{"id":35707,"date":"2019-08-15T10:26:10","date_gmt":"2019-08-15T17:26:10","guid":{"rendered":"https:\/\/www.enxmag.com\/twii\/?p=35707"},"modified":"2019-08-15T10:26:13","modified_gmt":"2019-08-15T17:26:13","slug":"thinking-of-selling-some-words-of-wisdom-from-leading-ma-players","status":"publish","type":"post","link":"http:\/\/www.enxmag.com\/twii\/feature-articles\/2019\/08\/thinking-of-selling-some-words-of-wisdom-from-leading-ma-players\/","title":{"rendered":"Thinking of Selling? Some Words of Wisdom from Leading M&A Players"},"content":{"rendered":"\n

There\u2019s a wealth of information to be had for dealers who\nare considering selling a business they may have spent a lifetime developing.\nIt\u2019s not an easy call by any stretch, which is why consultants and lawyers\noften enter the picture at some juncture. <\/p>\n\n\n\n

But we have some free advice for sellers to consider. Take\nit for what it\u2019s worth, and be mindful that it only scratches the surface of a\nmultifaceted process.<\/p>\n\n\n\n

\"\"
Jim Sheffield, UBEO<\/figcaption><\/figure><\/div>\n\n\n\n

Jim Sheffield, president and CEO of UBEO Business Services,\nreminds sellers to keep everything business as usual throughout the entire\nprocess. \u201cDon\u2019t take your eye off the ball, run your business through the\ntransaction,\u201d he said. \u201cDon\u2019t get distracted to the point where your business\nfalls off at the end. It\u2019s got to be a win-win situation, and we need to make\nsure that all the guys we bring into the fold are paying the minimum amount of\ntax in the transaction.<\/p>\n\n\n\n

\u201cGet a good M&A attorney when the time comes, because\nthe structure of these deals is somewhat complicated,\u201d Sheffield added. \u201cUsing\na regular attorney is not the wisest thing to do.\u201d<\/p>\n\n\n\n

Research the Buyer<\/strong><\/p>\n\n\n\n

\"\"
Dan Cooper, Novatech<\/figcaption><\/figure><\/div>\n\n\n\n

It behooves sellers to do as much research as possible on\nthe acquiring company, and consider what may happen to her or her business one\nto five years after the closing, according to Dan Cooper, president and CEO of\nNovatech.<\/p>\n\n\n\n

\u201cWhat is the\nlong-term strategy of the company acquiring my business?\u201d Cooper related. \u201cAnd,\nhow will my customers and employees benefit? Continuing a seller\u2019s legacy is\nimportant to us at Novatech. We seek to build on their foundation, but others\nin the M&A field may not have those ideals at heart.\u201d<\/p>\n\n\n\n

\"\"
Michael Brigner, Visual Edge Technology<\/figcaption><\/figure><\/div>\n\n\n\n

Building on Sheffield\u2019s thoughts, Visual Edge Technology Senior\nVice President Michael Brigner suggests that sellers run their operations as a\nbusiness according to the industry benchmarks. Those who run it as a lifestyle\nbusiness will generally raise a red flag to buyers.<\/p>\n\n\n\n

In a sense, the lead-up to selling a business isn\u2019t all that\ndifferent than selling a home. Fresh paint, new carpets, some new flowers in\nthe landscaping\u2014you can\u2019t underestimate the value of appearances. While you\nneed to have the balance sheet to back up any aesthetic sprucing, it is vital\nto ensure that any warts are removed before negotiating, notes Jeff Gau, CEO of\nMarco.<\/p>\n\n\n\n

\"\"
Jeff Gau, Marco<\/figcaption><\/figure><\/div>\n\n\n\n

\u201cYou don\u2019t want to have underperforming employees,\u201d he said. \u201cWhen\nyou work through the diligence process, and the buyer asks about your\nworkplace, the sales reps and service technicians, you don\u2019t want to be hemming\nand hawing. Vetting out the staff early on is a good idea.<\/p>\n\n\n\n

\u201cOptimize your service margins, supply levels, staffing, parts\nutilization. Have a good handle on your service model. Clean up old inventory,\nmake sure it\u2019s within the last 12 months. With facilities and vehicles, are\nthey going to be part of the transaction? You don\u2019t want to have a 1985 look\nwith your business. You don\u2019t want the vehicles rusty, have them looking good.\nIt\u2019s all a part of your image and can go a long way when you\u2019re going through\nthe process.\u201d<\/p>\n\n\n\n

Desired\nOutcomes<\/strong><\/p>\n\n\n\n

\"\"
Chip Crunk, RJ Young<\/figcaption><\/figure><\/div>\n\n\n\n

Defining expectations can go a long way toward avoiding\ndisappointing outcomes. Chip Crunk, president and CEO of RJ Young, believes\nsellers need to have a firm idea of what they want that outcome to entail.<\/p>\n\n\n\n

\u201cThere are certain people for whom their outcome is simply\ndollars and cents,\u201d he said. \u201cSome of them are really concerned about their\npeople. A lot of them are concerned with what\u2019s the effect going to be in the\ncommunity, and making sure that they\u2019re going with somebody who\u2019s going to\nprovide the same level of support and service that the customers were seeing\nwhen they were running the business.\u201d<\/p>\n\n\n\n

