Path To A Successful Sale
The path toward a successful sale begins and ends with our engagement with our sellers. Hundreds of factors contribute to the sale of a middle market company, which we will cover below. Despite the fact that each company we represent is different, The George Ryan Group uses a proprietary process that we do not deviate from. This process and our experience combine to result in a closing rate that is more than 200% higher than the industry average.
The initial required step, which is often overlooked, is our internal preparation as a Merger & Acquisitions Master Intermediary. When we speak of internal preparation, we are of course referring to the preparation package for a seller we are engaging. However, from a broader perspective, internal preparation is really the way the office is set up, the policies and procedures, the philosophy, the mission, the tools, education, experience professionalism, capabilities and talent of the office owners. In other words, the initial step is the foundation of our company, because we have to be solid in our foundation in order to best represent our sellers. In our case, we don’t have an owner with the above characteristics. We have two owners, Chris Wozniak and Les G. Wozniak, who handle every aspect of the transaction in tandem, which essentially mean that our seller’s get double the effort and experience of a typical M&A firm for the price of one.
The next step is initiating the external process of locating our sellers. We have buyers looking for specific industries, revenue, business models, etc. Part of our job is for us to find the sellers (or for the sellers to find us). We are highly proactive in our search for the right sellers. We have a huge pool of registered buyers, with money to place, who have specific criteria for the companies they’d like to acquire. We match those buyer’s acquisition criteria and constantly reach out to specific sellers whom we believe meet most of or all of those criteria. However, a large percentage of our sellers came to us by way of referral or repeat business. Referral business is self-explanatory. These are seller’s that were referred to us by former or current sellers, attorneys, bankers, and in some instance, buyers. Repeat business are those satisfied clients that have either purchased a business from us and then used us to sell the business in the future, or when we’ve sold a business for an owner and they use us to help them find their next opportunity.
Initial face to face consultation with Seller. Gather documentation from our document entitled “Seller’s Checklist”, including financials. We have a set of proprietary questions we ask during this meeting which directly effect our ultimate valuation of the company. These are questions we’ve created and accumulated strictly from the previous deals we’ve participated in. That’s why when a sellers asks us 1) what’s my business worth or 2) how to you value a company, it is virtually impossible to answer those questions this early in the process. We have a thorough valuation process we employ, which we describe next.
This is what we call our homework phase, because we take the information we’ve gathered from the owner and bring it back to our office (or after hours, we often bring the information home). We typically spend over 40 hours researching the data we’ve accumulated in order to develope a “Market Indication” for the potential seller’s business. This is not a full blown, third party valuation, but it will prove highly effective, extremely accurate and affordable. There’s as much art as there is science when determining a market indication, but our main goal is to set a realistic expectation, which also exceeds a seller’s expectation (please see our page entitled “What’s My Business Worth”…we could write a book on this topic alone, but the text will give you a very broad overview to consider).
Following the natural progression of the deal, Engagement is the next step. This is actually one of the easier steps, because at this point, the seller knows if they want to engage our services and we know if we want to engage the seller. Our Engagement agreement is a very straight forward document, written in English, and absent of wordy legalese. Ultimately, our main goal is to sell your company and earn a success fee. Engagement with The George Ryan Group is essentially a partnership with our sellers (please see our page entitled “Partnering with Our Sellers”).
At this point, we’ve made it about halfway to the point of “going to market”. This is where we begin the difficult and involved process of more in depth information gathering and creating our Confidential Business Review. Our CBRs contain substance, not a lot of generic industry fluff and filler. We present an easy-to-read narrative of the business and all its aspects, and not only do we create the CBR in-house, it is created by the two partners of The George Ryan Group (we will not contract out our CBR to a third party company). We’ve experimented with over 30 styles and formats, and we believe we’ve created the optimal template. We’ve received hundreds of compliments from private equity groups, corporate buyers and individual buyers regarding the excellence and unique content of our CBR. Our memorandum is considered an industry leader in the sale of lower middle market companies. We strive to provide all the necessary information any buyer would need to understand what the company does from a macro and micro level, how well they have done, are doing currently and will do in the future. Essentially, we allow buyers to visualize the acquisition target, which allows the buyers to see themselves operating within that environment. This is beyond a powerful tool. In many ways, our proprietary Confidential Business Review is one of our main differentiators and a major part of the lifeblood of our business.
