As the owner of a middle market A&D company, the process of selling your company is a time of high emotion. Your objective is to sell your company to the right buyer at the right price in a manner that is least disruptive to the business. It is a process that has many steps, and each must be done thoroughly to assure that the sale is completed successfully.
In our 23 years of selling middle market A&D companies, we have found that while the entire sale process can cause anxiety for you as the owner, there are key events in the sale process that are worth worrying about, if they occur. We bring these events to your attention such that if they do occur, they should be immediately addressed by you and your selling team (investment banker, M&A attorney, and accountant).
Among the concerning events that can occur in the company sale process, facts found in due diligence by your selected buyer that conflict with information provided in the Confidential Information Memorandum (CIM) are among the most worrisome. This is because such conflict brings into question other information and data found in the CIM and creates a serious question of credibility. When this occurs, depending on the scale of the discrepancy, it is not uncommon that your selected buyer will terminate its interest in your company. The best way to prevent this is to be sure that all data in the CIM is accurate, including solid substantiation for your sales projections.
Other very worrisome events that can occur in the sale of your company are largely beyond your control and include operational events such as the loss of a key executive, a significant negative customer event, or a successful cyber-attack. These are best dealt with by immediate and clear communication with your potential buyer. Doing so strengthens your credibility and displays a high level of transparency to your potential buyer.
Lastly, we have found that time is one of the most serious worrisome issues that can occur in the selling of your company. Time is the enemy in the sale of your company because the longer it takes to sell your company, the odds of some unplanned or unforeseen negative impact occurring increase exponentially. Therefore, it is essential that the sale of your company be conducted on a rigorous schedule. Having a fast sale schedule keeps every participating member accountable for performing their task in a timely fashion. Having a firm schedule assures that your potential buyer is not unduly lengthening its due diligence into trivial matters while assuring also that your investment banker is giving you priority attention in a timely and responsive manner.
In summary, selling your A&D company can be a worrisome time. However, proper planning and schedule adherence can ensure a smooth process and reduce anxiety.
Have a great day everyone!
Bruce Andrews
Partner