M&A Spotlight

SealedBid’s Jerry Clark was a featured guest on Dynasty Leadership’s podcast. Todd Eberhardt, Founder of Dynasty Leadership, and Jerry discussed what owners really need to know to sell their business.

Since founding the company in 1993, Jerry, and the SealedBid team, have completed over 300 successful transactions across a wide variety of industries.  The SealedBid team works closely with owners and deal teams to maximize value through succession and exit planning.

On the podcast, Jerry explains SealedBid’s Structured Transaction Process which details the marketing and negotiation phases of a transaction and how an owner can exit successfully.  Additionally, Todd and Jerry discuss individual, financial and strategic buyers and the process of purchasing a company.

To listen to the Podcast, press play on the imbedded link below:

Additional Listening Options

• Download the Podcast directly to your phone or computer
• Access the Podcast on iTunes

Selling your business is something most owners do once.  It could represent a lifetime’s worth of work, so why not get the most out of the opportunity?  SealedBid can help maximize the value of your company when you are ready to sell!

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

Business owners face many unique challenges both in the market place and in succession planning.  SealedBid has provided Mergers and Acquisitions (”M&A”) guidance for over 25 years and has extensive experience maximizing value for our clients.  In special situations, SealedBid offers business owners a unique Accelerated M&A process that allows business owners to exit more quickly than the norm without sacrificing value.

What is an Accelerated Transaction?

An Accelerated Transaction relates to an M&A process tailored to a specific client’s need and is designed to engage prospective acquirers, create competition and complete a transaction within an expedited timeline.

How Does the Accelerated Transaction Differ from a “Standard” Transaction Process?

Besides the obvious shortened timeline, an Accelerated Transaction would likely be viewed as being closer to a true/stringent M&A Auction.  Advisors work to create targeted marketing documents, identify likely prospects and define a strict timeline of events.  With an increased sense of urgency, both sides of the table (seller and buyers) must be responsive and engaged to meet bid deadlines and ultimately finalize negotiations.

In addition to shortening the marketing timeframe, Advisors must collect all relevant documentation and reports in advance and prepare for an expedited due diligence period.  In a standard transaction a buyer may request 90 ± days to complete their review, an Accelerated Transaction may call for the same process to be completed in 30 ± days.

The motivating factor for conducting an Accelerated Transaction is unique for each ownership group. Below are examples of the many outside forces that drive transactions:

Why Choose an Accelerated Transaction?

1. For many entrepreneurs and private business owners, their Company and its assets represent a substantial portion of their wealth and are connected with personal credit guarantees.  A transaction may be necessary to prevent a default and/or call of a delinquent note – – owners stand to receive significantly more value by selling their operating Company as opposed to liquidating assets.

2. Transactions are often motivated by changes in the shareholder group to allow exiting owners to capture “market value” for their interest.  These situations can be triggered by retirement, divorce or simply the need to part ways.

3. In the unfortunate event of an untimely death or illness, estate planning can influence a transaction to meet Estate Planning and probate needs.  In these situations, depending on the impact on the Company, it is often important to replace/install a new leader of the business and stabilize the business.

4. In all market conditions, businesses often encounter opportunities to maximize value within a defined window.  Whether it be capitalizing on specific customer/vendor contracts, leveraging economic changes or taking advantage of specific market forces.

Upside and Downside of an Accelerated Transaction Buyer’s Perspective

What are Some Common Risks of an Accelerated Transaction?

What Type of Companies Really Benefit from an Accelerated Transaction?

Companies that have a strong strategic base of potential acquirers, with either strong regional competition looking to expand, and or strong vertical companies looking to add products/service offerings can benefit from using an Accelerated Transaction.  Also, companies that are located in a desired metropolitan area with strong financial prospective acquirers (primarily individuals in small groups).  Most importantly, a company that decides to choose an Accelerated Transaction needs to have desirable assets and or have a well-known brand name.

SealedBid’s Role in Accelerated Transactions

SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.