Here we are ready to determine the buyer, or follow the Money. The buyer may be strategic, financial, synergistic, etc. We determine which buyer will not only fetch the highest price, but most agreeable terms and potential fit, because each buyer has a different perspective and goal in mind. These various buyers therefore will value the business differently, and put more weight into differing aspects of the potential deal.
We are proactive in contacting all interested parties, or quickly responding to those parties finding us, and having proper non-disclosures executed, profiles executed and financially qualifying all parties. Once we have our marketing materials ready for market, we begin to reach out to the buyer marketplace. A portion of our market is a compilation of buyers we’ve worked with throughout the last 5 years, having compiled our own unique databases of financial, synergistic and high net worth buyers during that time. We have several other avenues of locating buyers, including reaching via email, phone, face to face with groups of buyers in various locations across the United States, and mailers to synergistic buyers that may not have normally been considered an obvious acquirer. The way we enter the marketplace is with a “Teaser” that we’ve written. This is a two page document that touches on all of the pertinent information that any buyer would need to know, while highlighting what makes the company such an attractive target. Confidentiality and discretion must be implemented in the creation of the teaser. Once we are comfortable with the buyer on this deeper level, we will then distribute the marketing material (namely our Confidential Business Review). We try to present materials in person if at all logistically possible. Fortunately, Dallas is a major market, so we have a terrific pool of PEGs, family offices, corporate buyers and high net worth buyers right here in our background. However, we’ve had equal success working with buyers from all over the United States and North America. Below we will touch on how the goal is the finding the right buyer to create the perfect, or more accurately, the closest to perfect marriage between the buyer and seller.
There are an array of steps that follow and many prior to this point that we have not covered here. We still need to follow up with every buyer that has been issued a Confidential Business Review, answer the litany of questions we will unquestionably receive from these buyers, schedule conference calls with the buyer and sellers, schedule tours of the facility (before or after hours of course), alert buyers of time frame to submit Letters of Intent, manage the Letters of Intent to compare each LOIs positives and negatives, present those to the seller, walk them through each, respond to the LOI after everyone has determined is the right one to go with, respond to those that we will not be moving forward with at this time (a tricky step, but necessary because there is a good chance one of those buyers will be the one we end up working with…another reason relationship and reputation of your intermediary is so critical), help negotiate the LOI to execution, etc. We use an offer matrix, which is a system we use to compare multiple LOIs and to attribute some type of quantitative value to. Each LOI will have different terms and conditions, some with great down payments but a lesser purchase price, some with a greater purchase price with a lesser down payment. Many LOIs will differ in that some request much more owner involvement post closing, while others require a quick transition (maybe because they come from the industry). There are literally hundreds of aspects that can be addressed in a Letter of Intent, and each item has a real value to the seller, and all those aspects must be taken into consideration and compared. We enjoy managing that process and breaking it down for our sellers. Most of our sellers are excellent decision makers, but they need us to lay it out for them.
Also, because of our relationships, reputation, designation and experience, we know what a company is worth. In other words, buyers know that we know what we’re doing and that we can substantiate anything we present them. Again, from the very beginning, we operate from a position of strength and leverage. We manage the entire process of back and forth response and negotiation with each buyer, whittling the pool down to the final buyer.
Once a buyer is chosen, we proceed down the path toward closing. This is path wrought with potential pitfalls and the proverbial forks in the road. Our job is simple; we quarterback this process down to the very detail. We are hands-on, hands dirty intermediaries. Many major steps remain for the path to a successful sale, including the purchase agreement negotiation, the creation of all required exhibits, schedules and addendums, finalizing due diligence and preparing for closing. Closing is a critical period in the transaction, and we address this step in the process separately because of that. We leave nothing to chance, nor do we turn the reigns over to outside counsel or other advisors. We coordinate with counsel and advisors, helping facilitate the specific portion of the deal they are responsible for. Again, we the intermediary are responsible for the entire deal. If you’d like to read on, please click on the picture with the text “Closing the Transaction”. Remember, if you are interested in a free consultation to discuss your company, please call Les Wozniak, Partner at 214-682-8562 or email les@thegeorgeryangroup.com.
