Potential Negative Impact On The Sale of Your Business - Article #2

Article #2 - "Re-traded" Transactions

You’ve taken steps?to make your business as attractive as possible to potential suitors. Your operating margins are solid, your attrition is below industry standard, you have iron clad contracts and your revenue has increased year after year. And, you have signed a Letter of Intent from what appears to be the perfect buyer. Then due diligence begins.

During the buyer’s due diligence review of your company, they find elements of the business that are not to their liking. Some examples are: contracts that do not automatically renew or have necessary terms/language crossed out (non-qualified RMR), types of RMR that do not meet the buyers standards (priced too low or too high for services rendered), too much concentration in one or a few large accounts. The list can go on and on but the end result is that?the buyer changes the terms of the transaction?thereby leaving you to decide if you want to move forward with the?re-traded (lower price)?sale.

No one ever wants to see this happen! You can avoid this by first?doing your own due diligence. Identify what could be unusual and disclose as many of these unique traits of your business to your broker before you go on the market. At Davis Mergers & Acquisitions Group, our goal is to represent your business in the best light possible and to help eliminate “re-traded” transactions while getting you the best offer.

Contact me today to learn more about what your business is worth and how to avoid the Gotchas. [email protected].