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Write a Compelling Company Profile

Business buyers typically have many acquisition choices and only limited time to investigate each prospect. Your company profile often is the first impression potential buyers get of your business, so it must grab their attention. By writing a concise, on-point profile that focuses on your company’s best qualities, you can build a compelling case for its purchase, and even increase bid amounts.

Speak with one voice. Once they begin the search for an acquisition target, buyers are likely to have dozens of company profiles cross their desk. So the question is, what actions can you take to ensure that yours stands out?

Although you probably will solicit information and opinions from many different managers in your organization, your profile needs to have a unified voice. A profile that’s obviously the product of dozens of contributors — each trying to boost his or her own unit — can make for an unappealing, and confusing, read. Instead, choose only one or a few writers to compile relevant information and write the profile.

A single voice will help ensure that your profile’s balanced, but also that it highlights items of greatest interest to prospective buyers. It’s also more likely to provide a clear and compelling argument about your company’s value.

Use space wisely. Company profiles can contain all kinds of information, depending on a company’s industry, specific characteristics and the M&A marketplace. But all profiles should feature:

The basics. Essential background information includes how long your company’s been in business, its ownership history and business structure, products or services base and market share.

Financial highlights. Include anywhere from three to five years’ worth of financial information that has been distilled to its basics — revenues, assets and debts.

Corporate leadership breakdown. Provide names and brief bios of your key executives, including all of the heads of departments and units, board member sand your CEO. Also leave room for your client or customer list, and an inventory of furniture, fixtures and equipment (FFE) to be included in the sale.

Make a proposition. Perhaps the most important text your profile can include is what is generally known as a “unique selling proposition.” Depending on your business, this proposition might be a greater market share, trimmer work force, better product lineup or more valuable customers. Your profile needs to accomplish what the most successful brand advertising campaigns have — selling your audience on the unique value of your company.

Make the case with a clear statement saying that your company does something better than your competition. If you’re not quite sure what that superior quality is, ask your M&A advisor to review your company’s strengths and distill them into an essential pitch.

Make sure your pitch isn’t dry, either. Impart some sense of your company’s business culture — what makes it vibrant and capable of growth — by providing details about day-to-day work in your office or production facility and, if your company’s involved in community support or has other interesting sponsorships, your external commitments.

Why, what and how? Now isn’t the time to go it alone.  An effective company profile requires the input and feedback of seasoned M&A advisors. Your advisors can help you craft a profile that’s not only easy to read but, more important, sums up your company’s core values and how its acquisition would be advantageous.

How to Prepare for the Buyer Visit

When a business buyer is serious about a potential acquisition but not quite ready to sign a letter of intent, its owners and executives usually visit the selling company. Although you should provide a tour of your company’s offices and other facilities, the buyer’s main interest during this visit is assessing possible risks and growth opportunities. The visit also gives you a chance to determine whether the buyer is serious and has the required financing to complete a deal.

Deal killers lurk. During the visit, the buyer is likely to ask probing questions about your business. For example, buyers almost always want to know why you’re selling. So be prepared with an answer that communicates that you’re regretfully departing a flourishing business. After all, you don’t want them to think you’re trying to flee a sinking ship.

They’ll also seek signs of financial distress or other potential deal killers such as legal liabilities. Experienced buyers will study how closely the physical space and operations parallel your reported numbers and description of the business. Be careful, therefore, to communicate clearly any discrepancies before they visit.

Buyers may be concerned about other issues, such as the likelihood that key staff and customers will remain after the deal is complete and whether the two companies are culturally compatible. And they will look for potential cost synergies.

Dialogue works both ways. During the visit, try to frame your company’s weaknesses as opportunities for a different owner. For example, if a relatively understaffed marketing department has resulted in a weak market position, your  business could be a growth opportunity for a buyer with the right marketing expertise.

You, too, should use the buyer visit as a learning opportunity. Ask questions that will help you ascertain if the buyer has the financial resources to make the acquisition — which can be critical in the current tight credit environment. Also learn more about your buyer’s motivations. If you know what it perceives as valuable and how your business fits into its strategic plans, you may have better negotiation leverage.

