The price at which a company sells can be greatly affected by factors that can be optimized if owners begin planning well in advance. Potential long lead time deficiencies in critical areas can be corrected, if there is sufficient time. Long lead time critical value drivers include but are not limited to: audited financial statements, sophisticated budgeting tools, talented management with good governance and succession plans, and a large new business pipeline. Conversely, if there is not proper planning prior to the sale, then any long lead time deficiencies cannot be remediated.
Over the past 21 years, we have seen time and time again that proper planning for a sale can have a tremendous impact on the value of a middle market aerospace and defense company. Whenever possible, we recommend sellers start long range sale planning two years prior to the planned start of a sale process. While there are many ways to organize this work, we use a specific set of tools, closely aligned with those we use during the active sale process, to dry run an entire sales process. In so doing, we surface a company’s most significant deficiencies and opportunities for value creation, prior to selling the business. By identifying these years prior to the sale, we afford the client the ability to dramatically impact these key value drivers.
There are many ways to go about preparing for a future sale. You can have a trusted attorney, accountant, or management consultant guide you through this process. Or, you can do much of this on your own. Many M&A Bankers, like us, also offer a service along these lines. We have trademarked our version of this offering as Long Range Sale Planning (LRSP)TM. The key takeaway here is not about how you should go about this planning. The key is that sellers should take at least two years to actively plan for a sale, prior to starting a sale process. Time and time again we have seen how much value this creates for shareholders.
Have a Great Day!
Managing Director, Defense