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How to position a company for mergers and acquisitions

July 8, 2024
Industry experts share tips to successfully plan and prepare for potential mergers or acquisitions—from choosing advisers to communicating with stakeholders.

Navigating mergers and acquisitions can be complex and challenging—especially for owners of small and midsized trucking companies who haven’t sold a business before.

“When you get in the heat of a deal, things sometimes get a little unclear,” Keith Klein, president and CEO of KKlein Ventures, said in a webinar. “It’s good to have good people that have your back but are also willing to tell you when you’re wrong and need to take a step back to think about things.”

Industry experts like Klein shared their tips on successfully navigating the M&A process in a recent webinar from Spark Change Lab. When looking to juggle the complexities of an acquisition, keep these recommendations in mind:

Research, learn, prepare

Often, the world of M&A is an entirely new field for business owners. They will need to learn countless new processes and rely on the expertise of people more familiar with this new world.

Consult with advisers

The right advisers can make all the difference. Rebecca White, EVP of strategy and corporate development for Kenan Advantage Group, recommends consulting with an adviser for an accurate valuation. This way, when an owner goes to market, they know what expectations to hold.

“Consulting with an adviser that can help give you a benchmark before you go to market on what your business is worth and how buyers are going to view the value of your business is really important,” White said. “If you work with an adviser that is focused on the transportation logistics space, they will have the relationships with the buyers in the market and will have better knowledge that will relate to your business as you’re going through the sale process.”

Klein agreed, emphasizing that the right advisers have both the necessary experience and the respect of the business owner.

“Make sure you have the right advisers,” Klein said. “It’s not your beer-drinking buddies; it’s a bunch of folks that have actually been through the process before from different aspects of it—whether it’s accountants or lawyers—but also people that you trust and have respect for, so they’re not afraid to tell you when you’re full of it.”

Find buyers that would close

Company owners should also look at the buyer pool and pinpoint the types of buyers that would be most appealing. One key characteristic is whether a prospective buyer is willing and able to go through the complete acquisition process.

“You want to make sure the buyer has the capabilities to come through,” Kevin Burch, VP of governmental affairs and sales for Martin Transportation Systems, said.

See also: Analysis: Mergers & acquisitions 2024 outlook

Start planning for the acquisition process

Owners might not realize the time, energy, and processes involved in the acquisition process. It is important to learn what needs to be done well beforehand, from compiling documentation to building a team of experts.

Prepare for diligence

One key factor in maximizing a business's value is well-maintained documentation and financials. Thorough bookkeeping, if not prepared beforehand, can take immense time and effort to start.

“Start compiling diligence,” White said. “The process is very time-consuming, as buyers are looking to get up to speed on the business and understand the potential risks in the transaction. It’s hard to necessarily pull all of that information while you’re still running the business.”

White recommends working with your advisers to understand and prepare for any information needs, including legal documents, asset titles, stock certificates, or customer contracts. Having this information readily available can reduce the burdens of the acquisition process.

“When the buyer starts digging in from a diligence perspective, they’re able to move more quickly,” White said. “It’s not as much of a burden on the company, and you can continue to focus on operating the business.”

Timely financial information

Owners should ensure they have a strong financial team to maintain timely financial statements.

“Critically important is making sure you have your financials in order,” Klein said. “You will undersell and undervalue your business if you have poor financials because the buyer’s not going to trust the numbers. You need the buyer to trust the numbers, and your advisers need to understand exactly how the business performs to determine how to get the maximum value."

“If you don’t understand how your business performed last month, 10 days after the end of the previous month, that’s not timely,” Klein said.

Find your priorities in selling

Selling a business involves several competing interests that the owner must weigh and prioritize. The interests of employees, family members, stakeholders, and buyers will often conflict with each other. The business owner needs to prioritize what is important for them.

“Think about the priorities. What’s important to you?” Klein asked. “If two happen to compete, which one takes precedence? Is maximizing profitability or the sale price important—or, if you have a buyer that wants to consolidate all the operations into a different town, is your community important to you?”

Begin talking with stakeholders

Everyone affected by an acquisition has a vested interest in its outcomes. Owners should take care to involve the right people at the correct times to get their desired results.

Find experts for critical roles

A business acquisition involves several employees and advisers from both the buyer and seller. For an owner selling their business, having the right experts in place is important.

“The initial ones that come to mind [are] your M&A attorney, probably your tax adviser, your wealth adviser in that transaction, investment bank,” Meghan Meurer, CCO for The Tenney Group, said. “If you do have equipment, someone to value your equipment [and] potentially real estate if there’s a real estate component.

See also: US Logistics Solutions announces bankruptcy filing after lender abruptly pulls funding

Meet buyers in person

Face-to-face meetings with potential buyers are ideal for working together efficiently and finding compatible workplace cultures.

“We’ve always found a lot of success whenever we can bring buyers and sellers physically together in the same room, have a meal together, and get to know each other,” Meurer said. “That’s always helpful.”

Find the right way to communicate

When employees hear that they are about to be acquired, they can feel understandably troubled by the risks inherent in acquisitions. Effective and timely communication will prepare the selling business for the process, setting the stage for a successful transition.

“You have to communicate,” Burch said. “It’s very tough to figure out: ‘When do you say it? How do you say it?’ You don’t want the whole company to suddenly just go away and then the buyer to have another suggestion that maybe [the company] is not worth that much.”

The business will need to figure out when to inform which stakeholders and when key information can be responsibly disclosed. It can help to include some teams in the acquisition process so they can prepare the business.

“It’s important to make sure that all the parties that are going to be involved in that and affected by it are included in those discussions,” White emphasized. “A lot of that will happen post-closing but, to the extent there’s work that can be done pre-closing if the people are involved and aware of the transaction, it’s certainly helpful to bring that forward so everyone feels comfortable with the plan going into the closing.”

When the information is appropriate to share, effective communication includes all stakeholders, including employees at every level of the organization.

“There are certainly things that you have to keep close to your chest, but you have to be smart about it,” Burch said. “If you really care about your culture and you really care about the whole deal, you have to communicate all the way from the higher-up to middle management to the shop.”

Be patient

The acquisition process can take a lot of work over a long time. The owner must take their hands off the organization for lengthy periods to work with advisers, meet with buyers, and sort out the deal.

Patient, exhaustive, and timely preparation is necessary to ensure the business can thrive without its owner’s full attention.

“Start early,” Klein said. “If you think you’re going to need to exit in two years, it’s not too early to start that process.”

About the Author

Jeremy Wolfe | Editor

Editor Jeremy Wolfe joined the FleetOwner team in February 2024. He graduated from the University of Wisconsin-Stevens Point with majors in English and Philosophy. He previously served as Editor for Endeavor Business Media's Water Group publications.

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