Avoiding Common Legal Problems

Avoiding-Common-Legal-Problems-dealnotes

Before bringing a company for sale to the market, we always counsel our clients to have a thorough legal review conducted by a seasoned M&A lawyer, often in cooperation with the company’s long-time business attorney. We suggest they focus on three areas in particular: CONTRACT COMPLIANCE: For major contracts with customers, suppliers, and others: are […]

Affiliates

Affiliates-Deal Notes

The definition of ‘affiliate’ can be complex and can depend on the perspective taken (e.g. legal, regulatory, financial). From a financial perspective, there are specific auditing rules, standards, and procedures that accountants use to determine when an affiliate should be included in a company’s annual financial statements. However, even with audited statements, buyers often have […]

Addbacks

Addbacks-dealnotes

“Addbacks”, in the jargon of M&A, are one-time expenses that can be legitimately added to a company’s EBITDA. The key to “Addbacks” is that they are legitimate, meaning they are expenses that a new company owner will not incur post-acquisition. While there are many examples, some of the most frequent include the following: Discretionary: expenses that […]

Debt Free Cash Free

Debt-Free-Cash-Free-Dealnotes

The foundation of value in a business is its ability to generate future cash flow from its core operations. Most buyers run their valuations based on Discounted Cash Flow (DCF) models. Under this method, value is independent of the capital structure of the company. In other words, the starting point for negotiations of most business […]

Due Diligence Fails Employee Nexus

Due-Diligence-Fails-Employee-Nexus-dealnotes

One of the more common problems that we have seen in buyer due diligence is “Employee Nexus”.  Employee Nexus problems arise when a seller has not properly worked with legal counsel in advance to test and document the Nexus of employees who are remote or off site. These may be administrative employees who often work […]

Increasing free cash flow in the year ahead

Increasing-free-cash-flow-in-the-year-ahead-dealnotes

We want to thank you all for reading our weekly Deal Notes during 2022. “Deal Notes” was created to address the important aspects of selling a mid-market Aerospace and Defense company, preparing for the sale process, and managing the many vital steps in ensuring a successful sale. We send Deal Notes to nearly 12,000 business […]

Strategic Competitive Advantage

Strategic-Competitive-Advantage-DealNotes

I was part of Boeing management in the 1990s when it dawned on the executives that Airbus might not be just a flash-in-the-pan startup that would be going away anytime soon. Fast forward to last week as COMAC delivered its first C919 while industry critics continue to scoff at the notion that it will ever […]

Exclusivity Periods

Exclusivity-Periods-dealnotes

In almost all cases, before a buyer will commit resources to conduct exhaustive due diligence, they will demand an exclusivity period, during which time the seller will not talk with any other potential buyers. This is usually documented in the form of a Letter of Intent (“LOI”). How long is an appropriate amount of time […]

Sell for a Higher Price

Selling for a Higher Price

Potential sellers often ask us “how do I sell my business for a higher price?” As you might imagine, the answer to that question is complex and involves a variety of factors. Still, in the middle market of the aerospace and defense industry, it boils down to advance planning on specific key points. Here are […]

Replacement Cost

Replacement-Cost-dealnotes

Previously, I’ve covered two important valuation methods: i) discounted cash flow (DCF) and ii) comparables (Comps). To conclude my valuation series, the third tool Alderman & Company utilizes to build a complete valuation is Replacement Cost. Would you buy a company if you could build it for a fraction of the cost? The Replacement Cost […]