They say not to judge a book by its cover. Well, when it comes to M&A, the truth is that buyers often make snap judgments based on a business’ executive summary.
Why is an executive summary essential for finding the right buyer, and what goes into crafting an effective one? At Symmetrical, our team works with sellers to create strong executive summaries for businesses in a wide range of sectors. Read on to find out more about what goes into an executive summary and how this can lay the groundwork for the successful sale of your business.
Why an Executive Summary Matters
Think of an executive summary like a cover letter in a job application, or the pilot episode of a TV series: This represents your first impression, and the goal here is to grab a buyer’s attention and get them wanting more.
This is important for a number of reasons. First, buyers looking to make a strategic acquisition usually consider a number of different companies. A strong executive summary can help your business stand out among the fray.
Even more importantly, an executive summary is a way for a seller to capture the attention of buyers, which will most likely lead to a successful deal. One of the key elements of any good M&A transaction is the connection between the buyer and seller. The executive summary is the first test of this connection and can be designed to appeal to buyers that will fit well with your existing business.
Four Key Questions: Who, What, Why, and How?
Any good executive summary should answer four key questions: Who, What, Why, and How?
–What is your business?’
–Who are you as a business? (This can be both a philosophical question about your company values and a practical one about your employees and leadership)
–Why are you going to market now?
–How will you benefit the buyer?
Keep in mind it’s not enough to just answer these questions. It’s how you answer them. Attention spans are short, and you should strive to make your executive summary a compelling read. Brevity is your friend. This isn’t the place to dwell on the nuances of your corporate history. Those details can come later.
Think From the Buyer’s Perspective
What is a buyer trying to accomplish?
Most of all: adding value. This is why any executive statement should contain a value statement — a section that explains your company’s place in the market, its strategic importance, and what it can offer to a buyer. This value statement is arguably the most important component of the entire executive statement and typically appears at the top of the document.
Interested in Taking the Next Step?
At Symmetrical, we understand that the best deals are the ones with a seamless match between seller and buyer. And an executive summary represents the first step toward attracting the right buyer. Our team will work with you to learn your business, and then design an executive summary that achieves your goals. To learn more about how we can help kickstart the M&A process, get in touch with us today.
The decision to sell your business isn’t just a transaction; it’s also a complicated legal equation. From navigating NDAs to performing due diligence to determining the structure of a deal, a solid legal strategy is the foundation upon which a successful M&A transaction rests. At Symmetrical, we know how to help business owners navigate the legal terrain of M&A. Here are a few key legal considerations to consider when advancing toward a sale.
Non-Disclosure Agreements
Negotiating a sale with a buyer is always delicate. The risk of leaks can jeopardize the entire process, and sometimes a deal simply doesn’t make it over the finish line. An NDA can help provide peace of mind during a negotiation, ensuring that your business’ financials and intellectual property won’t spread beyond the confines of the deal room. This is an essential component of any merger and one we highly recommend.
Due Diligence
Due diligence might sound more like a financial consideration than a legal one. However, customer contracts, leases, employment agreements, and other agreements may contain provisions that are triggered by certain transactions, making a thorough legal analysis essential for many deals. In addition, depending on your type of business, it may be wise to look at your intellectual property and patents to determine how they fit into an M&A deal.
Deal Structure
The structure of a deal is one of the most important parts of any negotiation. As with due diligence, it’s also something of an underrated legal calculation. Many sales, for instance, will have complex tax implications and/or require shareholder approvals, both of which are legal questions that ought to be accounted for during the negotiation. Other legal frameworks that may be part of a transaction include representations and warranties (a way of ensuring that the information shared by both parties of the deal is accurate) and non-competes (a clause that’s frequently requested by buyers who are looking to ensure the seller doesn’t go and start a competitor).
The Importance of Early Legal Planning
At Symmetrical, we know how difficult it can be to find the right M&A transaction. That’s why it’s essential to think about the legal components of a sale early in the process — so that there are few surprises when it comes time to close the deal. To learn more about how Symmetrical can help you navigate these legal considerations, get in touch with us today. We’ll make sure you leave no stone unturned during your M&A journey.