Finally, ask questions that will help set your mind at ease that the business you’ve spent years building — perhaps at great personal sacrifice — will be in capable hands. For example, how does the buyer plan to consolidate product lines, facilities and workforces?

Appearance counts. Work with your M&A advisors to show your business in a realistic but good light. To make it visually appealing, clean up, organize and paint facilities, and repair or replace equipment. Keep in mind that the culture and operational consistency of your business will be apparent once the buyer assumes ownership and that any misrepresentations could adversely affect your reputation.

Consider scheduling the actual tour after hours to avoid fueling the employee rumor mill or violating confidentiality. If your prospective buyer has questions about your company’s financial statements, inventories, suppliers or customers, the site visit can be a great opportunity to bring your Offering Memorandum to life. A “show and tell” response is more likely to reassure buyers about the acquisition than a verbal-only reply.

Remember safety first. The buyer visit is a great way to determine if the proposed merger is a perfect match. But just as you wouldn’t invite strangers into your home and leave valuables lying around, work with your M&A advisors to keep your company’s proprietary information safe. Once you have a non-disclosure agreement or “clean team” in place, you’ll be ready to put out the welcome mat.

Are You Ready to Sell?

You may have decided it’s time to sell, but before you begin the M&A process, you need to take a good, hard look at what you plan to put on the block. Just because you’re ready doesn’t mean buyers will be interested — particularly if this is the first time you’ve thought about preparing your business for sale. Prospective buyers won’t just scrutinize your business, but they’ll also compare it to other opportunities in the marketplace.

With the help of your M&A advisors, go over your company with a fine-tooth comb, just as a buyer will during the due diligence stage. Evaluate everything from debt levels to personnel to customer relationships and address any issues that are likely to give potential buyers pause, such as too much business concentration in only a few customers.

As an owner, you probably value your business and its sale prospects highly. But to understand its actual market value, you need to think like a buyer and ask the kinds of questions buyers will. These include:

Is it financially sound? Is your balance sheet strong relative to those of your competitors, particularly when it comes to debt? Do you have good growth prospects or has your company’s growth plateaued? If buyers sense financial distress or little growth opportunity, they’ll undervalue your business or, more likely, move on.

Is it unique? Identify what gives you a leg up on the competition. Do you make a niche product essential to the business of other manufacturers? Do you own a valuable patent, trademark or brand? Do you have an exclusive client or customer list? Such assets can increase your company’s value in the eyes of the right buyer.

Is it an easy fit? Buyers look for businesses with strong leaders, similar corporate cultures and the You may also need to separate your real estate holdings from your business. Some buyers prefer to buy real estate separately from the rest of the business so they have the option of easily selling it when the transaction closes.

Be your own harshest critic. As you evaluate your own company, be as critical as possible. If sales have slowed, a key executive is halfway out the door or your vendor relationships are shaky, don’t try to sweep these problems under the rug. Prospective buyers and their financial advisors will notice.

So if you can’t easily remedy a problem, honesty is the best policy. In some cases, what challenges you could be a simple fix for a buyer. If, for example, you’ve had trouble getting favorable pricing on relatively small supplies orders, a larger company placing bigger orders may be able to get preferential rates that enable it to lower production costs.

Brace yourself. With fewer companies capable of financing an acquisition, those that have the money to buy can afford to be choosy. Before you put out the “for sale” sign, conduct a rigorous self-assessment. If you know your strengths and shortcomings and understand what likely buyers in your industry are seeking, you’re in a better position to find a buyer prospect of smooth integration. Do you have an experienced management team capable of easing the company through a merger transition? Have you provided incentives for good employees to stay?

Housecleaning Mandatory. Before entering the market, streamline your company’s operations so that buyers can focus on your essential offerings and not be distracted by peripheral issues. Begin at the office level, ensuring your facilities are clean, modern and professional looking. Next, make sure key business documents are well organized and easily accessible, including financial statements, which need to be accurate, up-to-date and easy to review. Streamline at the organizational level as well. Try to resolve or minimize potential snags such as:

Ongoing or pending lawsuits, • HR issues, • Major outstanding insurance claims, and • Ownership of intellectual property.

