Sell Side Due Diligence
Before an offer is ever agreed to, it is critical for each seller to think like a buyer or investor, and prepare adequately for the rigors of due diligence. Investing in pre-deal due diligence provides the basis for a smooth transition and avoidable questions later on.
Such preparation must first include the gathering of all key information to establish the fair market value of the business by a third party, accredited valuation firm. It also requires the composition of a detailed Confidential Memorandum and an MIS system operating at peak performance to readily provide requested financial information to a buyer.
Within our firm’s well established processes, our team performs such preparation at the seller’s location without interference by employees or third parties.
ANA will gather all key information with the business owner and evaluate the company’s documentation and auditing standards. ANA will provide insights into efficiently maintaining reporting systems. We use templates, tools and knowledge based on 20 years of mergers and acquisitions experience.
ANA will document the organizational structure and technical skill sets of the team and provide an organizational chart. We will compare such structure with previous engagements and recommend hires, changes to the reporting structure, and outsourcing as appropriate.
ANA evaluates the operational aspects of the company that insure continued top performance and will make recommendations regarding the marketability of the company to potential investors. This will particularly relate to potential customer or vendor concentrations that could conceivably drive the enterprise value down.
ANA performs financial recasting, compares key metrics against industry standards and will make recommendations for adjustments to exceed the performance of peers in the industry. The recasting focuses on such discretionary items as the seller’s personal expenses paid by the business and extraordinary events like a hurricane, or other one-time expenses
Our process involves more than just a typical due diligence check list. Within a detailed two hour, in-person seller interview and an extensive financial review, it goes far beyond. It ensures a review of all factors in the business relevant to each area assessed.
Moreover, ANA will typically sit on the seller’s side of the table in each and every meeting, interpreting complex due diligence questions to make them understandable to a business owner.