Any time you make a big purchase, you likely perform some kind of due diligence ahead of time, whether it’s a home inspection or something as simple as checking reviews before making your anniversary dinner reservation. The due diligence process, in other words, is usually thought of as the responsibility of the person making the purchase.
Sellers should also be proactively engaging in due diligence. One way our team at Symmetrical helps sellers accomplish this is by helping prepare their financial records, which can be a powerful way to attract potential buyers. Here’s what you need to know about the seller-side due diligence process.
Why Due Diligence?
Buyers looking to acquire another business inevitably perform due diligence, but proactively jumpstarting the process as a seller offers multiple advantages.
For one thing, it can show prospective buyers that your business is taking the process seriously and is invested in getting a deal done. By doing a thorough look under the hood of your business, you’ll be better equipped to answer any questions a buyer might have and to propose solutions to any potential problems a buyer might want addressed. In addition, you’ll gain a better sense of your company’s growth potential and competitive advantages, which will be a big help at the negotiating table.
What Due Diligence Entails for Sellers
One way to think of due diligence from the seller’s side is to gain an understanding of your company’s value. The main way to accomplish this is through a Quality of Earnings analysis. This analysis can include a range of metrics but typically focuses on EBITDA — earnings before interest, taxes, depreciation, and amortization. In some cases, we find that sellers actually underestimate their company’s value, and it’s only until the Quality of Earnings analysis that sellers realize the proper valuation of their company.
Other Types of Due Diligence
While an internal financial analysis is the most common type of due diligence for sellers, it’s far from the only kind of due diligence you can perform in advance of a sale. Sellers can also compile reports on the legal implications of a sale or produce analyses of the market and synergies that would be gained through a sale. These reports can be useful to you as a seller by giving you a better understanding of the value of your business in ways that aren’t necessarily captured by the bottom line.
At Symmetrical, we’ve seen firsthand how sellers who perform due diligence in advance of a sale often end up with the best deals. In M&A, trust and transparency are essential, so an engaged seller who begins the due diligence process in advance is often considered a major asset among buyers. Get in touch with us today to see how we can jumpstart your due diligence process and make the sale of your business a success.
Deciding to sell your business is one of the hardest decisions you’ll ever make. The second hardest might be picking the right M&A firm to help you through the process.
How do you differentiate between the various M&A firms and their promises? What questions should you be asking of firms? How do you ensure the right fit?
At Symmetrical, we’ve been on the receiving end of these questions more than a few times, and we have a pretty good sense of what businesses are looking for when they’re about to embark on a transaction. Read on to hear our perspective on how to find the best M&A firm for your business.
Consider Industry Experience
Mergers and acquisitions are all about relationships. The relationship between the buyer and seller is critically important, but don’t forget to consider the relationships your M&A firm has as well. An M&A firm that works with specific industries or specific kinds of businesses will not only have valuable experience in handling the type of transaction that’s relevant to your business, but they’ll also have considerable knowledge of all the players in the corporate landscape. This can be an extremely valuable asset when it comes time to search for prospective buyers.
Focus on Corporate Philosophy
Just as you’d seek a seller that aligns with your corporate identity, approach your conversations with potential M&A firms with the same key question: Are we a good fit?
Of course, that can be a tough question to answer directly, which is why it’s important to ask as many questions as possible to try to get to know the M&A firms you’re meeting with. How do they find prospective buyers? How do they ensure corporate synergy between the two parties in a deal? How do they handle common pitfalls during a deal? Are they after the first deal or the best deal?
The more questions you ask, the better sense you’ll have of a firm’s corporate philosophy. Just remember: It’s all about fit.
Other Important Questions to Ask
The questions you ask an M&A firm may depend on the specifics of your business, but from our side of things, there are a few general questions we always like being asked:
– What strategies do you use to come to an accurate valuation?
– What steps do you take to ensure privacy during negotiations?
– How many deals do you typically do in a year?
– How many team members from your firm can I expect to work with us on the deal?
– Are you open to providing referrals?
Now … Any Questions for Us?