\"\"
Dan Ruhl, Oval Partners<\/figcaption><\/figure><\/div>\n\n\n\n

The market conditions are certainly ideal for sellers, according to Dan Ruhl, a principal with Oval Partners, the private equity engine behind Flex Technology Group. The economy is strong, interest rates are low and leverage markets are good. Further, not only are the conditions optimal, but dealers have a strong roster of alternatives among the buying community, he said, which gives sellers a better chance at achieving their objectives beyond mere price.<\/p>\n\n\n\n

Ruhl also offered this nugget of advice regarding EBITDA. \u201cThere\u2019s a lot of focus on multiples of EBITDA, and a lot of times that\u2019s led a seller to believe that they have to wait to achieve that actual performance, when in reality, if there\u2019s an adjustment that\u2019s made to the business, it\u2019s going to change the business on a going-forward basis,\u201d he said. \u201cA buyer doesn\u2019t have to see that full 12 months to give the company credit for profit improvements. It\u2019s best to get somebody to come in and provide them with value\u2014an investor buyer to provide them with a value for their business\u2014and move forward if it\u2019s something that works for them.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s a wealth of information to be had for dealers who are considering selling a business they may have spent a lifetime developing. It\u2019s not an easy call by any stretch, which is why consultants and lawyers often enter the picture at some juncture. But we have some free advice for sellers to consider. Take it for what it\u2019s worth, and be mindful that it only scratches the surface of a multifaceted process. Jim Sheffield, president and CEO of UBEO Business Services, reminds sellers to keep everything business as usual throughout the entire process. \u201cDon\u2019t take your eye off the ball, run your business through the transaction,\u201d he said. \u201cDon\u2019t get distracted to the point where your business falls off at the end. It\u2019s got to be a win-win situation, and we need to make sure that all the guys we bring into the fold are paying the minimum amount of tax in the transaction. \u201cGet a good M&A attorney when the time comes, because the structure of these deals is somewhat complicated,\u201d Sheffield added. \u201cUsing a regular attorney is not the wisest thing to do.\u201d Research the Buyer It behooves sellers to do as much research as possible on the acquiring company, and consider what may happen to her or her business one to five years after the closing, according to Dan Cooper, president and CEO of Novatech. \u201cWhat is the long-term strategy of the company acquiring my business?\u201d Cooper related. \u201cAnd, how will my customers and employees benefit? Continuing a seller\u2019s legacy is important to us at Novatech. We seek to build on their foundation, but others in the M&A field may not have those ideals at heart.\u201d Building on Sheffield\u2019s thoughts, Visual Edge Technology Senior Vice President Michael Brigner suggests that sellers run their operations as a business according to the industry benchmarks. Those who run it as a lifestyle business will generally raise a red flag to buyers. In a sense, the lead-up to selling a business isn\u2019t all that different than selling a home. Fresh paint, new carpets, some new flowers in the landscaping\u2014you can\u2019t underestimate the value of appearances. While you need to have the balance sheet to back up any aesthetic sprucing, it is vital to ensure that any warts are removed before negotiating, notes Jeff Gau, CEO of Marco. \u201cYou don\u2019t want to have underperforming employees,\u201d he said. \u201cWhen you work through the diligence process, and the buyer asks about your workplace, the sales reps and service technicians, you don\u2019t want to be hemming and hawing. Vetting out the staff early on is a good idea. \u201cOptimize your service margins, supply levels, staffing, parts utilization. Have a good handle on your service model. Clean up old inventory, make sure it\u2019s within the last 12 months. With facilities and vehicles, are they going to be part of the transaction? You don\u2019t want to have a 1985 look with your business. You don\u2019t want the vehicles rusty, have them looking good. It\u2019s all a part of your image and can go a long way when you\u2019re going through the process.\u201d Desired Outcomes Defining expectations can go a long way toward avoiding disappointing outcomes. Chip Crunk, president and CEO of RJ Young, believes sellers need to have a firm idea of what they want that outcome to entail. \u201cThere are certain people for whom their outcome is simply dollars and cents,\u201d he said. \u201cSome of them are really concerned about their people. A lot of them are concerned with what\u2019s the effect going to be in the community, and making sure that they\u2019re going with somebody who\u2019s going to provide the same level of support and service that the customers were seeing when they were running the business.\u201d The market conditions are certainly ideal for sellers, according to Dan Ruhl, a principal with Oval Partners, the private equity engine behind Flex Technology Group. The economy is strong, interest rates are low and leverage markets are good. Further, not only are the conditions optimal, but dealers have a strong roster of alternatives among the buying community, he said, which gives sellers a better chance at achieving their objectives beyond mere price. Ruhl also offered this nugget of advice regarding EBITDA. \u201cThere\u2019s a lot of focus on multiples of EBITDA, and a lot of times that\u2019s led a seller to believe that they have to wait to achieve that actual performance, when in reality, if there\u2019s an adjustment that\u2019s made to the business, it\u2019s going to change the business on a going-forward basis,\u201d he said. \u201cA buyer doesn\u2019t have to see that full 12 months to give the company credit for profit improvements. It\u2019s best to get somebody to come in and provide them with value\u2014an investor buyer to provide them with a value for their business\u2014and move forward if it\u2019s something that works for them.\u201d<\/p>\n","protected":false},"author":166,"featured_media":35396,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1650,82,87,1638],"tags":[],"_links":{"self":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/35707"}],"collection":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/166"}],"replies":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=35707"}],"version-history":[{"count":1,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/35707\/revisions"}],"predecessor-version":[{"id":35708,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/35707\/revisions\/35708"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media\/35396"}],"wp:attachment":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=35707"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=35707"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=35707"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}