Strategic Planning

By Kyler Gilbert, Associate Consultant, Business Consulting Resources Business Consulting Resources is excited to share with our community and clients that we have a new collaborative relationship with Tabori Gilbert. As specialists in mergers and acquisitions and business brokerage, Tabori Gilbert offers our clients expertise in consolidating their company and business assets. This three-part Q&A blog series offers insight from Dan Tabori, managing partner at Tabori Gilbert (TG) into what they do for business owners and advice for those exploring the process of selling their business or buying a business. In part 1 of this interview, Dan Tabori discussed what M&A and business brokerage is. He also talked about how M&A can impact a company. In this second installment, we learn more about the impact of M&A on the employees and its stakeholders. Dan Tabori Interview — Part 2 BCR: From an employee perspective what does M&A/business brokerage look like on both the buy and sell side? Tabori: If you look at the top three concerns a seller has in a transaction, their employees are in the top three. Many sellers feel a lot of loyalty towards their employees and want to make sure that their employees are being taken care of by the buyer. The tough question to answer is when to tell your employees. Usually, the employees find out when the transaction has been consummated. Ideally, you’ll be building up your team so that leaving your organization feels like a natural course rather than a strategic shift. The messaging to your employees is crucial and the messaging needs to be timely and consistent.  Sophisticated buyers know that most employees will have a “wait and see” attitude where they will assess and scrutinize the situation with a new buyer. Many times, when selling, you sell to bigger companies with more resources and benefits that employees will enjoy. If you communicate appropriately, and clearly, and have developed a good benefit message for your employees, you should be in good shape.   BCR: What are the possible outcomes that a seller can expect from an M&A/ business brokerage transaction? Tabori: I’ll highlight two major areas that sellers typically are interested in, ownership and the payment structure. Ownership: There are many different ownership structures when selling a company but the preference of the seller will dictate everything. You can have a complete sale of the business with a quick transition out of the business. The seller can sell the business but maintain a leadership role in the business during the transitionary period. If the seller is trying to create a liquidity event but still believes in the business, they can retain some level of ownership (minority stake in the current or new selling company). This also happens when the buyer wants to align everyone toward the same goal.  Payment structure: The payment terms are either for an asset purchase or a stock purchase. From the buyer’s perspective, the preferred offer is an asset purchase and most transactions are asset sales so that the buyer doesn’t inherit any of the liabilities of the company. Depending on the situation, a stock sale may be more appropriate.  The way the purchase price is paid also varies. There can be a bulk payment upon closing with earn-outs that can guarantee some representations made during the selling process to protect against certain clauses in the contract. An example of this is earn-outs, where proceeds are held back often for a year to make sure the company maintains its current performance after the sale. The buyer will most likely pay 2/3 to 100% upfront and if they don’t pay 100%, they will most likely structure the payment in the form of an earn-out.  BCR: How should a company communicate about a sale to customers, vendors, other business partners, etc.? Tabori: In the process of engaging the buyer, TG does a complete assessment of the company we are selling including profiling who the clients are and the relationships they have with their clients. Some of those may be contractual so we have to plan early on how we are going to approach communication of a sale to our clients. We ultimately want to make sure our clients will continue to receive the product or service they were receiving at a high level. The communication plan is very important and usually happens after the transaction is closed but before it is publicly announced. And often the company is selling to a larger organization with more resources, which can provide more comfort to the clients.  The bottom line is that you should treat your customers with respect and communicate openly with them about the transaction.  Business Consulting Resources has been championing successful transformations for 40 years and providing a comprehensive portfolio of consulting service solutions to help you solve complex problems. Reach out and let’s talk! Dan Tabori is the managing partner at Tabori Gilbert (TG). The TG partners have a combined 50 years of experience helping sellers with their succession plans and helping them sell their businesses. Dan can be reached via email or phone (808-721-9933.)

By Kyler Gilbert, Associate Consultant, Business Consulting Resources Business Consulting Resources is excited to share with our community and clients that we have a new collaborative relationship with Tabori Gilbert. As specialists in mergers and acquisitions and business brokerage, Tabori Gilbert offers our clients expertise in consolidating their company and business assets. This three-part Q&A blog series offers insight from Dan Tabori, managing partner at Tabori Gilbert (TG) into what they do for business owners and advice for those exploring the process of selling their business or buying a business. Dan Tabori Interview BCR: Dan first off, thanks for taking the time to chat with us and share some of your knowledge. To start off, can you tell us what the difference is between M&A and business brokerage? Tabori: I think doing M&A is more of an activity, you might be merging with another company or there might be an acquisition where you’re buying or selling. Business brokers are companies who represent buyers and sellers and are responsible for brokering the deal, as the term suggests.  M&A also represents an umbrella term that is used in both the private and public markets for transactions that involve working with buying and selling businesses. Business brokerage is a term you see more often when a company is representing a seller and helping them find a buyer for their business.  Ultimately, business brokers help sellers who want to sell their company find buyers. The outcome of this can be a merger or a full sale of the business. M&A advisors are advising on contemplated transactions or partnerships. BCR: How can M&A affect one’s company? Tabori: There is never going to be a case where it is black or white. You will have to talk with the owner and find out what their goals are. From the perspective of the seller whether you call it M&A or brokering your business, they are basically the same, but they just serve different segments of the market.  BCR: More broadly, how should a company take advantage of business brokerage, and what does it usually look like in practice?  Tabori: It all starts with succession planning where the owner(s) are trying to figure out the next chapter for their company. Sometimes the owners are retiring and sometimes they are looking for a liquidity event. As soon as they discuss succession and one of the options is selling (outright or partially), a business broker is someone they should engage sooner than later to help set the strategy and direction moving forward as they explore that option.  In order to maximize the value of a company, it helps to prepare for the ultimate sale rather than start the process late. A good business broker can help you market the business for sale and do things like preparing the financial record keeping and ensuring the company is financially positioned in the best way so you can attract the most buyers at the highest valuation. This includes a relationship with an M&A advisor too. Often, sellers wait too long to engage in the succession planning of their business.  From the buyer’s perspective, this is most likely seen in the M&A advisory side. TG works with buyers looking to do strategic acquisitions, where growing organically is not going to happen as quickly as they are looking for. We assess what the buyers are looking for and incorporate the traits of businesses they are looking to buy and then go into the market to find potential buying opportunities.  Think of it like selling your house. If you’re thinking about selling, you wouldn’t go out tomorrow and try to sell your house. You’ll look at the market, hire a real estate broker, get the house in good working order, and enter the market at the right time to get the best value out of your home.  Business Consulting Resources has been championing successful transformations for 40 years and providing a comprehensive portfolio of consulting service solutions to help you solve complex problems. Reach out and let’s talk! Dan Tabori is the managing partner at Tabori Gilbert (TG). The TG partners have a combined 50 years of experience helping sellers with their succession plans and helping them sell their businesses. Dan can be reached via email or phone (808-721-9933.)