Chesapeake Corporate Advisor’s Charlie Maskell speaks on Pre-Sale Due Diligence Prep with Guy D’Andrea, CEO of Discern Health, Franklin Staley, Managing Partner at Exeter Street Capital Partners, and Tim Hodge, Managing Partner of Nelson Mullins Riley & Scarborough Baltimore at the Smart Business Dealmakers Baltimore Conference.
Watch the Live Q+A and find out what you need to know to be ready for the sale or cap raise.
Moderator: What should an Owner do when he/she receives an unsolicited offer for the business?
Panelist, Charlie Maskell:
- Take a step back
- Get an objective value of the business
- Look at the deal structure
- Review the currency the buyer is suggesting
~ Charlie Maskell, Partner Chesapeake Corporate Advisors
Moderator: What can an investment banker provide to a company that has received an unsolicited offer?
Panelist, Charlie Maskell: We can tell you if it’s a good offer. We can’t tell you if it’s the best offer.
Moderator: What do you do when you’re ready to sell your company?
Panelist, Charlie Maskell:
- Step 1: Understand the process: steps, duration, potential curveballs
- Step 2: Get a valuation. Sellers must get a realistic view of their companies.
- Step 3: Evaluate your accounting firm and the quality of financial reporting.
- Step 4 (optional, but preferred): Get a sell-side Quality of Earnings report.
- Step 5: Investigate any other potential problems that could exist.
“Once you make a decision to sell, time is not your friend.”
Moderator: What’s the growth profile of your business?
Panelist, Charlie Maskell: When it comes to business valuation, buyers will use past historical financial reports to inform them but are mostly focused on the future growth profile of the company.
Moderator: How do you advise a company in terms of what their value should be?
Panelist, Charlie Maskell: One of the things we find is companies come to us and say “What do buyers look at to value us?” And while buyers look at the past to inform their decisions, they really are interested in the future. What’s the future cash flow? That’s what they’re buying.
Moderator: What advice do you have for a business owner who is trying to sell their business?
Panelist, Guy D’Andrea, CCA Sell-Side Client: We started working with Charlie and his team at CCA so they could review our financials, do a valuation for us, give us some advice in terms of updates we should make. That prepared us for success.
It started to happen very quickly. Because we had a relationship with Chesapeake, we were able to respond to the initial offer quickly, get a counteroffer to them, kickstart the process. When it happened, it happened very quickly and it was important to us to have everything ready to go so we could move quickly when the time did come.
And with that, we’ll leave you with advice from Sell-Side CCA Client, Guy D’Andrea, “Find an advisor who you trust and has been through the (‘sales’) process before.”