Our Transaction Professionals use a team approach and have completed many Accelerated Transactions in the past.  SealedBid uses an extremely Confidential approach in standard transactions and Accelerated Transactions that has led to great success.  Clients can be assured they are working with a strong deal team that can support Accelerated Transactions from pre-marketing to marketing to Due Diligence to closing.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

SealedBid is known for assisting private, lower mid-market business owners as a Sell-Side advisor/intermediary because of our expertise in Strategic Acquisitions (Roll-ups/Fold-ins), Financial Acquisitions (Private Equity), Corporate Divestitures and Recapitalizations.  But for companies looking to GROW THROUGH ACQUISITION, SealedBid also offers and has had tremendous success as a Buy-Side advisor/intermediary.

Strategic Growth Through Acquisition

Along with the traditional efforts to produce organic growth (e.g. adding products/services, increasing or improving marketing/sales and adding strong employees/management to your team), businesses often reach “the-next-level” or “cross-the-chasm” through acquisition.  Growth through acquisition can be less expensive, faster and even sometimes less risky than allowing for stagnation or slow organic growth.

When a company is looking to complete an acquisition, there are many different strategies to evaluate, including but not limited to:

Channel Expansion: Acquiring a company that has complimentary products or services is a great way to grow your company.  There are many times that a company wants to enter these new channels and has trouble figuring out how to do so.  Choosing this path of acquisition is an easier way to enter a similar, but different market.  Being able to pair your company’s current products and/or services with the new company’s products and/or services is a huge win.

Geographic Expansion: Companies looking to access new markets, obtain manufacturing and distribution efficiencies and/or better service existing clients can immediately benefit from acquiring strategic companies outside their existing geographic territory.

Market Consolidation: Acquiring a company that is very similar to your company.  Adding a similar company allows for instant market growth and impact.  Some companies may even consider acquiring more than one company similar to their company so that they have even more power in their market.

In a perfect world, a strategic acquisition creates a 1+1=3 (or sometimes a lot more!) scenario for all parties due to newly leveraged synergies and relationships (e.g. customers, distributors, channels, suppliers, etc.)

The process of identifying the right type of company to acquire, approaching like companies, engaging in negotiations and completing an acquisition takes energy and expertise.

Buy-Side M&A Process

After Confirming that your Decision to Make an Acquisition is the Best Option, Securing Buy-Side Representation is a Practical Next Step

Role of a Buy-Side Advisor/Intermediary

• To help a company identify, filter and reach out to prospective acquisition targets in a professional and confidential manner
• Assist with prospect research, initial due diligence/information collection and prospect screening
• Help the company evaluate the benefits and possible challenges of acquiring the identified prospective targets
• Set prospect expectations, assist with negotiations and provide a buffer for the client company in case of tenuous negotiations
• Assist attorneys, CPAs and leadership teams in any final due diligence items and closing the deal

Importance (VALUE) of a Buy-Side Advisor

• Not only does a Buy-Side advisor/intermediary help search for prospective targets, but they can also expand the Buy-Side search beyond what a company can do on their own.  M&A firms are well connected to a network of potential sellers and can use additional resources to work with their Buy-Side client.
• A Buy-Side advisor/intermediary can help create a more defined offer that will get the best deal for the buyer.  There are many times during a negotiation process that the buyer and seller will not see eye to eye; however, an M&A firm Buy-Side advisor/intermediary can help get through these difficult situations, leading to a quicker, smoother process.
• A Buy-Side advisor/intermediary will help a company reach the finish line.  From due diligence to coordinating meetings, having a Buy-Side advisor/intermediary takes a lot of the stress and pressure off the buyer.

Buy-Side Prospect Funnel

SealedBid’s Role in Buy-Side Advisory

SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.

Our Transaction Professionals are experienced at sourcing “ideal prospects”, identifying sellers, negotiating and completing Buy-Side transactions. In closing…remember that an M&A advisor/intermediary is not only beneficial in a Sell-Side transaction, but can add huge value to a Buy-Side acquisition strategy.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

As SealedBid continues to highlight the importance of preparing for the ongoing future of your company, we would like to welcome you to part two of the SBM M&A Spotlight Series regarding succession planning!  In part two, this Spotlight will focus on “exit planning” and the important points to consider when transitioning ownership.

What is an Exit Plan and How Does it relate to a Succession Plan?

