Bob McCormack

Bob McCormack

Founder & Managing Partner

Murphy McCormack Capital Advisors

What makes a successful M&A transaction?

One of the best ways to ensure a successful transition, or exit, is to be well-prepared before going to market. Starting to work with advisors a couple of years before the sale gives you time to smooth out any wrinkles in your business and resolve issues that might impact the valuation or give an acquirer heartburn. Trying to prepare at the last minute is just inviting more stress and opportunities for mistakes.

You’ve been asked to sell, what now?

Before providing any information or engaging in any meaningful discussion, reach out to your trusted advisors: your attorney, CPA, M&A advisor, and/or wealth advisor. Many businesses get unsolicited offers to sell. Your advisors will help you protect confidentiality, determine if you want to explore the possibility further, uncover if it is a genuine inquiry, prepare a valuation range, assess taxes and net proceeds, and discuss all options available vs. working with only one potential buyer.

Due diligence - What’s necessary and how?

The Due Diligence process has become more intensive in recent years, including an uptick in firms seeking Due Diligence before even signing the Letter of Intent. Sellers can expect diligence in the following areas: Financial, Tax, Human Resources/Employee Benefits, Legal, Technology, Insurance, CyberSecurity and more. Getting a Quality of Earnings Report done by a CPA firm before going to market can save time when those requests for information come.

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Office: 115 Farley Circle, Suite 308 Lewisburg, PA 17837

bmccormack@murphymccormack.com

570-524-7253

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Areas of concern, and how to address them?

Two of the most common issues for an acquiring firm are poor quality financial reporting and issues with the depth of the leadership team beyond the owner. The first is relatively easy to solve. Consider investing in an audit or review level financial reporting a few years before you go to market. The greater detail and the credibility of the CPA firm can go a long way in smoothing the process and getting a jump on the financial due diligence. Building leadership depth beyond the owner is a longer process, and starting to build your team long before you consider a sale will make your company more desirable.

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