After determining how much your company is worth (see last month’s column), it the becomes time to ask yourself, “Is this the time to sell?”
If we look at the activity in the mergers and acquisitions (M&A) side of the ready- mixed concrete industry, the number of transactions has been at an all-time high the last two years with no sign of letting up. This is because values are high, and the major multi-nationals are placing premiums on the best-run and most profitable producers.
“Selling concrete is far different from selling your business.”
So if you’ve decided to test the waters to sell your company, how do you proceed? If you were sued, you would immediately go to your attorney, and you would never think about doing something as foolish as represent yourself in the courtroom. If you became seriously ill, you would go to your doctor, and never in a million years would you think of treating yourself.
Yet I constantly run across sellers who represent themselves in the sale of their businesses, often with no experience in selling any company, much less their own.
This phenomenon is puzzling, and there is one fact that seems to repeat itself in every unrepresented sale: The seller almost always leaves money on the table, and the buyers inevitably make the better deal.
I should explain that my firm represents sellers in the sale of their businesses as a part of our larger investment banking practice. However, there are also other highly regarded M&A professionals that specialize in our industry, who are well-qualified to represent producers in a sale.
Closing the sale
If you have decided to sell, there is no reason not to be represented. An industry-qualified M&A professional will obtain maximum value in your sale of and will also bring a higher degree of certainty that the transaction will actually close.
So what value-added skills do experienced M&A professionals bring to the table? Here are just a few of the benefits they offer:
- An industry-savvy M&A professional has his finger on the pulse of the market, and can accurately assess what the threshold of value is for your company. In every instance, this skill alone is worth more than the fees charged and assures that you will obtain a price that reflects both the quality and profitability of your company.
- He will assure a disciplined marketing process, which includes a detailed description of the company and its operations, including all of the proper disclosures that should be made at the outset to assure there are no surprises during due diligence.
- Your adviser will steer you toward the all-important and detailed Letter of Intent that sets forth every economic term. This document becomes the road map for conducting due diligence and, most importantly, assures that lawyers on both sides understand the deal that has been struck. This is critical, as transactions often unravel because there was a disconnect between the parties on a significant economic term.
- A adviser makes sure a deal stays on track, and works hard to get past due diligence, contract drafting, and all of the usual rough spots, assuring that the proposed transaction closes. It doesn’t matter how high a price you have negotiated: If it doesn’t close, all that effort has been for nothing. This alone reinforces that the best advisers are worth their weight in gold.
The road to selling your company can be full of potholes, and can be difficult to navigate. Hire a good adviser, and you’ll get to the end…successfully.
Pierre Villere is President and Managing Partner of Allen-Villere Partners. Contact Pierre Villere at firstname.lastname@example.org or telephone 985-727-4310.
© 2006 Hanley Wood, LLC. All Rights Reserved. Republication or dissemination of “Why Fly Solo?” (The Concrete Producer, April 2006) is expressly prohibited without the written permission of Hanley Wood, LLC. Unauthorized use is prohibited. Allen-Villere is publishing “Why Fly Solo?” under license from Hanley Wood, LLC.