M&A: A Practical Guide to Doing the Deal, 2nd Edition

CHAPTER 20 The Sale Process from the Seller’s Vantage Point

Chapter 20 outlines the M&A process from the seller’s point of view. Selling a company involves six distinct steps and typically requires nine months from start to finish. Most sellers retain an investment banker to guide them through the process.

A prospective seller operates far differently from a would-be buyer. Before making a commitment, a buyer conducts an exhaustive analysis of the seller’s business from a number of viewpoints—financial, operations, and legal, among others. At the same time, a buyer looks at the deal’s likely impact on its future operations and stock market values. In contrast, the seller’s principal concern is much narrower: price. In most cases, it needn’t worry about its operating results post-closing, and its analysis of the buyer is limited to whether the buyer has (or can raise) the money required to purchase its business. Despite the seller’s singular orientation, there are numerous steps between (a) the seller entering the M&A market and (b) the seller receiving the sale proceeds. Chapter 20 reviews these steps, presents observations on tactics, and suggests ways of avoiding pitfalls.

Key Seller Steps

1. Retaining a financial adviser.
2. Setting the stage.
3. The buyer list.
4. Approach tactics.
5. Coming up with a bid.
6. Final steps.

Retaining a Financial Adviser

Once the business owner has made the sale decision described in the previous chapter, the search begins for a competent financial adviser. ...