Planning for an exit via the sale of your company can be simple or complex, depending on the condition of the company.  Prior to entering into an exclusive engagement to sell the company, we perform an overall assessment of the strengths and weaknesses of the business. The ultimate outcome is to maximize enterprise value and seller friendly deal terms, as well as establish clear objectives for a potential sale, including the needs and desires of the seller(s). The optimum exit is based upon the sale preparation, even more so than negotiation. 

Our role in Exit Planning can involve the following: 

• Business Valuation:
  • Perform a thorough business valuation
  • Potential improvements from additional revenue streams
  • Operating efficiencies
  • Product/service gross and profit margins
  • Stronger customer relations
  • Valuable IP not on the Balance Sheet
• Capitalization: Ensure that the capitalization table is updated, and outstanding options and warrants are clearly defined. Any stock purchase agreements should also be noted.
• Coordinate Professionals: Coordinate the various professionals, such as attorneys, accountants, financial advisors, consultants, etc., who should participate and how.
• Customers and Vendors: Evaluate the agreements with these parties. In addition, to avoid the appearance of customer concentration issues if present, provide the rationale for valuable customer relationships, as well as special vendor pricing and terms.
• Due Diligence: Organize and advise a comprehensive due diligence program and data room for third parties.
• EBITDA Adjustments: Perform adjustments to the trailing 12-month financials. These may include eliminating extraordinary (one-time) revenues or expenses. Also, supporting add-backs to establish the proper EBITDA by removing non-business expenses from the P&L Statement.
• Human Resources (Employees and Management): Coordinate with the appropriate professional to provide, if necessary, a comprehensive review and benchmarking report that covers employment agreements, compensation and benefit plans, workers’ compensation coverage, unemployment tax obligations, and compliance with applicable employment laws. In addition, we review clear delineations of roles within an organization chart.
• Financial Preparation: Analyze prior and current financial statements for inconsistencies or issues.
• Insurance: Ensure that all types of insurance coverage are reviewed and in place, such as property and casualty, general/product liability, D&O, Key man, cybersecurity, etc.
• Legal and Regulatory Compliance: Recommend the appropriate professionals needed to analyze legal and regulatory issues.
• Market Comparables: Analyze market sales of comparable companies to ascertain a reasonable multiple range to apply against adjusted EBITDA.
• Negotiation Strategy: Develop a negotiation strategy to achieve favorable terms in the Purchase and Sale Agreement. Consider factors such as price, payment structure, employee retention, intellectual property rights, and post-sale involvement.
• Operational Efficiencies: Analyze for improvement the overall operations of the business, cost and margin drivers, best practices, workflows, manufacturing processes (if applicable), supply chain management, KPIs for customer retention and services, IT infrastructure, and cybersecurity, etc.
• Real Estate: Any lease agreement(s) should be current and assumable. If property is rented from the owner(s), market rent should be determined. Conversely, determine if the property will be included in the sale.
• Tax Planning: Work with tax advisors to optimize the tax implications of the sale. Explore strategies to structure the deal to minimize taxes, such as stock contributions to a CRT (Charitable Remainder Trust).
• Wealth Management and Estate Planning: Engage a wealth advisor early on, prior to marketing a sale of the company, primarily to minimize taxes and ensure financial security post close.
• Working Capital: Analyze the appropriate working capital for the business.