MERGERS AND ACQUISITIONS (M&A)
Darrell Jones is a Certified M&A Specialist, and has a number of Transworld M&A transaction records. Additionally, he has full access to Transworld’s Mergers and Acquisition Department consisting of a team of professionals that also specialize in larger transactions.
What are the Primary Business Categories Darrell works with?
- Main Street Businesses – $100,000 to $1,000,000 (non M&A)
- Lower Mid-Market Companies – $1,000,000 to $10,000,000
- Middle Market Companies – $10,000,000 to $50,000,000
- Upper Mid-Market Companies – $50,000,000 to $100,000,000
What Qualifies A Business To Be An M&A Transaction?
There are several situations that could make your company qualify for a M&A Transaction:
- Your company has earnings greater than one million dollars. When businesses grow to this size, they become targets for acquisition by industry strategic players.
- Your business is too large for an individual buyer to purchase or finance through conventional methods. Once your company is worth multi millions, a single individual usually will not purchase it (most multimillionaires do not wish to work).
- Your company is in an industry that is currently being “rolled up”. In some industries, strategic buyers that want to consolidate the marketplace will purchase even small Main Street Businesses.
- Your business is experiencing incredible growth. If your company is running out of capital because of growth, it may be a merger and acquisition target.
- You want to grow your company and perhaps retain some equity. If that is the case, you will need my M&A expertise. I have sold several M&A businesses that the owner has retained a smaller percentage of the business. The thought is that owning 20% of the much larger company in the future may end up being worth more than your original 80% you sold.
The M&A Selling Process
Understanding Your Goals
We meet with you and perhaps your advisors to understand your future goals. There can be many situations that could be present. Important issues include:
- Your company is growing and you need capital.
- Your company is growing and you need expertise to take it to the next level.
- You would like to take some chips off the table.
- You need to retire and there are no family successors.
- There are family successors and they will need capital and/or expertise.
- You have been approached by your competition to sell your business.
- There is an industry consolidation happening.
- The marketplace is changing and you cannot or are not willing to invest to keep up.
- You’re tired and want to do something else with your life.
Whatever the issues are we need to understand them completely.
Review Your Options
There are many options that you must consider. I can help you understand them all. Important issues include:
- Is it time to sell?
- Who are the buyers?
- Strategic or financial?
- Can I raise capital?
- Can or should I go public?
- Will I have to stay on and how long?
- What are Transworld’s fees?
- Are there any upfront fees? (Most probably NO!)
We can help you understand how much the company worth! Important issues include:
- Should I pay for a valuation? How much? (Not 50k!)
- What multiples apply to my business?
- What methods or rules of thumb are used in our industry?
- Do assets matter?
- Do you apply gross sales?
- What are the tax implications?
Create A Strategic Plan
Those who fail to plan, plan to fail. We will set up a plan of action to take your business to market. Important issues include:
- Which buyers do we approach first?
- How do we get the best price?
- How do we create completion for the deal?
- How do we keep it CONFIDENTIAL!
- How do we prepare the right marketing package? (Deal book!)
Network And Market The Sale
Transworld is one of the largest and most successful business sale organizations in the country! We work merger and acquisitions differently! Important issues include:
- The multifaceted approach. First strategic buyers, then financial, then open market.
- Create competition for the deal! To get you the best price!
- Qualify buyers.
- Review their qualifications.
Meet With Prospective Buyers
Darrell will attend all meetings with buyers and be present on conference calls. We will prepare beforehand. We will also have a post meeting to go over how the meeting progressed. Important issues include:
- Meet with only the best buyers.
- How to handle conference calls.
- How to handle face-to-face meetings.
- Limited but important information.
Solicit And Review Letters Of Intent (LOI’s)
Darrell will work with you and your advisors to decide who is the best buyer, and which one will eventually close! Important issues include:
- Who’s the best buyer?
- Cash, notes, earn-outs, stock, escrow?
- Senior debt, mezzanine, secondary?
- No shops and non-solicitation agreements?
Negotiate The Sale
Darrell is a great negotiator, but most companies in the M&A process are professional buyers, so you need a legal M&A expert on your side. I have a few of my favorites that could represent you. Important points include:
- Negotiation never ends.
- What should be in the LOI?
- When should the definitive agreements be drawn?
- How long for due diligence?
- Who pays the attorneys or CPAs?
- Is an audit necessary?
50% of unmanaged deals die in due diligence. Darrell will quarterback this process and keep everyone in the game. Important issues include:
- What information is necessary?
- Where is due diligence done?
- What to do when the buyer asks you to cut out the intermediary, your attorney, or CPA?
- How not to get a “haircut” as the deal progresses!
Close The Deal!
Once due diligence is over, then the merger and acquisitions process must be completed. Darrell will work tirelessly to get the transaction closed! Important issues include:
- Review and negotiate definitive agreements.
- Follow up with financing sources.
- Arrange real estate sales or lease transfers.
- Notify key employees at the appropriate time.
- Help arrange wire transfers.
- Make reservations for the celebratory dinner! (Perhaps even pick up the tab!)