CFO Insight LLC
Finance expertise for mid-market companies
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Buyer/Seller Checklist

Simple high-level checklists will help you understand the key issues when either buying or selling a company.  The checklists are based on a business template that considers People, Process, Plant/Assets, Product and Market.  The master matrix includes all the elements of any smoothly operating business or organization, and forces executives to self-assess their strategy and readiness to undertake a sometimes business-threatening action.  Buying or selling a company can destroy value if not completed effectively.

Selling a Company:

The "Seller's Bingo" checklist requires a thorough self-assessment of the company - as if being reviewed by a highly qualified Due Diligence team.  The self-assessment will examine every element of the Company's Value Chain, and help the seller identify their keys to value... those few elements of the matrix that represent the company's competitive advantage.  Understand that the keys to value may vary depending on the potential buyer.  For example, a strategic buyer may place the highest value on geographic position, or perhaps the unique product development process in a specific field over the fact that the company is a complete, self-sustained operating business.  Why?  A strategic buyer will likely disassemble the common infrastructure elements in the support functions, since their company will already include those well-managed operations.

Review the "Seller's Bingo" checklist, and consider how a potential buyer will view your company.  Those areas that represent the competitive advantage - make sure that these areas function flawlessly.  

And as you prepare for sale, implement substantive changes well in advance of any offering for sale.  Remember, substantive changes will require time to be implemented, and proven effective.  Assume the role of a buyer when implementing changes.  If you completely reorganize a sales force 3 months before offering the company for sale, how will you demonstrate that the changes are fully implemented and effective?  Implement substantive changes at least one year in advance to capture the full benefit of change.

Buying a Company:

Buying a company may seem to be a simple matter... available cash ... strategic plan that defines goals and objectives... simply turn on the acquisition machine and begin the buying process.  Unfortunately, it isn't that simple.  Buying a company requires a business process that considers - certainly the strategy - but also a thorough understanding of Your Company.  It also requires a commitment to the acquisition process that will entail numerous false starts, and near acquisitions, and a resource commitment that either includes incremental resources or an allocation of existing resources that formerly managed your business.  To do it right, you must thoroughly understand your Company - strengths & weaknesses - the culture, organization depth, key business processes, and how any potential acquisition will fit with your Company.  

All of this must be thoroughly understood before you embark on the M&A trail.  The following "R U Red E for M&A" checklist will familiarize you with some of the items you should consider before you begin the journey.  Is the checklist essential?  Consider that more than two-thirds of M&A investments fail to increase shareholder value and achieve the desired results.  ... and then you decide if you want to assess your organization's ability to be successful.