Mergers and Acquisitions
Middle Market M&A Advisor
Mergers and Acquisitions (M&A) can be seen from the two sides of the transaction. M&A involves the sale of a company when a business owner concludes that an exit is in his/her best interest and/or M&A involves the purchase of a company when a buyer decides that the purchase will lead to accelerated growth of the parent company.
Looking at the M&A process from the seller’s side of the transaction, the seller would want their company to be a healthy and financially profitable company and a company that larger companies would find attractive. These companies usually have a product or service that is in demand, a solid financial track record, a well-developed leadership team, established processes, and a clear path toward growth. These characteristics make the seller’s company very attractive to potential buyers who may be interested in breaking into a new geographic area or providing a product or service that is synergistic to the buyer’s company.
Looking at the M&A process from the buyer’s side of the transaction, the buyer would want to purchase a company that would help their business become even more valuable by fitting nicely into the acquiring company’s organization. This purchase can improve the buyer’s position by providing the benefit of the economy of scale enjoyed by combining resources with another companies. The acquisition can provide a synergistic boost by adding different products or services or it can provide additional strength to the organization because it provides a stronger sales engine. Fully understanding M&A involves a comprehension of the accounting procedures, legalities, government regulations, and documentation that go along with this exchange of large sums of money.
DBG Advisors, an M&A Advisor for DFW Businesses
DBG Advisors is a member of the Alliance of Merger & Acquisition Advisors and has a strong reputation in Dallas with private equity firms and the M&A network. We provide advice to our buy-side and sell-side clients on matters related to sales, corporate restructuring, and financing events. We handle these transformative corporate decisions with the care you would expect from an industry leader.
Factors to Consider When Acquiring a Company
Regardless of whether you are the buyer or the seller in an M&A transaction, various factors can come into play. Even Mergers and Acquisitions for a small business require a great deal of care to ensure a smooth transition. Consider these important components to an M&A deal.
- Dynamics of negotiations: One party will always have leverage in a business deal, and it is crucial to have a skilled M&A Advisor on your side to help you make any necessary compromises. You don’t want to give in too easily or accept a deal that works against your goals. This is why M&A consulting is a vital tool in your business transaction.
- Addressing employee and benefits concerns is essential. Issues such as employment agreements will be of utmost concern during your transaction, and an experienced M&A Advisor will be able to guide you through these considerations.
- Purchase Agreements: A well-drafted Asset Purchase Agreement or Stock Purchase Agreement will help to protect the seller in most M&A transactions. Your M&A Advisor work alongside the transaction attorney to help ensure that key provisions are covered in these Agreements.
- Intellectual Property: When companies sell their intellectual property, its status will be very important to the buyer. This is where M&A Advisors can help a company organize the related information so that both parties understand as they head into negotiations.
- Multiple bidders: When a company decides to sell and has multiple bidders, deciding which company to sell to can be a tough choice. These situations typically result in the best outcome for the seller, and an M&A Advisor can assist in brokering better terms and a higher selling price.
- Vetting the sellers’ financial statements: A buyer in an M&A deal will want to see an accurate record of the seller’s financial history and metrics. They will want to see these records prepared with generally accepted accounting principles that present the results of cash flow, condition, and results of operations throughout company history. DBG Advisors works CPA firms that can provide this kind of service.
- Lengthy negotiations: M&A deals can take a long time to complete. It is not uncommon for the process to take twelve months or longer from inception through consummation. A skilled M&A advisor will be able to see the process from start to finish and possibly shorten the time frame by properly managing all key factors involved in the deal.
- M&A valuation: Determining a defendable sales price for a company can be complicated, and negotiations can greatly affect the final deal. Having a trusted M&A Advisor on your side is the best way to achieve the most lucrative outcome, regardless of whether you are the buyer or the seller.
Factors to Consider When Selling a Company
Most business owners have never sold a company, so they do not understand the process and how to properly prepare their company for sale. Neglect this foundational step at your own peril! This transaction could be your only chance to reap maximum rewards for the company into which you poured so much of your hard work and sweat equity.
Some entrepreneurs want to sell too soon before their company is ready. This is not at all uncommon. How do we know? Because we have a readiness evaluation system that we use to determine the sellability of businesses. If a company has a low sellability score, does that mean it cannot be sold? Not at all. It simply means there is some work to do if you want to reach your maximum sales value.
DBG Advisors works with clients every day to determine their sellability score and prepare a plan to get them on the path to acquisition.
To sell your company, these are the important issues that you need to consider:
- Company health. How healthy is your company and how attractive will it look to a potential buyer? DBG Advisors helps our clients look at their company from a buyer’s perspective, so they can understand what should be changed to yield the best sales price.
- Business Valuation. What is your company worth? DBG Advisors will use our expertise and vast resources to determine a Broker Opinion of Value. This is a defendable sales price that will stand up to scrutiny.
- Offer Evaluation & Due Diligence. Evaluating the price and terms of an offer can be tricky when you are faced with complicated conditions. You may even have multiple offers. The DBG Advisors team can help you evaluate multiple offers.
- Due Diligence. A buyer will usually hire a CPA firm to do a quality of earnings report to verify the condition of the company. This process must be managed to ensure it does not go off the rails. DBG Advisors can help with this process.
- Negotiations. You are not selling a car. There will be multiple rounds of back and forth so be prepared for this complex process that will include multiple parties on both sides. DBG Advisors can manage negotiations and will make every effort to make the process as smooth as possible.
- Contracts. The Asset or Stock Purchase Agreement should protect your interests as the seller. It is essential to have qualified representation to review all agreements. Count on your DBG advisor to work with your attorney to shepherd you through this process, ensuring your interests are protected.
The Team with a Reputation You Can Trust
We are seasoned advisors with years of experience in conducting business transactions in the Dallas/ Fort Worth market. We have knowledge of your industry, market, and your line of business. When we are helping to develop a defendable sales price, we will consider both financial and non-financial factors in the process. Whatever your reason is for needing to know how much your company is worth, we can help because we are experienced in conducting valuations.