As discussed in the Spotlight: Succession Planning, an exit plan is what we consider to be the final culminating component within an overall business succession plan.  A complete succession plan includes estate planning, the transitioning of leadership and ultimately a detailed exit plan pertaining specifically to a change in ownership.

A good exit plan analyzes all factors that impact the business and the current owner(s) including the future of the company, the employees and the community.  Exit planning considers these factors and the ownership’s goals to create a strategy to maximize business value, personal and business resources and insure a successful transaction.

Where to Start an Exit Plan

Each business and ownership group will have unique challenges and priorities that dictate the first steps in creating an exit plan.  Sitting down with advisors (e.g. business intermediary, attorney, CPA, banker, etc.) that are familiar with the business and the current M&A market will expedite the process.

Elements of a Well-Designed Exit Plan

Although everyone does not start their exit plan in the same place, below we outline some general steps to assist with your exit planning strategy.

Exit Planning Steps

Common Pitfalls of Businesses that have Not Properly Planned for an Exit

• Internal Conflicts

  • Among owners

  • Among managers

  • A new owner will want to have a strong foundation that continues with the company post-closing

• Increased Costs

  • Appraisals

  • Excess inventory

  • Insufficient reporting

  • Tax planning

• Management Control & Employee Future

  • Key managers and sales staff who do not have non-competes or non-solicits can hold a deal hostage

  • The legacy of the business may be in jeopardy without a clear plan for employees

  • Loss of trust in ownership/management

Why You Need an Exit Plan

• Maximize the Value of your Company

  • When it is time to sell your company, having a well thought out exit plan will help to make your company more valuable

  • A potential acquirer will be much more willing to purchase a company that has created an exit strategy because that means there will be an easier transition for the new owner/owners

• Be in Charge of What Happens to your Company

  • If there is no exit plan in place, it is difficult to decide what exactly happens to your company, especially if you need to sell unexpectedly

• Help your Business Run Smoothly

  • Not only when it is time to sell, but also on a day-to-day basis

  • If there is an exit plan in place, there is a clearer understanding for employees with regard to their expectations and the overall goals of the company

  • An exit plan will help guide your strategic business decisions

SealedBid’s Role in Exit Planning

SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.  Our experience, knowledge and attention to detail are crucial to successful succession planning.

• SealedBid works closely with business owners through all the steps of a successful succession plan.
• SealedBid helps guide business owners in a Family Transfer.
• SealedBid assists business owners in a Management/Partner Buy-out.
• Ultimately, SealedBid coordinates the due diligence process, secures the necessary financial statements and aids in negotiating the deal structure (adding tremendous value to business owners).

As you begin to develop your exit plan, remember that SealedBid has the experience, knowledge and expertise needed to successfully guide a transaction, family transfer or management/partner buy-out.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

In closing…remember to write your succession and exit plan long before you need them, so when the time comes to act, the terms and conditions are already defined and agreed to by all parties.

As a business owner, your final management decisions may be the most important business decisions you ever have to make!  Do you have a clear, well-defined succession plan in place?  If not, there are many immediate and future benefits to preparing for the ongoing future of your company…here are some elements to consider:

• Succession planning keeps your company focused: Taking a closer look at the business and its needs today as well as into the future can help keep the goals of the company clear and in the forefront of the leaders’ minds.
• Succession planning helps you take a second look at many aspects of your company: It is important to look at all the parts of your company as well as all employees when creating a succession plan.  This review could help catch problem areas that you may not have thought about before and pave the way to a smooth transition.
• The future is unknown: Opportunities (and threats) abound and it is impossible to know exactly what can happen that may directly affect your company.  To capitalize on the opportunities (while avoiding the threats), it is very important to start a succession plan sooner rather than later.

So What is a Succession Plan?

As defined by M&A Source (www.masource.org), in a succession plan for a privately held business, ownership transfers from exiting owners to active family members, managers or outside shareholders.  In a Bloomberg Business article it states that about 40% of U.S. family-owned businesses successfully get passed down to the second generation.  Good facilitators are particularly sensitive to estate planning issues, family business dynamics and the need for discretion and trust to make these transactions seamless and successful.  Succession planning has many components that include business planning, estate planning and exit planning.