At Symmetrical, we believe finding the right corporate fit between buyers and sellers is essential. You should feel the same way when selecting an M&A firm to help you with your transaction. If you can’t already tell, we’re happy to answer any questions you might have about the transaction process. What are you waiting for? Get in touch with us today to start a discussion.
What makes a successful transaction? As the seller, it’s easy to focus most of your time on finding the right buyer — ensuring they share your company’s culture and long-term vision.
In this post, we’d like to shift the perspective a bit and think about what makes a transaction desirable from the buyer’s side. One of the key elements a buyer looks for in a sale is a strong management team.
Why Strong Management Is Important to Buyers
For a buyer, an experienced, proven management team is one of the best traits a company can have. From the buyer’s perspective, strong management is essential for integrating a new company into the existing corporate framework. After all, these are the people who will become leadership figures in the post-transaction landscape, and the buyer needs to have confidence that these managers can be successful working for them.
A company with a strong, dominant CEO and weaker management, on the other hand, is usually not nearly as valuable to a buyer. Once a transaction is complete, that CEO might be out of the picture entirely. No one wants to buy a top-heavy structure with a weak foundation.
An effective management team can even help enhance the company’s sale value as long as the seller understands a good management team for what it is: a valuable asset.
How to Build Strong Management in Your Business
One of the keys to a successful transaction as a business owner is keeping your leadership team involved throughout the process to ensure buy-in. Building a strong management team is no different: It requires engaging your team early on and trusting them to work on your behalf.
It’s important to remember that building a strong management team is a process that takes time. If you haven’t built and invested in your leadership team over the years, when the moment of a sale arrives, it will be too late.
Our team at Symmetrical has helped numerous business owners navigate a sale, and we have a deep understanding of the company assets that appeal to buyers. Whether you’re a business owner thinking about a potential sale years down the line and are looking to build the management team that helps you accomplish that goal, or whether you need guidance on how to integrate your existing management team into a sale, we can help. Get in touch with us today to discuss the specifics of your business and your long-term goals.
Change is never easy. For business owners, the question of how to begin an ownership transition can often prompt tough questions and sleepless nights. Who should take over? How do we keep the business on firm footing in the future?
A management buyout could be the answer to these questions. At Symmetrical, we’ve helped facilitate numerous smooth transitions between a business owner and their management team by creating a seamless M&A process. Here’s what you need to know about management buyouts.
Sell to Someone You Know
A management buyout is not unlike a standard transaction, with one key difference: Instead of selling to an outside company, you’re selling to existing management.
Frequently, a major part of the M&A process involves finding the right buyer, vetting, and making sure the two sides of the transaction share similar company values, business philosophy, and future plans. With a management buyout, this process — while still important — becomes a whole lot easier. Why? Because you already know your managers better than any outsider.
Gain Liquidity and Maintain Involvement
For an owner, a management buyout offers an opportunity to gain liquidity from your business. At the same time, a management buyout is often a great “exit strategy” because it can allow for a slow transition over time. Managers who purchase a company often value the owner’s insight, so it’s common for the owner to stay involved as an advisor. Contrast that with standard transactions, where there’s no guarantee a buyer will want to keep the old guard involved in the company.
Different Structures for Different Goals
Managed buyouts can take a number of different structures, whether it’s a leveraged buyout (where the managers use their savings or take on debt to complete the transaction) or a phased buyout (management receives chunks of equity over time). In addition, there’s a “management buy-in,” in which an external management team takes over the business.
Each type of management buyout has its own pros and cons, depending on what you’re looking to achieve as a business owner. Our team at Symmetrical can work with you to help facilitate the type of sale that best meets your personal goals, as well as those of the business. Get in touch with us today to learn more about management buyouts and how we can help.
Selling a business is never an easy decision — not after all the sweat and tears you’ve poured into your company to ensure its success. It’s normal to feel conflicting emotions when you start the process of a sale.
At Symmetrical, we’ve helped numerous business owners sell their business, and while we certainly offer guidance on the Xs and Os of an acquisition, we’re also here to help provide emotional support as you make your way through the sale process.
