Asset vs. Stock Sale

Asset vs. Stock Sale DealNotes

In most M&A transactions in the middle market of the aerospace and defense industry, the headline price is what usually attracts the most attention.  However, what really matters to the seller is the after tax proceeds. One of the most important drivers of the tax obligation associated with a sale of a business is whether […]

Management Succession

Management Succession DealNotes

It is often said that buyers acquire management, not assets. While some may view this as an over-simplification, the truth is buyers’ bids are often heavily dependent on their confidence in the seller’s management team’s ability to generate the expected future cash flows. Even in those rare cases where a buyer intends to replace current […]

Controlled Unclassified Information (CUI)

Controlled Unclassified Information

Controlled Unclassified Information (CUI) is a relatively new requirement in all defense contracts where the Department of Defense (DoD) has determined that the information must be handled specially, to protect national security. Control of the information is not as strict as classified information where access is limited to “need to know” and each individual must […]

After Tax Proceeds

After Tax Proceeds

The months leading up to the sale of a company are intense for the seller(s) and their team of managers and professionals. Creating the Financial Model, writing the Confidential Information Memorandum, preparing a Buyers List, talking with potential buyers, responding to due diligence requests, executing a Letter of Intent, negotiating a purchase agreement, and finally […]

Buyer Due Diligence

Buyer due diligence is the most important step in the process of selling a company.  In our view, it is more important than the purchase agreement. If a seller cannot successfully navigate through buyer due diligence, then there is no need for a purchase agreement. Exhaustive due diligence is typically conducted by a single buyer […]

Representations and Schedules

When a buyer acquires an aerospace and defense company, they are purchasing a complex collection of assets, liabilities, relationships, contracts, agreements, obligations, commitments, understandings, entitlements, data, knowledge and more. In a typical purchase agreement, the sellers will make various representations about what they are selling and provide detailed schedules listing the assets and liabilities of […]

DFARS

DealNotes-DFARS

If you lead a company that does business with the United States Department of Defense (DoD), then you must ensure compliance with Federal Acquisition Regulations (FAR). DoD implementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS) under the authority, direction, and control of the Secretary of Defense. The DFARS contain: […]

How to Get a Higher Price

All sellers of middle market aerospace and defense companies obviously want to sell their companies for the highest price possible, as this event often represents the culmination of their life’s work. While there are no magic shortcuts, there are ways to accomplish this objective. One of the best ways is to hire a team of […]

Days Inventory

Days Inventory

Most aerospace and defense companies have inventory. In some cases, A&D distributors will simply buy goods, mark them up and resell them. In more complex situations, like manufacturing, A&D companies will buy parts and materials, add labor and processes, and convert them into finished goods. From an accounting perspective, these are referred to as Raw […]