Do we have the necessary contracts in place, or should we amend the agreements with terms that are more desirable to potential buyers? Are there change of control provisions?
Are most of our customers or clients happy and satisfied?
What percentage do we expect will continue doing business with us after the company is sold and what steps should we take now to help increase that number?
What percentage of our clients currently renew their agreements? What is the average longevity of contracts?
What types of changes in our current structure, such as A-level clients we should consider cultivating or C-level clients we should consider terminating, in order to better position the business?
What messages should we be sending clients as we position the business for sale?
How and when do we inform key customers of our plans to sell?
What do we do if the potential buyer wants to speak with our customers as part of the due diligence?
How do we respond when rumors get out about a possible sale?
How do we deal with customer concentration?
In the sale process, what do we do if a current customer wants to buy our business?
Lenders. It’s important to check relationships with your lenders and determine:
Can our existing loans be transferred to the new owners? Are there any terms in our existing loans that should be addressed before we can sell the business?
Are our loans in good standing? Are we in compliance with all of the covenants and conditions?
Are there prepayment penalties?
What loan modifications could help strengthen the business?
Are there any terms in our existing loans that could hinder a sale, and how should we address these issues? Are there change of control or due on sale provisions?
What collateral does the lender have?
Without doubt, in today’s competitive market, buyers are more skeptical and analyzing businesses more closely than ever. There is much that can be done to prepare for a sale and ensure a smoother process. Those who work with qualified advisors and plan ahead by considering their employees, customers and lenders are more likely to maximize the value of their businesses and minimize the number of headaches.
James Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle-market companies. www.casselsalpeter.com