Fall Magazine - Page 29

else being equal . Also , systematically transferring dependence on the company ’ s ownership to the leadership team reduces transaction risks which typically increases business value .
Hornung-Scherr : Prepare . Prepare . Prepare . There are so many things in your business that you can ’ t control , so control what you can in an M & A transaction by preparing . Here ’ s a list of the things you can control , and that you should put in order :
• Deal team
• Senior management team
• Estate and tax planning
• Financials
• Contracts
• Insurance .
CLDA Mag : What kinds of deals will be most successful in 2023 ?
Berg : Deals where both buyers and sellers recognize they remain in a favorable M & A environment will be successful in 2023 . In these deals both parties will be working together to find common ground . Yes , there will be more work on the front-end by both parties to evaluate “ right-fit ,” more consideration about whether they can be long-term partners , and more transparent deal terms that are fair and equitable for both parties .
Tenney : Most buyers are excited about the current growth that their acquisition targets are experiencing , but they want to ensure that growth is feasible long term . The most successful deals in 2023 will be the ones where there is an appropriate amount of shared risks at the closing table and where the target acquisition is highly resilient to a variety of unforeseen industry or economic disruptions .
Hornung-Scherr : I think there is the potential for transactions in all sectors to be successful . Specialty , high-performing and last-mile transactions may be more likely . We are still seeing a robust M & A market with strong trailing earnings and favorable transaction multiples .
CLDA Mag : What are your predictions for valuation trends in 2023 ?
Berg : Valuations will be based on the unique combination of macroeconomic factors ( current and perceived future ), the buyer ’ s investment thesis / strategy , and ultimately how much the buyer values ( i . e ., is willing to pay for ) strategic growth and return on capital .
Tenney : Great companies will attract top value especially considering that the supply of final-mile companies capable of being considered a platform investment is getting smaller and smaller by the day . Smaller , less sophisticated companies will struggle to hold value unless they are able to differentiate and / or offer a niche expertise .
Hornung-Scherr : There may be some pressure on valuations in the current environment , but many companies are still experiencing record results and receiving record multiples . Heightened scrutiny of add-backs , focus on normalized equipment gains , and increasing use of earn-outs to bridge valuation gaps are predicted .
CLDA Mag : What can last-mile companies to do in 2023 to position themselves with future buyers ?
Berg : There are internal and external components to positioning your company for sale . Externally , most companies partner with trusted advisors who can assist them in maximizing enterprise / transactional values . This includes M & A advisory / sell-side representatives , CPAs , attorneys , insurance brokers , among others . These relationships can play a meaningful role in supporting companies through the M & A process . They can help prepare the companies for sale , take the sellers “ to market ” and ultimately work with the sellers through closing .
Tenney : Make sure you have your financial house in order and that you have a compelling growth story that captures the imaginations of buyers .
FALL 2022 customized logistics & delivery Magazine 29