Frequently, our clients’ companies contain two or more distinctly different lines of business (“LOB’s”). For instance, they may sell aviation fuel through a chain of FBOs, have a fleet of charter aircraft, operate maintenance facilities, and have a parts distribution operation, all within a single organization. When a client hires us to sell their business, it is best practice to present the company in a way that anticipates how potential buyers will conduct their due diligence.
Over the past 22 years, we have found the vast majority of buyers will conduct in-depth LOB analyses as part of their due diligence, seeking to fully understand the unique competitive attributes and financial characteristics of each line, including but not limited to:
- Demand drivers
- Pricing power
- Competitive forces
- Technology factors
- Supply chain issues
- Costs of Goods Sold
- SG&A expenses
- Sales strategy
- Marketing strategy
- Capital Expense needs
- Working Capital assumptions
- Regulatory requirements
Additionally, buyers may have different post-closing plans for each LOB and will want to model them individually. Preparing for buyer due diligence by LOB and developing projections based on the specifics of each line is key to providing information to buyers in a way that builds credibility and supports a high valuation.
Digging into LOB data can be difficult and time-consuming, but we have found it is imperative to obtain the best outcomes for our clients.
Have a great day everyone,
Kevin Gould
Managing Director, Aerospace
