DesRosiers - CADA 2017 - Canadian Automobile Dealers Association - Year in Review - 87

Exit Focus
Preparing the business for sale
One of the most significant challenges faced by a company and its owners is laying the groundwork for the successful sale of
the business. Much of the difficulty lies in balancing two competing priorities, each of which demands careful attention. On
one hand, the seller must commit significant effort to steer the process and receive the highest value it can in the transaction.
But on the other hand, they must also ensure day-to-day operations remain sharp and focused. The ability to balance these two
aspects is what makes the process more difficult. When that balance suffers, transactions can falter on anything from failures of
awareness to subtle tactical missteps.
There have been many potential transactions that have disintegrated, but not necessarily because of one big oversight.
Instead, it is mostly because of a series of misjudgments in the complex sale preparations, and the allure of a high price
that can cloud rational thoughts about the risks associated with closing the deal.

Key considerations
Getting both arms around the challenge
While no one-size-fits-all answer exists to help manage the
challenge of simultaneously running a successful business
and managing a sales process, careful preparation is vital.
Adjusting your thinking well in advance
In order to achieve a successful sale of a business, the planning process should begin well in advance. Be aware of the
various internal and external factors that should be identified in the early stages of the process to optimize business
value.
Issues in evaluation and valuing the business
It is imperative to understand a buyer's philosophy and attitude toward the value of a business. What does it mean to
them and how can you align this outlook with the business
and its emerging valuation?

Getting the house in order
One of the first steps in preparing for a sale is to assess your
current business performance. Determine areas of your
business that may need improvement and take corrective
action to resolve any issues before engaging with potential
buyers.
Building the best package
Know your business landscape; be prepared to provide
concise and knowledgeable responses when prompted by
a potential buyer, and have key information relating to the
business available if and when requested.
Forming the team
Involve key individuals from your company in the divestiture process- they will provide valued input, gather necessary information relating to the business and interact
with potential buyers.

Success in preparing a company for sale depends on 10 critical steps
Although there is not a one-size-fits-all program to ensure the process of selling of a company is flawless, there are a few
vital steps that owners should take in the process. Following these steps, at a minimum, will allow for a smoother sale
process, with fewer problems faced along the way.
1.

Align organizational objectives. Share one direction and one message.

Develop a divestiture plan. Address the tactical priorities early on, so that resources, funding, and timing all fall into place.

Assemble a team of trusted advisors and deal specialists. Complement company strengths with functional experts.

Get financial results organized. Highlight key financial metrics and management tools, and demonstrate their relevance.

Develop sound financial projections, and back them up with a picture of strong potential. Tell a credible, accurate
and compelling story.

Understand subjective value, and see the business through the eyes of a potential buyer. View the business- and its
value-from a buyer's perspective.

Initiate a buyer identification and assessment process. Understand the likely buyers and consider them in the planning.

8. Evaluate potential structuring alternatives. Identify various structuring options and related trade-offs.
9.

Revisit specific transaction objectives and priorities. Review the company's changing goals- and refine their direction.

10. Determine-and execute- a specific sale timeline. Act with precision once the decision to proceed has been made.

Moving toward negotiations and closing
With sell-side due-diligence performed, the data room prepared, the offering memorandum sent out, and the team assembled, owners are ready to begin fielding questions from potential buyers and soliciting preliminary indications of
interest and value.
The next installment in this series The Deal Process, covers negotiating and getting to closing, avoiding pitfalls and structuring the most efficient sale.

Table of Contents for the Digital Edition of DesRosiers - CADA 2017 - Canadian Automobile Dealers Association - Year in Review