Attendees of our M&A conferences often ask us to explain what makes the Generational Equity process so unique and successful? Our answer is simple: Throughout the years through lots of hard work, dedication, and collaboration, we have perfected a system that may not work 100% of the time (quite a bit is out of our control as you can imagine) but more often than not leads to a successful culmination of a merger or acquisition event (either a 100% sale or a partial sale).
So that you can visualize our process, I am providing you with the following flow chart that identifies the key steps we follow:
Now don’t get me wrong, most middle-market M&A advisors will follow a similar process, especially after the “Go To Market” decision is made. However, two things make our system work so effectively: the prep phase (boxes 1-5) and the skill and resources of our professionals. Let me elaborate on both a bit.
First, if you look closely at the second box, you will see that three documents are listed. Each of these is vital to our success as a deal team. From the Evaluation flows the REV (Roadmap for Enhanced Value) and the OM (Offering Memorandum). The evaluation is the key first step in what we do. It is comprised of several components that all work together to allow us to ultimately develop the enterprise value for each of our clients:
Once our evaluation is completed (a process that typically takes 2-3 months depending on how quickly financial data is given to us), we provide the business owner with what we believe is the fair market value for the business. This number is what a willing and informed buyer would pay based on the projected growth of the business. It does not factor in (nor could it) any value of the intangible assets that the business has that for specific buyers would drive a premium value above and beyond the current enterprise value (this is where the offering memorandum comes into play).
After the value is determined and provided to our client, he or she obviously has two options: Go to market immediately OR hold and grow the business for a future sale. This is where the REV document comes into play. The reality is not every business is “buyer ready” when they come to us. Some need financial guidance, others need to focus on operational improvements, some are owner-dependent and need to develop middle-level managers, and finally, a portion may have customer concentration (usually more than 20% of revenue coming from a single client) that needs to be addressed.
The REV document is designed to ferret out these issues that need to be worked on so that the value can be “enhanced.” The key here is that our relationship with our clients does not end when the evaluation is completed. And this is a unique feature of our model as well: Our clients are entitled to two updates of value at no additional charge during a five-year period. This enables our business owners to spend time working on improving the bottom line of the company and come back later with an improved opportunity and logically a better fair market valuation.
The final product is the OM. This is the document that is created by the deal team once the business owner decides to move forward and approach buyers. It is designed to attract buyers that will be an “optimal” fit for the business, buyers that will be willing to pay a premium above the market value based on unique features that the business may have. This is where the skill of the deal maker and his/her team come into play and leads me to the second feature of our system that makes it work so well: our talented, knowledgeable, and experienced deal makers and their resources.
Lots of financial analysts that join our organization aspire to one day become a deal maker, although the skill set required to be a successful deal person is rather unique. You have to be able to understand great quantities of financial and marketing data, while at the same time translate them into the language of an entrepreneur. You have to have incredibly thick skin because half the time the buyer is mad at you because of the hard work you are doing to drive the value up, and the other half of the time the seller is mad at you because you aren’t driving the value up high enough!
Your typical deal maker also is a marital and family counselor, helping to maintain familial peace and harmony during a very stress-filled process. This role cannot be underestimated in the sale of a family-owned business and is another example of why business owners should have professional representation when going to market. If you don’t have a professional on your team to handle the tough parts of negotiating with buyers, it will add additional strain to your life and your family during an already stressful time.
Our deal professionals have, in many cases, decades of real world experience in the M&A trenches. There is an old axiom in deal making that is so very true: A deal isn’t a deal unless it falls apart at least once. And another: At least 60% of all deals fall apart in due diligence, so be ready to pick up the pieces.
On top of their skills, our deal teams also have tremendous resources available to them. Not only does this include the dozen or so M&A research databases we subscribe to, but also our proprietary database of registered buyers that now numbers over 34,000. Why is this proprietary? Because these are buyers that we are in regular contact with who tell us specifically what they are looking for in acquisition opportunities, including location, industry, size (revenue and earnings), growth potential, and intangibles. These characteristics are updated regularly to reflect any changes in a buyer’s preferences, and every client we take to market gets passed through this database to look for matches. As you can imagine this system produces very good combinations of buyers for our clients.
Again, our overall system is not that much different from other competitors of ours. However, what sets us apart is that we do the following very, very well:
And it is these features that have enabled Generational Equity to be recognized as the M&A Consulting/Advisory Firm of the Year in 2011 and 2013 by the M&A Advisor, a leading M&A trade group. In addition, we have been ranked No. 1 in deals closed in North America valued less than $25 million for the past eight years, and we are consistently ranked in the top ten in deals below $100 million. We are quite justifiably proud of our successes, but our success is due to our proven system and skilled, talented professionals.
However, many of you will, for a variety of reasons, decide to pursue buyers without our help. If so, then you can follow the process outlined above to do so. I have not even touched on the last 11 steps in the process. If you would like to delve deeper into these latter steps so that you can ensure success despite going it alone, attend a Generational Equity M&A workshop. Most of the business owners that attend our seminars do so because of the quality of information we provide, and only a minority of attendees ever become clients.
If you would like to find out how to attend a seminar in your area, please give us a call at 877-213-1792 and we will see if your company qualifies you to attend.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2014 Generational Equity, LLC All Rights Reserved
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Wealth Advisors’ affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Wealth Advisors to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Wealth Advisors is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.