CEO Advisor Newsletter February 2014
Opportunistic Acquisitions to Fuel Growth
Focusing on growth through opportunistic acquisitions, hire the right business advisor with the experience, education and expertise in mergers and acquisitions to create a great return on your time and investment. Your business advisor will discuss with you the criteria for an opportunistic acquisition, explain your options to pay for the 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 to gain other needed 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, how long their lease is for, as well as, the roles 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 alongside you. Once the LOI is negotiated and the business terms are agreed upon, your business advisor will initiate Due Diligence to verify a whole set of information, including the prospective seller's customer agreements, recurring revenue, financial statements, 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 assisted 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 will 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 will be critical once the seller has met your requests so the advisory team of your attorney, CPA and business advisor are key. 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 decades of experience in buying and selling companies. Contact Mark Hartsell, MBA, CEO of CEO Advisor, Inc. today to discuss your growth needs at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit www.CEOAdvisor.com for more information.
CEO Advisor, Inc. Advises Integrated Media Systems on Growth, Marketing and Sales Strategy
- CEO Advisor, Inc. (www.CEOAdvisor.com), a leading business advisory firm serving the needs of CEOs, presidents and business owners of small and mid-size companies is providing growth, marketing and sales strategy advisory services to the CEO of Integrated Media Systems, Inc. (IMS) (www.imsav.com), a leading audiovisual solutions and communications system integrator in Costa Mesa, CA.
- CEO Advisor provides business advisory services affordably and effectively with hands-on work performed to assist CEOs, presidents and business owners of small and mid-size companies on growth, business strategy, sales, sales team building, sales strategy, marketing, operations, finance, funding, mergers and acquisitions to grow businesses to the next level.
- As a trusted CEO Advisor® to business owners since 2004, the firm specializes in providing business consulting services in a one-to-one advisory role on a weekly basis to maximize sales, profits and a substantial return on its client's investment.
- Mark Hartsell, CEO of CEO Advisor states, "Integrated Media Systems has an amazing 27-year history with tremendous expertise in its field. CEO Advisor is providing advice on sales, marketing planning, goal setting, processes and technology to accelerate growth and achieve their goals."
- Brad Caldwell, CEO of Integrated Media Systems states, "CEO Advisor's focus, expertise and hands-on approach is enabling IMS to implement a sales and marketing strategy for today's environment to achieve a clear set of goals. This approach will enable us to move quickly and definitively."
- About Integrated Media Systems
- For 27 years, Integrated Media Systems has been a premier provider of best-in-class audiovisual and communications solutions for the financial, healthcare, education, technology, and construction markets, as well as federal and state government agencies and municipalities. IMS clients include Apple, Boeing, The Capital Group Companies, Department of Energy, Kaiser Permanente, Symantec and many others. IMS specializes in integrated audiovisual and communications solutions for auditoriums, boardrooms, briefing rooms, classrooms, training rooms, executive briefing centers, command and control centers, conference rooms, council chambers, emergency operations centers, surgical operating rooms and digital signage applications. For more information, contact John Grubin, Vice President of Sales & Marketing at Integrated Media Systems, Inc. at (714) 579-4100, or visit www.imsav.com for more information.
- About CEO Advisor, Inc.
- CEO Advisor provides business consulting services affordably and effectively to meet the specific needs of CEOs, presidents and business owners of small to mid-size companies in a wide range of industries, including technology, media, professional service firms, light manufacturing and many more. CEO Advisor's mission is to advise business owners with the needed expertise and focus, coupled with hands-on advice and work performed to grow your business to the next level. Contact Mark Hartsell, CEO of CEO Advisor, Inc. at (949) 629-2520 in Orange County, CA, by email at mhartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.