Thinking of a Merger, Sale or an Acquisition?
Manufacturing companies across the nation are optimistic about 2018 according to the Leading Edge Alliance 2018 National Manufacturing Outlook and Insights Report (click the link to download the report). In addition to growing sales and cutting costs in the upcoming year, manufacturers surveyed indicated they will be considering mergers or acquisitions. Ownership transfers often represent the most significant operational and financial impact for a business, and thoughtful consideration is recommended before any decisions are made. Based on his experience helping many clients through an ownership transition, Delap CEO Alex Corrigan offers the following recommendations to consider if you are entertaining a sale of your business in the future:
- Assess your team and your future involvement. What will the new roles of each person look like after the transition?
- Eliminate waste and keep your personal activities/expenses out of the business. Optimize costs for maximum efficiency.
- Get your financial reporting dialed in. Are the numbers accurate with support readily accessible by a due diligence team? Will audited or reviewed financial statements be required? For how many years? Start early and be ready.
- Do you have any skeletons in your closet? Legal issues? Environmental issues? State/local tax exposure? Personnel problems? These are some common landmines that can blow up these transactions quickly.
- Is it a stock deal or asset sale proposed? Have you run cash flow scenarios to determine tax impact and expected net cash flows?
- Work with your wealth advisor to develop a sound plan of action following a significant liquidity event.
Other related blog posts:
- Cost-Cutting Considerations for Manufacturing Companies
- 5 Keys for Maximizing the Sale of Your Business
For over 85 years, Delap has leveraged professional expertise to help clients win. Contact us today so we can help you make more predictable and profitable business decisions.