M&A Activity
Planning Assistance Helps Multi-National
Auto Repair Business Sell to PE Firm
Bryan Graiff, CPA/CGMA, CVA, CFE, CM&AA
Sometimes a strategic buyer is not
the best fit for an exit plan. Perhaps
the owner wants to work for a few
more years, or the strategic buyer
would fire long-term employees
because their positions duplicate
those of other employees. for $50 million, which exceeded the
owner’s original expectation.
Customers and vendors could also
react negatively if a competitor
bought the company and had
unfettered access to confidential
information. Beyond preparing quality financial
statements dating back at least
two years and a sound forecast
projecting out results at least three
years, a seller might need to tidy up
some back-office aspects before a
transaction.
In those situations, a company
looking to sell might consider a
financial buyer, such as a private
equity firm or family office.
In any selling situation, sellers need
to get their house in order before
going to market. However, sellers
should be prepared for a financial
buyer to perform extensive due
diligence before a transaction.
Whereas a strategic buyer may
already know the company and the
industry well, a financial buyer, such
as a private equity firm, is more likely
to need to do more research before
they use their investors’ dollars to
buy a company.
Recently, the owner of a large
multi-national auto repair business
prepared to sell his company to a
private equity firm. The sale closed
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The business owner followed these
key steps to prepare his business
prior to the sale.
1. Get the house in order
The auto repair business benefitted
from the support of entrepreneurial
services professionals who assisted
with day-to-day bookkeeping needs
to clean up the business’ financial
statements. The professionals also
set up foreign subsidiaries in the
company’s general ledger system,
something that the company’s CFO
had not had the time or internal
resources to properly account for at
the level of detail required for a due
diligence analysis.
2. Calculate net cash proceeds
Once the business’ back office
is in order, but before pulling the
trigger on a deal, an owner needs to
understand the realistic takeaway
from a transaction.
A financial buyer is
more likely to need
to do more research
before they use their
investors’ dollars to
buy a company.
In the previously mentioned example,
transaction advisory professionals
performed a fair market valuation
that took into account research they
performed on past transactions
within the industry. After that, tax
professionals performed a state
sales tax exposure analysis and
helped the owner calculate the net
cash proceeds he could expect
based on his current and future tax
positions.
3. Recruit the right team
An investment banker, a transaction
advisor and a transaction attorney all
have critical roles to play in an exit
transaction.
In this case, transaction advisory
professionals provided a referral to
three reputable transaction attorneys