Embrace the Emotions
A business owner who doesn’t feel stressed or conflicted about selling their business is a very rare thing. For many people, their business becomes one of the most important parts of their lives, so it’s understandable if you’re feeling a range of emotions once you’re on the precipice of a sale.
Instead of trying to fight these feelings, we believe it’s best to embrace them. Sometimes, your emotions can actually help make the sale more successful. For instance, if you’re feeling worried about a particular aspect of the deal — for example, how your former employees will be integrated into the new business — it may be a sign that there’s more planning to be done. Addressing concerns with the buyer can simultaneously put you at ease while improving the overall deal.
Navigating Your Legacy
In our experience working with business owners, one of the most common sources of anxiety is related to legacy. This isn’t an egotistical kind of legacy but rather a desire to ensure that the business you’ve built continues to live on in the future. The best way of minimizing this anxiety is to find the right buyer, which is an area where our team at Symmetrical excels.
Finding the right buyer goes beyond business synergies. Instead, here are a few questions to consider discussing with a prospective buyer:
- What is your long-term vision for the business?
- What does your corporate culture look like?
- What are your plans for integrating the business’ employees after the sale?
Shared culture is an essential element of success in any M&A deal. By finding a buyer that shares your overall philosophy, you’re helping to maintain your business’ legacy.
Once you decide to go down the path of selling a business, you should expect to feel a range of emotions. Our team at Symmetrical has helped countless business owners achieve successful sales, which means we’re well aware of the emotional coaster that is the M&A process. Don’t take the ride alone; get in touch with us today to learn how our team can help you sell your business — and give you the emotional support that you need throughout the process.
Allow us to let you in on a little secret: Confidentiality is an essential part of the M&A process. Why? Especially for middle-market companies, the hunt for a potential buyer can take time and lots of vetting. And vetting requires letting prospective buyers — and all the people involved in a transaction, from accountants to lawyers and beyond — under the hood of your business. Ensuring confidentiality through non-disclosure agreements can not only help a transaction go through but also serve as protection in the event a deal isn’t completed. At Symmetrical, we’ve helped countless business owners navigate the sale of their business while protecting their critical confidential information. Here are four factors to keep in mind when it comes to confidentiality and your transaction.
Design an NDA for Your Specific Needs
Some companies in an M&A process will propose a boilerplate NDA. This is rarely a good idea. Each business is unique, with particular confidentiality needs. A boilerplate NDA may not cover the specific elements of your business that need to be protected. A dedicated NDA, however, can avoid any confusion or future disagreements over what was subject to the agreement.
Protect Key Information
As a business owner, you would never usually share your trade secrets or client lists with a competitor. However, until a deal is finalized, your business still has a responsibility to maintain its competitive advantage. The first interested buyer may not be the one who ultimately closes the deal. An NDA can ensure that your company’s valuable data and strategy remain protected, whether the deal goes through or not.
Ensure Future Flexibility
In some cases, a business owner may decide to sell only a portion of their business. In this scenario, an NDA is your friend. It enables you to open up your books and strategies enough to give a buyer confidence but also protects your proprietary information and sets you up for further success in the future after the transaction is completed.
Remember Your Own House
A transaction is very delicate, especially at the beginning of the process, when very few people inside the business know that an acquisition could be forthcoming. If news of the discussions were to leak, it could both hurt employee morale and jeopardize the relationship with the buyer. Consider limiting those involved with the deal to senior leadership at the beginning of the process and include them in an NDA as well, ensuring that no leaks come from inside your own house.
Mergers and acquisitions are complicated enough transactions as they are. The prospect of leaks or losing key company data in the event of a failed transaction is why confidentiality and NDAs are so important. Our team at Symmetrical has experience working with sellers to ensure that their assets are protected and that a sale ends up successful. Get in touch with us today to learn more about how our team can assist with devising a strategy for confidentiality.
How long can a family business thrive? If you believe an old piece of conventional wisdom, it’s not past the third generation.
That saying comes from a study that found 70 percent of family businesses will either fail or be sold off by the second generation, while only 10 percent will make it to a third generation.
