CEOs who have sold a business before rarely debate the value of engaging an investment banker the second time around. Many try to fly solo on their first company capital raise or sale and end up learning important lessons about the value of turning to a professional when executing transformational deals for their largest asset. Here's what CEOs and CFOs have told us about the value of working with an investment banker.
There's a right way to assemble the data.
Most CEOs think they know the business so well that putting together a confidential information presentation will be a breeze. In reality, the presentation is the collateral for selling your business, whether it’s an M&A deal or a Bridgepoint capital raise. Buyers expect it to contain specific information: description of the business, history, operations, marketing and sales, technology and financial data.
An investment banker knows what information is needed at each stage of the deal and how to position that information to attract potential buyers and to limit the risk of a broken process, driving momentum and options. \
Doing a deal is very time consuming.
Preparation of the CIM and financial forecast alone can take 30 to 60 days — and that's just for an experienced investment banking team who's done it before. As Bill Snow, author of Venture Capital 101 points out, selling a business is a full-time job — and CEOs have already been tasked with running their own business. Ask yourself if you have time for:
- running financial models
- analyzing transaction structures
- screening buyers (knowing which ones are real/what LOIs mean)
- comparing offers
- building an online data room for your due diligence disclosures
When you go solo on your deal, one of three things can happen:
- you never get around to the work required for selling the business.
- you divert so much time to selling the business, you put the business on autopilot, creating a risk for revenues and valuations.
- the LOI you thought was a deal really didn't mean much.
The devil is in the details.
Getting your company ready to sell or raise capital requires some preemptive housekeeping. There are lots of small tasks to be done, like locating your stock certificates and organizing verifiable business records. Bridgepoint Investment Banking has a proven process that ensures nothing gets overlooked. Bridgepoint capital staff will have checklists and can help your internal team assemble what's needed well before it's established. We even provide a daily and/or weekly update on what we're doing and how the deal is progressing, all while letting you run your company.
It's all about connections.
After decades of running a company, most owners have a large network of professional contacts. When it's time to sell or raise capital, however, most either don't want to tap into that network for confidentiality reasons or find their network doesn't include the right kind of connections for assembling a deal.
Bridgepoint has built multiple strong relationships with varying sources of capital, making it easier for them to put together different options to meet your goals. Often these options are ones you likely didn’t know existed before.
Having a buffer makes the negotiating (and working together after the deal) easier.
Some CEOs like to wheel and deal, but most have never done so with their life's work at stake. Selling a company or raising institutional capital is a bumpy ride, fraught with frustrations, disagreements and misunderstandings.
As Snow says, “A buyer is going to ask questions, poke and prod and criticize your decisions and results. You need someone who is objective and not wrapped up in the emotional details of your company — an arm's length from your business, in other words — to handle the delicate process of selling or raising real dollars.”
There's no substitute for experience.
Most business owners sell one or maybe two businesses in their lifetime. Investment bankers help sell companies every day. It's what we do. We specialize in first-time issuer deals with founders, families and management teams.
We serve as your advisor to ensure you enter the transaction process well-prepared and well-informed. We're your accountability partner to ensure the process doesn't stall because you're trying to run the business and get an intensive deal done at the same time.
Bridgepoint's team of seasoned investment bankers bring deep experience across an array of business types. Discovery conversations are complimentary and confidential. If you’re considering capital raise or sale in the next few years, give us a call.