Selling a company or raising institutional capital is definitely a team sport. It requires specific knowledge, skills and experience along with the ability to adapt to change and handle stress. Your deal dream team won't come together overnight, so before you plan to transact, you'll need to hire or develop your internal leadership team and build relationships with external partners.
The Internal Team
As an owner and ultimate decision maker of the company's future, you may be hesitant to discuss your plans with your management team, possibly out of fear they will leave rather than deal with the uncertainty and extra work involved.
In our experience, the bigger mistake owners make is not being transparent with their key officers and managers, which creates greater stress and uncertainty. Schedule a time when everyone can hear the news together. Be clear about the strategic reasons for the sale or raise and the important role they play in ensuring a positive outcome. Have a plan for regular communications and discussions about preparing for the transaction.
Ideally, your company should already be a well-oiled machine that can operate without your day-to-day involvement. If not, begin with a list of the activities you do and how you can delegate them. Be sure to consider how this extra workload will affect your officers and managers. They also may need to delegate more work to their teams. You may discover you don't have all the right people in the right seats. Work with your HR director or an outside search firm to hire where you need to add bench strength.
Keep in mind you may have some dedicated, long-term managers who don't have the skills needed for the deal process. You may want to outsource those activities — for example, hire a public relations firm experienced in deal communications. Then task those dedicated managers with the critical job of keeping the company operating optimally and growing to drive valuation higher.
If you find yourself hiring for key positions, be sure to allow newcomers time to mesh with the rest of the management team. Buyers will be looking for a management team that works well together and can operate without your direction on day-to-day operations and decisions.
The External Team
Like the internal deal team, your external team of advisors should be assembled well before you plan to start looking for a buyer. This allows you to meet with multiple candidates, take your time selecting the best fit and building strong relationships and communication.
Your investment banking team will be your key advisor during the transaction process. They can provide insight on areas of the company that may need to be addressed or strengthened prior to discussions with potential buyers. They can establish an initial value range, market your company to prospective buyers and guide you through the complexities of structuring the deal. They will also have relationships with other professionals you need on the team, such as attorneys, accountants, financial planners and insurance agents.
Most likely you already have relationships with professionals in these areas. For attorneys and accountants in particular, you need deep experience specifically in mergers and acquisitions and/or corporate finance. Your deal attorney will be responsible for reviewing the definitive agreements and negotiating with the funder's legal team on the details. If the funder is counting on your internal management team to remain and run the business, you will also need an attorney who specializes in employment to draft appropriate retention contracts and incentive agreements.
Your deal accountant needs knowledge specific to the tax implications of deal structures. You may want a qualified CPA firm to prepare a pre-marketing quality of earnings report prior to interviewing buyers or funders.. This preparation can expedite the due diligence process and limit re-trading risk on the purchase price.
Your current personal financial advisor will be an ancillary part of the team, helping you determine the most effective and tax-aware use of proceeds from the sale and how that will work for your personal financial plan. This person can work with the deal accountant and other team members to ensure asset and tax structuring are optimized.
When it comes to preparing a company for sale or institutional capital raise and going through the deal and transition processes, human capital is as important as financial capital. Investing early in developing a strong internal team and taking time to build external personal relationships will help ensure you get the highest return on your equity in the company and fewer sleepless nights.
Principles of Bridgepoint Investment Banking have quarterbacked over 100 successful transactions totaling well over $100 billion of total proceeds.Even if your plans to sell all or part of your company or raise money seem like they’re in the distant future, our experienced team can help you start today creating your internal and external dream team. It's never too early to call us to schedule an initial discussion.