We have covered many topics in the over two years since we started publishing Deal Notes®. Because of its significance, we thought it would be wise to reiterate a topic we covered in Deal Note® 27 (August 2, 2022), addressing how to receive the best price for your mid-market aerospace and defense company when you decide to sell.
Once you have made the decision to sell, there are two keys to maximizing the price that you will receive:
- Retain a seasoned team of M&A professionals to manage the sale process. Key team members are the M&A Banker who will lead the sale process, a seasoned M&A attorney, and an accounting firm to defend your numbers, manage tax issues, and assist in other critical areas such as working capital true ups.
- Your M&A professionals will perform early rigorous due diligence of your company to verify every significant aspect of your company including financials, legal matters, operations, quality performance, cybersecurity preparation, human resources, environmental, etc. This early due diligence will be done so that when the sale process advances, the data that is disclosed in the Confidential Information Memorandum (CIM) reflects accurately every aspect of your company. When a CIM is prepared optimally, it will disclose all the positive as well as potential areas of concern of the company and how they impact (and don’t impact) your future cash flows. The objective is to ensure that your potential buyer does not discover something later in the detailed due diligence phase, that it can use to lower the price.
Hiring qualified M&A professionals and enabling them to perform the necessary early due diligence takes time and is costly (historically 3.8% of a company’s value) but we have found over the past 23 years that this investment is recovered many times over and results in a substantially higher net price for your company.
Have a great day everyone,
Bruce Andrews
Partner
