell process can start.

4Value Advisors Are Here To Help

To maximize the enterprise value for a sell process it is not enough to write a nice confidential information memorandums (CIM). Professional buyers will carry out financial, legal, environmental and operational due diligence with one goal in mind: Find potential issues, scrutinize the reported EBITDA and the projections as well as minimize the multiple.

4Value Advisors can help the potential seller to get the company ready for the sell process, to minimize surprises during due diligence and maximize the enterprise value at closing.

4Value Advisors’ service can be tailored to specific clients needs, from a one day seminar to refresh the knowledge of the seller to a longer term partnership throughout the entire process. Here are some options:

• “Sell-Side M&A Seminar”: 1 day on-site refresher for owners, BOD, and executives

• “Ready for sell Assessment”: On-site assessment varying from a few days to several weeks

• “Getting ready to sell ”: A consulting partnership throughout the assessment, action plan development, execution phase

to prepare the company for sale

• “Sell-Side Advisors”: A consulting partnership throughout the entire process