Myths of Succession Planning for Small Businesses

• Succession planning can all be done at once: Succession planning does not happen overnight.  A succession plan is an ongoing effort that can always be changed as new opportunities or issues arise.  Business owners should address financial, management and estate needs unique to their specific situation on an ongoing basis
• Waiting to create a succession plan won’t hurt: When it comes to succession planning, it is better to be safe than sorry.  If you put off creating a succession plan and something unexpected arises, you may not be in a position to pursue an exit opportunity or maximize value of your company.
• Succession planning is only important for big companies: According to Forbes.com, approximately 90 percent of all companies in the U.S. are family-owned/controlled.  When a business is small and an employee leaves, it is much more noticeable than if it were a large company.  If an employee in a leadership role leaves a small company, it can have significant impact on an unprepared company.  Internal and external resource planning is important, specifically for leadership roles in small companies.

How Do You Begin Succession Planning?

• Search for future leaders: Looking at current employees, as well as potential future leaders outside of a company, is important to do in the beginning of succession planning.
• Solidify financial reporting: It is extremely important for existing and future owners to have absolute trust in the company’s managerial reports, financial statements and tax returns.  Having reviewed or audited year-end statements by an outside CPA firm can greatly assist in estate planning, appraisals and ultimately maximizing transaction value.  Create a timeline: Plan out specific steps for your succession plan. Allow time to implement new systems or to clean up the company’s accounting.  Make sure the future leaders of the company are gradually introduced into their roles so there is a smooth transition.
• Follow your succession plan: Don’t just forget about the plan you have made. Plan to revisit the succession plan every once in a while so that you can make sure that everything is on track.  To help ensure a smooth transition, all managers, employees and the company as a whole should be clear on the succession plan.

Now that I am Thinking about my Succession Plan, What Comes Next?

Part II of this Spotlight Series is now available; Spotlight: Exit Planning

SealedBid’s Role in Succession Planning

SealedBid is proud to have successfully served clients for over 25 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs.  As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.  Our experience, knowledge and attention to detail are crucial to successful succession planning.

• SealedBid works closely with business owners through all the steps of a successful succession plan.
• SealedBid helps guide business owners in a Family Transfer.
• SealedBid assists business owners in a Management/Partner Buy-out.
• Ultimately, SealedBid coordinates the due diligence process, secures the necessary financial statements and aids in negotiating the deal structure (adding tremendous value to business owners).

As you begin to develop your succession plan, remember that SealedBid has the experience, knowledge and expertise needed to successfully guide a transaction, family transfer or management/partner buy-out.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.

In closing…remember to write your succession plan long before you need it, so when the time comes to act, the terms and conditions are already defined and agreed to by all parties…

Over the 25+ year history of SealedBid Marketing, Inc. (“SealedBid”), we have not only built a national network of strategic and financial acquirers, M&A advisors and professionals but we have also had the pleasure to work with an impressive list of companies.  So the goal of this Spotlight Series is to display that impressive list of companies in a fun and interactive way that would demonstrate our long-term success!

Industry Experience: SealedBid’s longevity in the marketplace and core team provide a solid understanding/foundation for working with Companies across a wide variety of industries, such as; manufacturing, distribution, technology, business services, etc.  That longevity, core team and subsequent industry knowledge plus SealedBid’s limited number of actively engaged projects culminate in our ability to successfully facilitate campaigns across various industries with confidence.

Prospective Acquirers: While SealedBid is a boutique M&A firm based in Minneapolis, we pride ourselves in our ability to leverage technology and social media to gain national, and international when necessary, reach to potential acquirers.  We understand the importance of presenting SealedBids’ opportunities to the best strategic and financial prospects, regardless of location.

As the map indicates, we are successful in engaging Companies far outside our home base in Minnesota:

(The map above highlights the location of sellers and buyers from select transactions as well as category detail such as industry and buyer type.  Specific Successes and Case Studies are available for review as well.)

M&A Advisors and Industry Professionals: As with any business, relationships are key and SealedBid is no exception, we pride ourselves on established, professional relationships which include; attorneys, accountants, bankers, consultants and other advisors who have worked with SealedBid on past transactions.  This vast network allows SealedBid to recommend competent, professional advisors who fit with both our buy-side and sell-side client needs.

If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232.  SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.