Bold, is using Latin words to remind us are how old certain ideas.
Bold, is watching for weakness in competitors, that need your capital, your skills, and your connections.
Bold, is buying a competitor in 2022.
Acquisition multiples as based on revenue, earnings, and/or cash flow fall during periods of uncertainty. No one can argue that we are in an uncertain political and financial environment.
We expect multiples to continue to fall on closed acquisitions as we continue into 2022.
Are you prepared for that? Where are your advisors?
Chance Favors the Prepared ( Louis Pasteur )
You don’t have to be an esteemed microbiologist like Pasteur, to know to be ready for unexpected opportunities. Yet, how many do?
Consider a situation like one: Your competitor calls and says “my wife and I are getting a divorce. We want to sell the company and divide the proceeds. Are you interested in buying us? If so, how soon could you close?
What would you say?
Let’s talk about ways you can be prepare.
Do you have Adequate Financials?
Are your financials audited? The seller will want them, especially if they are helping finance the deal. Having ready financials is also a sign of a prepared and organized buyer.
Do you have Financing?
Trying to close a deal, while you are going through the due diligence process is hard enough, without adding the stress of finding bank or non-bank funding at the same time. Having your financials ready in the correct form and in the hands of a funder who knows your industry well, is a competitive advantage. It is also necessary to have liquidity to successfully compete against another, larger buyer. Be ready when a seller asks “Do you have cash or funding in place?”
Do you have a Valuation Expert ready?
Having a third-party evaluation of a company is helpful for both parties. They confirm market levels based on revenue, earnings, and cash flow. It speeds up the deal’s closing. They adjust balance sheets and P&L for personal items that aren’t part of the ongoing business. This will take 30-60 days to complete, assuming you have already chosen someone and they are available in time to help.
Have you spoken yet to an Exit Planner?
There are individuals and firms who assist you with planning the seller’s exit process. Charles Schapira (link), someone we have worked with and also interviewed on our “Square Deals Web Series” is such a person. They have done this before, know the processes and needs of buyers and can help you prepare for the rigors of the buyer’s rigorous due diligence process…which usually must be completed to their satisfaction in under six months.
Do you want the real estate, the operating business or both?
You have extra space to move their business to your headquarters or factory. Do you want to invest in their real estate and lease it to others? Can you afford to do it, based on your financials? Is the title clear? You’ll need a commercial real estate broker and a title company to help you. Do you have both ready and available? You need this team to make sure the property is attractive to own (a real estate market valuation independent of the operating company) AND that the property is free of liens and other legal encumbrances.
Will you absorb their employees?
Many businesses use a third-party human resources company. The firms review employees’ past performance and interview them for their new positions. They also provide a comparison of acquired versus existing employees’ skills (so you keep the best of the best). Do you know the firms that do this work well?
How are you going to name the business?
Your competitor may be larger or better known than your company. Do you have someone who can tell you which name makes the most financial sense to retain? What about after the close of the deal…do you have a sequence of announcements and other advertising to let the world know about your success?
Are you trying to scare me with all of this?
No, just the opposite! There are people and companies that we’ve used before, both for acquisition and general operational needs. You don’t have to start from scratch. This is part of our “Money Plus Ideas” approach to helping businesses. We’ve done enough deals to have multiple people or advisory firms ready to keep the deal moving towards a successful close.
Getting prepared with “bold” preparations is best done before your competitor knocks on your door (or you read about their troubles in the paper). A few minutes now can save you hours of time in searching and coordinating work.
A BOLD buyers will have identified this team and have them ready to start work today. Sellers often have insufficient cash, and want a quick close after all their questions are answered. If they come ready to sell, are always in a state of “ready to buy” like most billionaires?
Your company has value. Be BOLD enough to prove that value.
Call Us, and we’ll give you the missing pieces to compete your team and be ready for an opportunity.
Seize this offer.
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