Get real about price. With scant credit available — particularly for larger deals — many buyers simply can’t afford their desired targets. If you’re determined to sell your business and have been unable to find a buyer, you may be overvaluing your company relative to the current market. Now’s the time to reconsider your asking price.

Sellers, particularly founding owners, often believe that years of dedication and hard work should translate into a substantial dollar amount. But you must remove sentiment from the equation. Your company’s value lies in its numbers — including its customer base, revenues, market share and debt load.

EBITDA (earnings before interest, taxes, depreciation and amortization) is a critical figure in determining sale price. Typically, the higher a company’s EBITDA, the higher the selling price it can expect. However, many smaller businesses `reduce EBITDA to cut tax exposure and, therefore, need to “normalize” these numbers if they hope to realize a fair price.

Also, consider offering some form of seller financing. If a buyer can’t get adequate bank credit and you really want to complete the transaction, you may need to finance part of it yourself. Seller financing also assures other potential lenders that you believe in the buyer and your company.

Adding Value to Your Company

When it comes to sell your company, a good portion of the value is the prospective buyer’s perception of the business. You want to make sure that early impressions of the business are good. The better the first impressions are, the more likely the business will justify its real value – or it’s asking price – to a prospective buyer. Before you sell, you might want to consider the following suggestions:

The decision to sell your business may not be etched in stone, but pretty close. You don’t want to start the process if you are not sure that selling is what you really want to do. If there are other owners, such as family members, they should all be in concert regarding the decision to sell the business.

If the company presently has some problems, such as pending litigation, unresolved accounts payable, officer loans or questionable receivables, now is the time to resolve these issues. You may have to, as they say, “bite the bullet,” but better to do it now than have these problems arise in the middle of a possible sale.

Talk to your accountant about cleaning up the numbers so they can be presented in a clear and concise fashion. Buyers are impressed with a clear picture of the financial record of a business. Have your lawyer review the firm’s legal documents. Are the corporation filings up-to-date and in order?

Many sellers overlook the physical appearance of their business. If the furniture is outdated, replace it. Is the shop area neat and tidy? How about the other operational centers? Do your printed materials present a crisp, clean picture of your business? Is the material current? Does it represent the kind of company you would want to own?

Is management in place? This is especially important if you plan to leave the company when it sells. A strong, stable management team already in place is an asset. Do these employees have contracts to take them through the selling process?

Finally, don’t overlook the benefits of working with an experienced intermediary. S/He can guide you through the steps to maximize the value of your company. The M & A Source is a good place to find such an intermediary.

A Time To Sell

When it comes to sell your company, a good portion of the value is the prospective buyer’s perception of the business. You want to make sure that early impressions of the business are good. The better the first impressions are, the more likely the business will justify its real value – or it’s asking price – to a prospective buyer. Before you sell, you might want to consider the following suggestions:

The decision to sell your business may not be etched in stone, but pretty close. You don’t want to start the process if you are not sure that selling is what you really want to do. If there are other owners, such as family members, they should all be in concert regarding the decision to sell the business.

If the company presently has some problems, such as pending litigation, unresolved accounts payable, officer loans or questionable receivables, now is the time to resolve these issues. You may have to, as they say, “bite the bullet,” but better to do it now than have these problems arise in the middle of a possible sale.

Talk to your accountant about cleaning up the numbers so they can be presented in a clear and concise fashion. Buyers are impressed with a clear picture of the financial record of a business. Have your lawyer review the firm’s legal documents. Are the corporation filings up-to-date and in order?

Many sellers overlook the physical appearance of their business. If the furniture is outdated, replace it. Is the shop area neat and tidy? How about the other operational centers? Do your printed materials present a crisp, clean picture of your business? Is the material current? Does it represent the kind of company you would want to own?

Is management in place? This is especially important if you plan to leave the company when it sells. A strong, stable management team already in place is an asset. Do these employees have contracts to take them through the selling process?

Finally, don’t overlook the benefits of working with an experienced intermediary. S/He can guide you through the steps to maximize the value of your company. The M & A Source is a good place to find such an intermediary.