While some analysts now dispute those findings, they do capture something fundamental about running a family-owned business: difficult to achieve prolonged success, and the decision of whether to sell or pass along the business to the next generation can be fraught.
At Symmetrical, we regularly consult with business owners who are thinking about selling their family business and help them come to a decision that’s best for them. Here are some of the pros and cons of selling a family-owned business.
Pros: Resources, Longevity, Succession
There are plenty of benefits to selling your family-owned business. A sale to the right company can provide your business with greater resources, helping it grow in a way that might not have been possible had it stayed within the family. A sale often leads to more security and longevity, ensuring that the company you’ve spent your life building remains in good hands for years to come.
While selling a family-owned business is undoubtedly a big change, it’s also worth remembering that a sale doesn’t necessarily mean your family gets removed from the business entirely. Many buyers actually value keeping family members involved after a sale, tapping them for their expertise.
Another underrated benefit to selling the business is that it can eliminate any thorny conflicts within your family over who will take the reins of the business. Save the Succession-style conflict for the TV!
Cons: Loss of Control, Culture Change
One of the greatest advantages of owning a family business is the freedom to make your own decisions. Frequently, it takes time for business owners to feel comfortable giving up control.
Similarly, selling a family-owned business can produce legitimate concerns about disrupting the company culture.
While these are both valid fears, it’s worth mentioning that they aren’t necessarily reasons not to sell. With the right planning and by ensuring the buyer is a good fit, you can feel confident that the new owners will share your business philosophy and retain the key components of the corporate culture that made your business a success. That’s why picking the right partner is the single most important factor for the success of any merger or acquisition.
There’s no denying that selling a family-owned business constitutes a major change: for your family, your employees, and the future of the business. Our team at Symmetrical has years of experience navigating the sale of family-owned businesses, and we can help you make the right choice. Get in touch with us today to learn more about how we can offer guidance and ensure that, if you do choose to sell, the transaction will be a long-term success.
The mergers and acquisitions process is typically a painstaking endeavor — and for good reason! If two companies are going to merge, they better know everything there is to know about each other.
Historically, that “getting to know each other” routine has involved huge amounts of time-consuming labor: sifting through paperwork, performing due diligence, determining company valuations, and more. In recent years, however, new technologies have helped streamline that process — all without sacrificing detail or quality. At Symmetrical, our team is well-versed in the latest digital tools to help make the M&A process successful. Here are some ways technology is changing M&A.
Targeting Acquisition Candidates
The rise of technology in M&A doesn’t just help during the acquisition process; it can also help business owners determine which companies are potential acquisition candidates. This can be a valuable prospecting tool for a business owner looking to sell, helping jumpstart acquisition conversations with other businesses.
New, Efficient Data Analytics
A new suite of analytics tools has helped make M&A much more efficient. These tools can analyze company data, helping business owners better understand the internal dynamics of the companies they’re partnering with. These data analytics tools can also survey company data and market trends to produce company valuations.
Faster Due Diligence
The rise of AI tools has also helped companies speed up the due diligence process — one of the most important components of any M&A agreement. AI can provide a baseline analysis of risk assessment and financial information, producing high-level takeaways for executives to analyze themselves.
Improved Collaboration
Gone are the days of a physical data room, where all important business documents are stored and reviewed by company leadership. Instead, much of the documentation for M&A can take place in virtual data rooms — secure document storage hubs in the cloud — where relevant parties can review all important documents at their convenience.
Post-Acquisition Integration
As any business owner who’s been through M&A knows, the process doesn’t end when a purchase agreement is signed. Any acquisition needs to account for integrating the target — whether it’s through changing workflow processes or adapting new workplace tools. This can prove especially challenging in our digital era, where transitioning from one software to another is often fraught and convoluted. The good news for executives is that there are a number of tools designed explicitly to help with technological integration during acquisitions.
At Symmetrical, we work with business owners throughout every step of the M&A process, ensuring they are using all of the latest tools to their benefit. Connect with us to learn how we’re deploying technology to make the M&A process that much smoother.