Preparing for a Sale

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Once the decision has been made to sell your company, resist the strong urge to jump to the marketing phase. Investing time in the preparation phase is likely to pay off by putting you at a distinct advantage during negotiations. Remember, keep asking yourself: "What can I do now to eliminate a slowdown once the process is rolling?" For example:

* Complete the descriptive memorandum so that it can be distributed immediately when a strong prospect is identified.

* Ensure that your company's "investment story" is clearly understood and supported by senior management, particularly those who will have regular contact with potential buyers.

* Anticipate the buyer's basic due diligence and gather information as early as possible.

* Adjust your corporate structure to eliminate certain asset classes (e.g., real estate remaining with owners) that the owner may not wish to sell.

Once you have began preparing your company for sale, your momentum will maximize the strength of your bargaining position. With few exceptions, the best prepared companies: 1. find the M&A process to be the least disruptive to current operations, 2. are able to generate and handle the greatest number of potential bidders, 3. command the highest price multiples.


There are more buyers out there for your company than you might think. Coopers & Lybrand professionals advised on the sale of a company that manufactures steel cutting edges on snow plows and agricultural equipment. The sale process is extremely competitive, attracting a wide spectrum of buyers, each with its own specific interest in the company.

Some investors were interested in the seller's strategy earnings stream, while others saw great potential in selling additional products through the company's existing distribution channels. One investor was enamored with the company's preferred status with the major international steel manufacturers, while another wanted to acquire the seller because it was counter cyclical to its current operations. The point is: The potential buyer universe may far exceed what would appear, on the surface, to be the logical buyers.