PE HUB Wire Highlights, 6.8.18


Private Equity Editor Chris Witkowsky reflects at home. Photo by Wendy Witkowsky

Considering the personal side of a company sale, Time to track spinouts, first-timers in market this year

Happy Friday!

Apologies for the light content today; we experienced some technical issues yesterday that disrupted the day. Should be back to normal today.

Sales thoughts: I got an education this week on some of the finer details of selling a middle-market business. At an M&A panel at a conference I attended, the discussion centered on important factors for sellers and buyers to consider in a transaction. The discussion got down to details I never think about when writing about deals.

For example, sellers should also be prepared to make tough decisions post-sale: to work for someone else; to potentially terminate employees; and to give up the status and perks that come with leading a business.

Selling a business can be a traumatic experience for founder/owners selling this thing they created and grew and suffered and struggled over for so long. In a sale, the buyer’s job is to pick through the business and find its flaws, to know exactly what he is buying and also to peg the business with an accurate valuation.

That’s why, in such situations, it’s good for a seller to work with intermediaries like investment bankers and attorneys to do the heavy lifting, according to an M&A panel I attended this week. Intermediaries help take some of the emotion out of the process, panelists said.

“This is your baby and they’re telling you your baby is ugly,” a panelist said.

Also, sellers should have an M&A attorney, an accountant, including a tax accountant especially around deferred revenue, and an investment banker who knows the market and valuations, panelists said.

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