The initial required step, which is often overlooked, is our internal preparation as a Merger & Acquisitions Master Intermediary. When we speak of internal preparation, we are of course referring to the preparation package for a seller we are engaging. However, from a broader perspective, internal preparation is really the way the office is set up, the policies and procedures, the philosophy, the mission, the tools, education, experience professionalism, capabilities and talent of the office owners. In other words, the initial step is the foundation of our company, because we have to be solid in our foundation in order to best represent our sellers. In our case, we don’t have an owner with the above characteristics. We have two owners, Chris Wozniak and Les G. Wozniak, who handle every aspect of the transaction in tandem, which essentially mean that our seller’s get double the effort and experience of a typical M&A firm for the price of one.
The next step is initiating the external process of locating our sellers. We have buyers looking for specific industries, revenue, business models, etc. Part of our job is for us to find the sellers (or for the sellers to find us). We are highly proactive in our search for the right sellers. We have a huge pool of registered buyers, with money to place, who have specific criteria for the companies they’d like to acquire. We match those buyer’s acquisition criteria and constantly reach out to specific sellers whom we believe meet most of or all of those criteria. However, a large percentage of our sellers came to us by way of referral or repeat business. Referral business is self-explanatory. These are seller’s that were referred to us by former or current sellers, attorneys, bankers, and in some instance, buyers. Repeat business are those satisfied clients that have either purchased a business from us and then used us to sell the business in the future, or when we’ve sold a business for an owner and they use us to help them find their next opportunity.
Initial face to face consultation with Seller. Gather documentation from our document entitled “Seller’s Checklist”, including financials. We have a set of proprietary questions we ask during this meeting which directly effect our ultimate valuation of the company. These are questions we’ve created and accumulated strictly from the previous deals we’ve participated in. That’s why when a sellers asks us 1) what’s my business worth or 2) how to you value a company, it is virtually impossible to answer those questions this early in the process. We have a thorough valuation process we employ, which we describe next.
This is what we call our homework phase, because we take the information we’ve gathered from the owner and bring it back to our office (or after hours, we often bring the information home). We typically spend over 40 hours researching the data we’ve accumulated in order to develope a “Market Indication” for the potential seller’s business. This is not a full blown, third party valuation, but it will prove highly effective, extremely accurate and affordable. There’s as much art as there is science when determining a market indication, but our main goal is to set a realistic expectation, which also exceeds a seller’s expectation (please see our page entitled “What’s My Business Worth”…we could write a book on this topic alone, but the text will give you a very broad overview to consider).
Following the natural progression of the deal, Engagement is the next step. This is actually one of the easier steps, because at this point, the seller knows if they want to engage our services and we know if we want to engage the seller. Our Engagement agreement is a very straight forward document, written in English, and absent of wordy legalese. Ultimately, our main goal is to sell your company and earn a success fee. Engagement with The George Ryan Group is essentially a partnership with our sellers (please see our page entitled “Partnering with Our Sellers”).
At this point, we’ve made it about halfway to the point of “going to market”. This is where we begin the difficult and involved process of more in depth information gathering and creating our Confidential Business Review. Our CBRs contain substance, not a lot of generic industry fluff and filler. We present an easy-to-read narrative of the business and all its aspects, and not only do we create the CBR in-house, it is created by the two partners of The George Ryan Group (we will not contract out our CBR to a third party company). We’ve experimented with over 30 styles and formats, and we believe we’ve created the optimal template. We’ve received hundreds of compliments from private equity groups, corporate buyers and individual buyers regarding the excellence and unique content of our CBR. Our memorandum is considered an industry leader in the sale of lower middle market companies. We strive to provide all the necessary information any buyer would need to understand what the company does from a macro and micro level, how well they have done, are doing currently and will do in the future. Essentially, we allow buyers to visualize the acquisition target, which allows the buyers to see themselves operating within that environment. This is beyond a powerful tool. In many ways, our proprietary Confidential Business Review is one of our main differentiators and a major part of the lifeblood of our business.
