GROWING & ENHANCING
THE BUSINESS

TIMING IS EVERYTHING, SO SHOULDN'T YOU BE IMPROVING YOUR BUSINESS IN CASE THE WHITE KNIGHT COMES ALONG?

 Mergers & Acquisitions Specialists

Focusing on the items below can positively impact a buyer's interest in a business and how much they are willing to pay. For a listing of 35 things you can do to help enhance your business, please contact O'Keeffe & O'Malley.
  • Cash Flow/Earnings:
    Buyers typically base their offer on the re-casted earnings or cash flow of the business. Interest, deprecation, amortization, expenses that are extraordinary and excessive, owner benefits and perks which a replacement manger/owner would not incur are all re-casted to arrive at a re-casted EBITDA (Earnings Before Interest Taxes Depreciation Amortization). Focus on increasing your bottom line. Every dollar in earnings can give you $3 to $6 in selling price.
  • Management Team & Owner Dependency:
    Are key customer and vendor relationships dependent on the owner? Buyers want to see transferable relationships that won't be overly vulnerable to competitors once the owner departs. Develop a strong management team to back up the owner. Otherwise the owner will need to stay working with the buyer for an extended period of time and the price may be paid out over time.
  • Non-Compete & Confidentiality Agreements:
    Key employees are a threat to become competitors. Having employee's sign non-compete and confidentiality agreements before they find out the business is being sold keeps you in control and will comfort a buyer's anxiety.
  • Customer Base:
    Revenues derived from several large customers impairs a buyer's confidence in the future of your company. Implement a marketing plan that will lead to the creation of new markets or customers. Ideally no customer should account for more than twenty percent of total revenues.
  • Employee Dependency:
    Are employees cross-trained in multiple areas of the business? This minimizes the negative effects of employee defections before and after a sale.
  • Supplier Dependency:
    Are replacement suppliers available if key suppliers go out of business or change distribution methods? Contingencies should be in place if possible.
  • Market Dependency:
    Are sales tied to a single industry or geographic market? If so, be prepared to defend why a potential buyer should not be concerned.
  • Commodity vs. Proprietary:
    How does a company differentiate itself from competing companies? Firms that set themselves apart through proprietary products, processes or superior service are stronger than those that compete on price alone.
  • Pre-Due Diligence:
    Conduct a pre-due diligence of your organization. Letters of Intent (LOI) often fall apart because of unknown items that come up in due diligence or because the due diligence process drags out trying to resolve certain issues that could have been fixed if known earlier. Identifying hidden skeletons prior to selling allows owners to resolve issues on their time frame. Having a pre-due diligence package assembled prior to selling comforts and impresses buyers plus it speeds the selling process towards closing after a LOI is executed. Hiring a CPA and attorney to conduct the process prior to finding a buyer may be expensive, but in the end your "Pre-Due Diligence" will reap many benefits.

Mergers & Acquisitions Specialists