M&A Advisory Services in Dallas, TX
M&A Advisory Services in Dallas, TX
This page walks through what our M&A advisory services in Dallas actually include, in the order they happen. If you own a company in the lower middle market and a sale is somewhere in your plans, this is what to expect from the first meeting to the closing table, and what we will ask of you at each stage.
The short answer to why an owner hires an advisor at all is on our M&A advisor Dallas page, and the wider engagement is described under our business advisory process. This page is the longer answer: the work itself, step by step.
Step one: the first meeting
Your business intermediary explains what is involved in selling and answers your questions about how the process will treat your operation, your history and the future prospects of the firm. Nothing is signed at this meeting. We are learning what you want from the sale, whether that is retirement, a partner buyout or the next venture, and you are learning how we work. Before you leave you will have a priority list of the most likely types of buyer for your company and how each one is best sold to.
What you do: bring your questions and an honest account of why you are selling. Buyers ask, and a clear reason such as retirement raises the odds of a sale at the highest justifiable price.
Step two: recasting the financials
Before anyone talks about price, our team recasts your financial statements to find owner’s discretionary cash flow, the figure a buyer and a lender actually price from. We lay the three previous years and the current year to date side by side on a spreadsheet, so trends are visible and unusual items are separated from the true earning power of the business.
What you do: provide three years of financial statements and the current year to date. The cleaner the books, the shorter this step.
Step three: the valuation comes first
Once the financial review is complete we assign the applicable multipliers to your cash flow and work out the deal structure that fits. Several standardized valuation techniques are used and industry comparables are researched, so the recommended selling price is one we can defend in front of a buyer, a lender and a CPA rather than a number pulled from the air. This is the same appraisal work described on our Dallas business valuation services page, and it is why our clients have historically received 97 percent of appraised price. With the required documents in hand, a full analysis takes about three to four weeks.
Step four: engaging The Vant Group, and what it costs
If the number and the structure make sense to you, your intermediary prepares the engagement agreement, with the amounts and any agreed conditions written in, for your attorney to review. Your attorney will usually have comments before you sign, and we expect that. We recommend that we act as your exclusive M&A advisor, and we work in concert with your attorney, CPA and other key advisors rather than around them.
On fees we keep it plain. Every transaction carries a preparation fee and a success fee that is paid at closing. The figures depend on the size of the business and the services the engagement requires, and we go through them with you by phone or in a complimentary consultation before you commit to anything. If you already have a buyer at the table, our Facilitation service does the deal work for a reduced success fee.
Step five: the documents and the marketing package
After the agreement is signed we send you a list of what we need: a business questionnaire, a fixed asset list, a copy of the building lease and the other items buyers and their advisors always ask about. From those we build the marketing package. It is a full roadmap of the operational, financial, tax and other information a serious buyer wants, and we take pride in it being one of the best in the industry. We will not market a business until you have signed off on the accuracy of the package and of the summary for the listing website.
What you do: read both documents carefully. This is your chance to correct, clarify and add before a buyer sees them.
Step six: the buyer’s eye review
While the package is being built we look at your company the way a buyer and a lender will. Customer concentration matters: a business with a diversified customer base earns a premium over one that depends on a customer worth more than 20 percent of revenue. Key employees and good systems matter, because they give a new owner continuity. Books that flow cleanly from invoice to general ledger to financial statements matter, because a buyer who cannot follow the numbers will hesitate in due diligence. Even the premises matter; clean, orderly offices and warehouse space make a strong impression. Where we find a weakness we tell you plainly and, where there is time, help you fix it before it costs you at the negotiating table.
Is the deal bankable?
Most deals are financed in part by a third party lender, so we ask the lender’s question early: can this business support the payments a buyer will need to make, out of its own cash flow, and still leave that buyer an income? Where the answer is yes, the buyer pool is wide. Where the financials cannot carry a conventional loan, we say so before you go to market and set the expectation for seller financing or a different structure, rather than letting a deal fall apart in a bank’s due diligence months later. We have closed sales with no bank involved, using buyer equity and a seller note, and our in house funding department exists to remove the financing hurdle, which is one of the main reasons deals fail.
Step seven: confidential marketing to qualified buyers
When you approve the package, an email notification of the new listing goes to our buyer database of more than 10,000 potential acquirers, and a very confidential written executive summary of about 100 pages is made available to interested buyers. No buyer learns the name or location of your company until they have supplied a signed and dated financial summary and a signed confidentiality agreement. Alongside the database we use targeted buyer searches, co brokering groups, trade journals and internet advertising. The aim is several buyers at once and a competitive environment focused on value rather than price.
Step eight: screening buyers and the first meeting
Every interested buyer is entered into our system against your company, and both our staff and your intermediary review the buyer’s profile and speak with the buyer before deciding whether they are appropriate to pursue. Only then do we set up a meeting. The first buyer and seller meeting lets the buyer tour your facility and ask about the operation. Buyers are expected to open with their professional experience, their acquisition goals and why they see your company as a possible target, so you spend your time only on people who have passed that screen.
Step nine: the letter of intent and negotiations
Negotiations usually begin with a letter of intent. It is not binding, but it is the roadmap the rest of the deal follows: price and structure first, then due diligence, the buyer’s funding and finally the purchase contract. It is normal for the LOI to change several times before everyone signs it. Your intermediary is responsible for keeping the negotiation moving and for keeping the transaction at arm’s length between you and the buyer, so that the bargaining does not damage the working relationship you will need after closing. Under LOI you should expect a running conversation with your intermediary, not silence: what the buyer has asked for, what is outstanding on your side and where the timeline stands.
Step ten: due diligence, financing and the purchase agreement
Due diligence is the buyer confirming what the marketing package told them. Third party lenders have their own due diligence checklists and they often stretch the closing timeline; seller financing, where it applies, is usually the quickest route and can take only weeks to closing. Both sides’ attorneys and tax advisors then review the definitive purchase agreement, and reaching agreement on the final wording takes time.
What you do: answer requests quickly. The faster the buyer’s questions are answered, the shorter the gap between LOI and closing and the less room for a deal to go cold.
Step eleven: closing and the handover
Your intermediary sets up the closing at a venue acceptable to everyone. You and the buyer each receive a closing statement that lays out the proceeds and expenses of the sale, and the buyer finalizes the loan with any third party lender at the same time. Closing itself generally takes one to three hours. Expect to stay on for a period afterwards to train the new owner. How long depends on how far you have stepped back from daily operations in the years before the sale; the more the business runs without you, the shorter the training.
Who does this work
Based in Dallas since 1999, our team offers more than 200 years of combined business transfer experience and is made up of MBAs, prior business owners and a Certified Business Intermediary accredited by the International Business Brokers Association. Because we have bought and sold companies of our own, we direct your transaction in terms of due diligence, funding and negotiating as though it were our own.
Every step above is listed in order on the selling process page. To see how the number is built, start with Dallas business valuation services. If you are weighing an advisor against a Dallas business broker, read M&A advisor Dallas. Then contact us for a confidential conversation; The Vant Group has been walking owners through this process since 1999.