PROJECT: PREPARING A COMPANY FOR SALE
Our client was a business owner experiencing difficulty in growing the business. Shortly after we started working with him, the business was appraised. Some years later, it was appraised again at about twice the value. The business owner approached us for help in preparing the company for sale in three-to-five years.
When the client was ready, actually a bit more than five years later, we assisted in the process of selling the company. At that point, the decision was to set the asking price at well over four times the first appraisal mentioned above. Dossin Business Solutions assisted in the preparation of both initial offering materials and in creating and monitoring an online due diligence room.
Result: The client cleared over five times the initial appraisal amount, even after paying the investment banker and paying key employees the incentive compensation which matured upon the successful sale.
- Periodic financial review: After getting to know Dossin Business Solutions, this client honored us by not just coming to us with specific problems, but by periodically sending us the same financial package that went to the Executives and asking for our opinion on things that looked out of line, or that looked like opportunities for improvement.
- Compensation plans: Dossin Business Solutions developed executive compensation plans to reward results in line with the owner's goals. It is amazing how proper incentives will encourage employees. The key players contributed valuable effort to the project as soon as they viewed it as a win-win proposition.
- Collaboration: Dossin Business Solutions does not claim to have capabilities in all areas of business. We will inform the client if he or she is asking for something that we do not have the skills to accomplish. In this case, we worked with an investment banker who had wonderful contacts with potential buyers, and with attorneys — both the client's attorneys and one we brought in with special skills. We maintain files of resource persons to augment our own expertise.
- Honesty: Too many times, companies are prepared for sale by cutting expenses that do not have a rapid payoff. Seasoned buyers know to look for that, and will discount their offer when they realize during due diligence what has not been funded appropriately for an ongoing concern. For example, we recommended keeping R&D funded at appropriate levels for this business, and then highlighted products in the development pipeline as part of the sales literature. This also pays off big if the process of selling requires an extended period of time, as happened in this case.
If you need help with long-term projects such as mergers and acquisitions, please contact Dossin Business Solutions, Inc. via the phone, fax, or e-mail addresses below.