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CEO Advisor® Newsletter
July/August 2012
 Opportunistic Acquisitions for Growth

Buying and selling companies takes specialized expertise.  If you are interested in growing your company and organic growth doesn't come fast enough, you may want to explore acquiring a company in your space.  CEO Advisor, Inc. advises CEOs and business owners on making opportunistic acquisitions to grow, and to exit or sell your business to the right buyer.  

Focusing on growth through acquisitions 
initially, you want to hire the right business advisor with the experience, education and expertise in mergers and acquisitions to create a great return on your investment.  Your business advisor will discuss how you would pay for or finance an acquisition, explain your options to pay for an acquisition with cash, stock, a loan, earn outs, stock options, benefits, or a combination of the above, and help you understand the best method to purchase a target company, or the assets of the company.  

Once you have created the criteria for the profile of a target company, you want to have your business advisor research and collect the contact information of the set of targeted companies.  Then, your advisor will contact each company and ask a set of qualifying questions to see if the owner is interested in selling and gain other information.  

Once you have a targeted company that expresses real interest and meets your criteria, your business advisor will ask for a set of financial statements from the owner of the prospective seller to further assist you in understanding the value of the company.  There are many things to consider from how large is the market, is it a growing market or not, their revenue, gross margin and EBITDA, how much recurring revenue a company has on contract to how long their lease is for, as well as, the situation and salaries of their employees.  A non-disclosure agreement may need to be executed between the buyer and prospective seller to accommodate getting this financial information.  

Your business advisor will then review and inquire about more information on the financials, and create a proforma financial statement with necessary adjustments to evaluate what the target company would look like as part of your company.  You and your business advisor are now ready to make a decision on making an offer or not.   

 

 

Provided you are interested in making an offer, your business advisor will prepare a Letter of Intent (LOI) to purchase the assets of the company.  Purchasing the stock of the company opens up too much liability and risk to a buyer so purchasing the assets of the company, exclusive of liabilities (unless otherwise specified) is the most advantageous method in most cases.  The LOI should be specific with all of the business terms laid out for the prospective seller, including protection for you, the buyer.  

Your business advisor will be key in helping you negotiate the LOI as a third-party.  You should never negotiate an acquisition (or sale of your company) on your own. Keep some distance and diplomacy in the negotiations to preserve your future relationship with the seller by having an experienced business advisor work along side you. Once the LOI is negotiated and the business terms are agreed upon, your business advisor assisting you with the deal will initiate Due Diligence to verify a whole set of information, including the prospective seller's customer agreements, financial statements, cash received, bank statements and other information.  Your business advisor will also coordinate all of the other documents and information required in the Due Diligence phase of the acquisition.  

Once your business advisor has helped in completing the Due Diligence to your satisfaction, your advisor will coordinate with your attorney to draw up the Asset Purchase Agreement (APA).  This is a legal document with the business terms from the LOI stating exactly what you will receive in the transaction (and what you won't be liable for) coupled with legal protection for you as the buyer from any liabilities, legal issues, payroll tax issues, etc. of the seller.  There may be some tax issues to be addressed so your CPA or tax attorney may be consulted and your business advisor should be present to walk you through your options.  Your business advisor will also help you in creating the compensation plans for the seller and their employees that you decide to hire along with the acquisition.  

 

Closing the transaction is not the end of the process, as the post-closing integration of the acquired company, no matter how small or how large, will be vital to the success of the acquisition and your business advisor will help you to optimize this process.  

In our next CEO Advisor Newsletter, we will cover the different aspects of selling your company so stay tuned.

CEO Advisor, Inc. has several decades of experience in buying and selling companies.  Contact us today to discuss your growth needs by phone at (949) 759-8676 or email Mark Hartsell, MBA and CEO of CEO Advisor, Inc. at MHartsell@CEOAdvisor.com

CEO Advisor, Inc. Advises Rhythm Interactive, Fastest Growing Ad Agency
CEO Advisor, Inc., (www.CEOAdvisor.com) a leading business advisory firm serving the needs of CEOs, presidents and business owners of small and mid-sized companies since 2004, is a business advisor to the two owners of Rhythm Interactive, Inc. (www.RInteractive.net), a premier digital agency in Irvine, CA.  Just published in the Orange County Business Journal's 2012 Top Orange County Advertising Agencies list, Rhythm Interactive is now the fastest growing Advertising Agency in Orange County.   

The list recognizes agencies located in Orange County based on overall 2011 yearly billings, employee growth and primary markets served. In just over a year, Rhythm Interactive has increased its staff by 118% - the greatest yearly growth rate of all other agencies on the list. With 26 employees and still hiring, Rhythm is perfectly positioned to meet the growing digital marketing needs of its clients. 
  
CEO Advisor, Inc. has worked with the CEO and President of Rhythm Interactive since May, 2010 and has focused on strategy, growth, sales management, sales team building, marketing, and mergers and acquisitions.  As a trusted advisor to the two owners of Rhythm Interactive, Mark Hartsell, MBA, is working in a hands-on business advisory role on a weekly basis. 

Mark Hartsell, CEO of CEO Advisor, Inc. states, "Congratulations to the team at Rhythm Interactive.  Rhythm is a strong, well-managed company with tremendous people and online expertise.  I am focused on achieving the owner's business goals.  Rhythm is extremely well positioned to continue to grow to the next level."

CEO Advisor, Inc. provides business advisory services affordably and effectively to meet the specific needs of CEOs, presidents and business owners.  CEO Advisor, Inc.'s mission is to advise small and mid-sized companies with the needed expertise and focus, coupled with hands-on advice to grow your business to the next level.  By specializing in the needs of CEOs and business owners, we focus on the growth, opportunities and challenges that you and your business encounter every day. 

Contact CEO Advisor, Inc. today at (949) 759-8676 in So. California, or (301) 580-8071 in the DC Metro area, by email at mhartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.comfor more information.

Testimonial  


"Mark Hartsell and CEO Advisor, Inc. provide a unique advisory service for CEOs. He not only tackles high level strategic issues to assist CEOs navigate through challenging times, but Mark also gets very involved in actually addressing important issues head-on by performing the work to achieve tangible results.  

 

Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way." 

Partner, Haynes & Boone, LLP

    

"Mark Hartsell and CEO Advisor, Inc. provide a unique advisory service for CEOs. He not only tackles high level strategic issues to assist CEOs navigate through challenging times, but Mark also gets very involved in actually addressing important issues head-on by performing the work to achieve tangible results.


Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way."

 


Partner

Haynes & Boone, LLP

Words of Wisdom


"For all of its faults, it gives most hardworking people a chance to improve themselves economically, even as the deck is stacked in favor of the privileged few. Here are the choices most of us face in such a system: Get bitter or get busy."

Bill O' Reilly
News Anchorman & Political Commentator



"Yesterday does not equal tomorrow. Forget the past and move towards your goals."

Tony Robbins
Motivational Speaker

"Yesterday does not equal tomorrow. Forget the past and move towards your goals."
Tony Robbins
Motivational Speaker
"Yesterday does not equal tomorrow. Forget the past and move towards your goals."
Tony Robbins
Motivational Speaker



Prime Minister of the U.K.