Communicate To Close!!
Successful transactions of lower middle market businesses have open, honest communication between the buyers and sellers. Business owners tend to be the greatest resource for information concerning the day-to-day operations of their company, and this information is ‘mission critical’ for serious, qualified buyers. Therefore, sellers should not hesitate to disclose on the front-end of the M&A process the strengths and weaknesses of their company, local market dynamics, and future growth prospects. No surprises should be the modus operandi, and often, the perceived weaknesses of sellers may be viewed as opportunities to buyers. Unsurprisingly, full disclosure builds trust between the two parties.
However, sellers should lean on their M&A Team of investment bankers, CPAs, and attorneys for nonoperational buyer-concerns. On behalf of the sellers, an experienced M&A Team will manage and execute the details of a formal sales process, including (but not limited to):
- Negotiating the purchase price, its allocation, and deal terms;
- Addressing potential M&A legal matters;
- Deferring/eliminating ordinary income, capital gains, and inheritance tax;
Honest communication throughout the M&A process will deliver a successful close for everyone.