Around the Web: A Week in Summary
A recent article posted on the Axial Forum entitled “7 Reasons to Perform Sell-Side Due Diligence” talks about why sell-side due diligence can be a useful and productive technique within the M&A process. While buy-side due diligence is much more common, sellers can take advantage of this practice to maximize the value presented to potential sellers so that they can ultimately get more out of the sale.
Sell-side due diligence can help to uncover and improve:
- Weak financial and operational data systems
- Overextended employee resources
- Unclear financial narrative
- Unhelpful “tax guy”
- Multiple entities and no consolidation
- Likely purchase price reductions
- Ineffective tax structuring
In the end, due diligence is part of any M&A process. But with so many things factoring into a successful sale, both buyers and sellers have a responsibility to know the business inside and out if they want to get the most out of a transaction.
A recent article posted on the Viking Mergers and Acquisitions Blog entitled “7 Key Questions Buyers Should Always Ask” examines important factors that a buyer should consider before making an offer or closing a deal. This includes questions like:
- Why are you selling?
- Who are the key employees within the company? Will they remain with the company?
- What is the growth potential like?
- What opportunities exist in this market in the years ahead?
- What are the various kinds of problems that arise in your business? How are these handled?
- How well documented are the financials of the business?
- What skills do I need to have to run this business adequately?
These questions, among others, can help to uncover or verify important facts about the business that will help a buyer make the best, most educated decision about whether or not they would like to pursue a transaction.
A recent article posted on Cincinnati.com entitled “Businesswise: For those selling a business, efficiency is a plus” names efficiency as one of the biggest drivers of business value in a transaction. As the article mentions, efficiency directly affects cash flow, which is a very important aspect of any transaction. Any way an owner or management team can improve efficiency usually results in a better bottom line, which in the end will drive a higher sale price.
Efficiency can be improved in many different aspects of a business, from improved IT systems to greater flexibility and productivity, to outsourcing and more.