Making Your Dream Team A Reality
We all know great teams make for highly successful outcomes. The group of people that helped land NASA’s Apollo 11 on the moon, navigated by one of the most famous and successful teams in history, had a lot of preparation and planning to help them achieve their goal. Looking at the sports world, the Golden State Warriors of recent years have embodied that great team mentality and, similarly to Apollo 11, have put in thousands of hours of training in preparation for their goal of winning a championship.
While not receiving the same fanfare or historical accolades, I’m sure you have put a lot of thought into the team you assembled to help your Company grow. You and your team have spent countless hours strategizing and executing on how to achieve the goal of growing your business. Ultimately, you’ll want to spend the same effort to set your Company up for your final goal: Selling.
So, what makes a great team when you’re considering selling your business? Here are the roles you’ll want filled on your team and things to look for:
Financial Advisor/CFO/Accountant – While there are many items that can be important to the valuation of your Company, the piece that will always get the most attention is revenue and profit. Consider that deals are often based upon a multiple of EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization), which can range anywhere from 5x-15x and up. If you’re Company is receiving a 10x multiple, every $1 of EBITDA you’ve secured will ultimately be worth $10 in value! That can add up quickly!
With that in mind, the first priority when selling your business should be ensuring your Company’s financial reporting is current and accurate (even if you are a pre-revenue company this applies to you!). All transactions will go through a Quality of Earnings analysis by a financial firm the buyer designates. It will be their job to audit every aspect of your Company’s financial reports to give the buyer confidence. Far too many deals have fallen apart simply because not enough time and detail was placed on the financial reporting and accuracy of an organization.
M&A Advisor – Generally speaking, the more buyers you have involved in a M&A process, the better chance you have of achieving your maximum value. To get there, you’ll want to have an experienced M&A Advisor that will be able to introduce you to both financial and strategic buyers. In past processes at MedWorld Advisors, we’ve had many clients who did not know about the acquiring company or firm prior to the M&A process. In addition to that, your M&A advisor will help guide your Company all the way through the exit process – from preparing the marketing materials and identifying buyers, all the way through to assisting with due diligence and negotiating the purchase agreement. Your M&A advisor will assume many roles in the exit process.
Legal Advisor/Transaction Lawyer – One of the most grueling portions of an exit process is conducting due diligence with the buyer. This can be an exhaustive effort where the buyer will want to look through almost every single document related to your business. Once due diligence is complete, it becomes a race to the finish to try and close as quickly as possible….and you won’t want to slow down your sale! In that time, you want an experienced transaction lawyer that has completed deals in your industry to help manage the purchase agreement and disclosure schedules, as well as protecting your overall liabilities.
One important thing to keep in mind with all these team members is their experience and ability to transact on international deals. The business world and healthcare world are more connected than ever, and more and more international buyers pop up each year. You’ll want to make sure your team can bring in international buyers, handle cross border regulations, and are able to respectfully negotiate your deal across different cultures and countries.
Selling your business can be a daunting task with a lot of unknowns for first time sellers. Make sure you’re prepared for the best transaction outcome by putting in place an experienced team that can help manage your exit process appropriately. With M&A transactions, it truly “takes a village” to get the deal across the finish line. Whether your team members are internal or outsourced, everyone should understand they are working for a common goal – a successful transaction!