Once your books are straight, there is deeper analysis to be done about whether your company should be transacted as an asset sale or a stock sale, with potential major tax implications for both buyer and seller. This analysis is typically accomplished by running a “mock purchase price” before going to market with your company, to make sure there are enough proceeds to achieve your desired valuation.
Advisor. An experienced M&A advisor who represents sellers is a key to any transaction, and good ones earn their fee. Experience is imperative, and ideally—
you want one with LBM sector experience, so they can take advantage of their market-specific knowledge to improve the price, structure and terms your company receives in a sale. Good advisors have their finger on the pulse of the market, and can tell you what the likely valuation range will be for your business, who might buy it, and be able to clearly outline for you how they’re going to handle every step of the sale process.
The most important functions an advisor provides are to (i) tell your story, to position the business in best possible light and (ii) unburden the business from countless questions and data requests so the management team of the seller can focus on driving earnings during the sale process. The advisor takes this story, and creates a “market” for your business via their connections with industry buyers and financial buyers (i.e. private equity firms, etc.). Additionally, a good advisor will interface with the accountants and lawyers on both sides of the transaction, to make sure the advisors are acting in concert. Industry-focused advisors can take it a step further, and provide insight on the legal and financial issues that are LBM-specific, which can be many.