Narrowing the Field pt.2

Steps to Selling your Business Part 23.

In my last post, I outlined our first step in cutting the extensive list of interested candidates down to a list of the highest-quality potential buyers through a request for a written Expression of Interest (EOI). 

The EOI request quickly removes bargain hunters, value investors, and tire kickers from consideration. What’s left should now be a small pool of prospects worth pursuing further, typically between 5 and 20 candidates.

The second step is the management visit

Get ready for your close-up— this will be very hands-on.  

Prior to receiving a signed NDA, the identifying details about your business were entirely anonymized and your Advisor has communicated with the market on your behalf. 

The management visit is the first opportunity for potential buyers to communicate directly with you. It is during the management visit that you will be making a management presentation to your candidates.  

This visit is a critical opportunity to test out the fit.  

The visit is also crucial for the interested buyer who wants to know more about your company, but it is equally essential for your M&A Advisor. Management visits give your Advisor a perfect venue for observation and analysis of your candidates.  

If there is not good chemistry at the management visit, or if there is no sense of a work-culture fit between a particular buyer and your people, it is unlikely you will succeed with them. 

The nature of your company will dictate the focus of the visit. 

An asset-intensive business, for example, will host a management visit that puts those assets on display, perhaps combined with a site visit to see your operation in action.  

Other companies are people-intensive, and accordingly, management visits would primarily showcase the shareholders and key leaders of the business. Who are the people in your company that your buyer will inherit? Do you have good people in positions of leadership? Do you trust them? Why do you trust them? Who are your experts? These are the sort of questions a worthy buyer will ask.  

In these meetings your M&A Advisor acts as a gatekeeper and coach; always close, actively involved, but standing by until needed. If this sounds like a passive role, it is not. This stage of the process requires wisdom, insight, and experience.  

Think of your Advisory team as your coach on the sidelines. They are not there to play the game for you, but they bring the team together, make the game plan, observe, call plays, and strategize on the fly.

A management visit has high-stakes, and many things could go wrong in ways that carry significant consequences. You do not want to be without a coach in this situation.  

In the next posts, we will spend some time laying out some practical steps for this critical part of the journey. For now, know this: you need to have active oversight. Be assured, when the time comes, if you are properly prepared, you are going to knock it out of the park. 

If you are planning to divest your business or have questions for one of our Advisors, please contact our team today.

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Written by: Douglas Nix