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The key buzzword in the M&A sphere is exit planning. Typically, the earlier and better the pre-M&A cleanup, the smoother the ultimate sale.

Filling the exit planning or strategy role are numerous species of consultants, many of whom are accomplished at preparing the seller for success. As the investment banker, we like to play a role in the initial planning, and select the needed advisors. Thus, our selection as the banker can occur as early as one to two years ahead of beginning the exit process.

Every trusted advisor/professional service provider believes he can play some role in the exit planning. In some cases, that is true. The seller needs to carefully consider the following, at a minimum;

1. Insurance Risks – coverage for property, cyber security, EPLI, etc.

2. Labor Exigencies – pension plans, state and local compliances, employment agreements, ERISA issues, et al.

3. IP identify the IP, ensure clear title; patents pending; infringement issues; etc.

4. Capitalization Table – warrants/conversion provisions; senior debt covenants; preferred share preferences; et al.

5. Accounting Issues – quality of earnings; tax deficiencies or open audits; internal controls and systems; EBITDA adjustments; etc.

6. Tax Planning – minimizing tax impact; gifting or charitable contribution before sale; personal goodwill, et al.

7. Internal Controls – finance and account; business operations; supply side chain, etc.

8. Assets – real estate owned; surplus cash or property; leases in force, et al.

9. Estate of Owner(s) – whether to gift prior to or after the sale; how to minimize the income taxes; consider an instalment sale, etc.

10. Management Team – sharing the payout; retention of equity; employment beyond the sale, et al.