How you can win at M&A March Madness

March 13, 2015
Using a March Madness strategy in selling your business can make you a champion!

If you are a fan of college basketball, March is the wildest month of the year as hundreds of teams from across the NCAA battle it out to get into the Sweet Sixteen, Elite Eight, Final Four and ultimately the NCAA Championship game. It’s all about competing and winning.

This same March Madness strategy should be used when a fleet owner decides to sell their company.  When you are ready to sell your company, you want to find the best buyer, who will pay the most, offer the best terms and be the right fit for your future. Using a March Madness strategy in selling your business can make you a champion!

Here are 7 March Madness steps to a winning M&A transaction:

  1. Prepare in advance – NCAA teams do not get into the playoffs without preparation.  They know what they have to do. They eliminate errors, practice thousands of hours and know what they want to accomplish. As a business owner you must prepare for a successful exit. Ensure financial records are complete and up to date. Resolve outstanding legal issues.  Review your entire operation and address any area that is under performing. In other words – get prepared!
  2. Market your business – Partner with an investment bank that has the proven ability to effectively market your fleet operation to a broad base of qualified, interested buyers. This should include both domestic and global marketing. This will put your company into the playoffs.
  3. Identify the best buyers – Solid marketing should produce a large number of interested buyers.  Think of this as the qualifying round for the Sweet Sixteen.  From this pool of buyers you and your banker can select the ones that have the most potential to meet your personal and financial goals.
  4. Let the playoffs begin – The ideal way to secure the best price and terms for your company is to identify the buyers who are most interested and willing to make the best offers. This competition begins in the “Indication of Intent” (IOI) stage, where you will narrow the list of potential buyers to the best in the pack.
  5. The Final Four – You and your banker have now narrowed the field of buyers even more.  Now the competition heats up as a silent auction is conducted between the best potential buyers.  The value of a fleet company is routinely based upon financial performance and other common factors. However, in an auction, the fear of not getting the deal can boost the price and enhance deal terms.  In other words – the real value of your company is truly what a potential buyer is willing to pay.
  6. The Championship Game – You have selected the best buyer and negotiated the best price and terms.  The buyer has signed a “Letter of Intent” (LOI) and will now conduct their due diligence. This is where you have to shine! This is what you have prepared for since you first thought about selling. With the assistance of your banker, you can stay focused on your game, which is running your company, while the due diligence work is completed. 
  7. You are the Champion! – As the deal closes, the final buzzer goes off and you are the champion! You have monetized years of hard work.  Selected an investor that will take your company to the next level of success, and you are the winner!

Every industry has a different season. Trucking is booming right now while the oil and gas industry is in a slump. You want to enter your March Madness when your industry is at its peak.  Your company will attract more buyers, command a higher price and sell quicker when it is growing and expanding than when it is headed downhill.  It normally takes 9 -12 months to market and sell a successful middle-market company. Don’t wait too long to get into the game.

About the Author

John Sloan | Vice Chairman

John Sloan is the Vice Chairman of Allegiance Capital, a middle-market investment bank that works with business owners to help them sell or raise capital. 

John has more than three decades of C-level experience in investment banking and private equity.  He has personally executed transactions with fleet owners and understands the unique needs of the trucking industry. 

During his career, John has raised more than $1 billion in debt and equity.  He is an expert in all aspects of investment banking and has evaluated and negotiated the acquisition of more than 30 companies in: energy, construction, retail, telecom, environmental, logistics and manufacturing, with an aggregate value in excess of $7 billion.

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