Recently, Axial, an online leader in the M&A industry, produced an interesting article on some of the pitfalls that often arise during due diligence. These pitfalls could singly scuttle any deal structure, and if they all occur (which happens more often than you may think), you can bet that the deal will not close or the time it takes to close will expand dramatically.
All points that were made in the article were certainly valid and useful, but one really stood out:
Now at first glance, you might think, “Well of course you are not going to leave money on the table. Who would do that when selling his or her business?” The reality is, without professional representation, it happens frequently.
Because even though you are most likely an expert in running and operating your company, you probably will sell only one business during your professional career. Because of this, and since you will be dealing with professional buyers who buy and sell dozens annually, you will be at a distinct disadvantage. This is how Mitchell S. Roth, Managing Director with the law firm Much Shelist and the author of the Axial piece put it:
This sound advice reminded me of a conversation I had a few years ago with Brad Whitlock, an attorney with Scheef & Stone, who has worked with Generational Equity dealmakers on more than a dozen deals. He echoed closely the comments of Mr. Roth.
Some of the key points Mr. Whitlock makes in this interview include:
Can you find a buyer and close a deal for your business without professional guidance? Sure, you can; it happens every day and, for many smaller companies, it may make sense to go that route. However, if you want to maximize the return on the investment you have made in your company throughout the years, having a team to help, guide, and ultimately protect you, not only during due diligence, but also in closing the transaction, is vital.
The fact is professional buyers are simply not going to look out for your best interests no matter how much you may like the ones you are dealing with. Rightfully so, they are going to protect the capital given to them to make multiple acquisitions and generate the largest ROI they can for their investors and/or shareholders. You need to be aware of this and realize that they will certainly assemble a team to help them defend and protect their interests at all costs.
To level the playing field, as both Mr. Roth and Mr. Whitlock so eloquently have described, assemble a team to navigate the minefield that due diligence can often become. Odds are good if you hire folks with extensive experience, teams that have worked on dozens and dozens of transactions like the deal teams at Generational Equity, you will have a much smoother transaction and a quicker timeframe to close your deal.
Time and space do not allow me to expand further on this key topic. If you are interested in learning more about due diligence and the entire exit planning process, you should set aside a few hours of your time to attend a Generational Equity executive M&A conference. These are complimentary and designed to educate business owners on the intricate yet manageable steps involved in closing a deal with an optimal buyer.
If you would like to learn more about them, or even register to attend one, please use the following links:
And remember, optimal deal structures require optimal teams. Build one and you will most likely be satisfied with the results.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2017 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 2 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.