Here we are ready to determine the buyer, or follow the Money. The buyer may be strategic, financial, synergistic, etc. We determine which buyer will not only fetch the highest price, but most agreeable terms and potential fit, because each buyer has a different perspective and goal in mind. These various buyers therefore will value the business differently, and put more weight into differing aspects of the potential deal.
We are proactive in contacting all interested parties, or quickly responding to those parties finding us, and having proper non-disclosures executed, profiles executed and financially qualifying all parties. Once we have our marketing materials ready for market, we begin to reach out to the buyer marketplace. A portion of our market is a compilation of buyers we’ve worked with throughout the last 5 years, having compiled our own unique databases of financial, synergistic and high net worth buyers during that time. We have several other avenues of locating buyers, including reaching via email, phone, face to face with groups of buyers in various locations across the United States, and mailers to synergistic buyers that may not have normally been considered an obvious acquirer. The way we enter the marketplace is with a “Teaser” that we’ve written. This is a two page document that touches on all of the pertinent information that any buyer would need to know, while highlighting what makes the company such an attractive target. Confidentiality and discretion must be implemented in the creation of the teaser. Once we are comfortable with the buyer on this deeper level, we will then distribute the marketing material (namely our Confidential Business Review). We try to present materials in person if at all logistically possible. Fortunately, Dallas is a major market, so we have a terrific pool of PEGs, family offices, corporate buyers and high net worth buyers right here in our background. However, we’ve had equal success working with buyers from all over the United States and North America. Below we will touch on how the goal is the finding the right buyer to create the perfect, or more accurately, the closest to perfect marriage between the buyer and seller.
There are an array of steps that follow and many prior to this point that we have not covered here. We still need to follow up with every buyer that has been issued a Confidential Business Review, answer the litany of questions we will unquestionably receive from these buyers, schedule conference calls with the buyer and sellers, schedule tours of the facility (before or after hours of course), alert buyers of time frame to submit Letters of Intent, manage the Letters of Intent to compare each LOIs positives and negatives, present those to the seller, walk them through each, respond to the LOI after everyone has determined is the right one to go with, respond to those that we will not be moving forward with at this time (a tricky step, but necessary because there is a good chance one of those buyers will be the one we end up working with…another reason relationship and reputation of your intermediary is so critical), help negotiate the LOI to execution, etc. We use an offer matrix, which is a system we use to compare multiple LOIs and to attribute some type of quantitative value to. Each LOI will have different terms and conditions, some with great down payments but a lesser purchase price, some with a greater purchase price with a lesser down payment. Many LOIs will differ in that some request much more owner involvement post closing, while others require a quick transition (maybe because they come from the industry). There are literally hundreds of aspects that can be addressed in a Letter of Intent, and each item has a real value to the seller, and all those aspects must be taken into consideration and compared. We enjoy managing that process and breaking it down for our sellers. Most of our sellers are excellent decision makers, but they need us to lay it out for them.
Also, because of our relationships, reputation, designation and experience, we know what a company is worth. In other words, buyers know that we know what we’re doing and that we can substantiate anything we present them. Again, from the very beginning, we operate from a position of strength and leverage. We manage the entire process of back and forth response and negotiation with each buyer, whittling the pool down to the final buyer.
Once a buyer is chosen, we proceed down the path toward closing. This is path wrought with potential pitfalls and the proverbial forks in the road. Our job is simple; we quarterback this process down to the very detail. We are hands-on, hands dirty intermediaries. Many major steps remain for the path to a successful sale, including the purchase agreement negotiation, the creation of all required exhibits, schedules and addendums, finalizing due diligence and preparing for closing. Closing is a critical period in the transaction, and we address this step in the process separately because of that. We leave nothing to chance, nor do we turn the reigns over to outside counsel or other advisors. We coordinate with counsel and advisors, helping facilitate the specific portion of the deal they are responsible for. Again, we the intermediary are responsible for the entire deal. If you’d like to read on, please click on the picture with the text “Closing the Transaction”. Remember, if you are interested in a free consultation to discuss your company, please call Les Wozniak, Partner at 214-682-8562 or email les@thegeorgeryangroup.com.