Service: Sell-Side Merger and Acquisition

Clients hire us with several goals in mind - to Maximize Net Proceeds, Ensure Transaction Closure and achieve the best possible terms with confidentiality, speed and minimal burden on ownership and management.

Maximize Net Proceeds

None of our sellers has yet to disagree with the phrase "Cash is King"; they just prefer to add one word - "NOW". Our rigorous analysis, comprehensive global buyer research, professional marketing materials, tenacious advocacy, coordination of the due diligence process, negotiation abilities and in-depth understanding of the relevant tax issues all combine to ensure that no money is left on the table or unnecessarily paid in taxes. Each step of the marketing process is custom tailored to our client's particular situation and designed to exploit competition amongst strategic buyers to achieve multiple premium priced offers.

Execute Transaction to Closing

Deal closings do not happen naturally and are, in fact, unnatural events. If a deal does close easily, the buyer may have simply realized that the price being paid was "buyer friendly" and decided to look past what would otherwise be areas of concern. However, when buyers are pushed to the brink from a pricing perspective, problems related to financial performance and projections, accounting, environmental compliance, customer concentration, employment agreements, non-compete agreements and industry downturns are all magnified. Our track record of preventing such issues from becoming deal-killers is attributable to our team of seasoned deal professionals. A small sample of potential issues that frequently surface during middle-market transactions includes customer concentration issues, missed financial projections, accounting issues, and environmental issues, amongst a multitude of others.

Customer Concentration -- For small business owners, customer concentration is an increasingly common theme. Often owners are able to get a foot in the door with a rapidly growing customer and are able to transform their customer's momentum into impressive revenue and profit growth for themselves. Understandably, a disproportionate amount of resources, including those normally earmarked for sales and marketing efforts, are directed toward fully exploring revenue opportunities with the prominent customer and making certain that the customer is kept happy. As a result, revenues become increasingly concentrated in the hands of one or a few customers.

Without long-term contracts with these large customers, risk-averse buyers and lenders seek alternative evidence that sales to the customer will continue. Therefore, Billow Butler focuses on identifying and communicating evidence to a buyer that supports an enduring relationship with the customer. Factors such as relationship history, switching costs, joint R&D efforts, technology compatibility or simply a lack of other suppliers that possess the requisite capabilities are all factors that help prevent the loss of a particular customer. Our ability to identify and communicate such factors to a buyer has allowed us to be extremely successful in overcoming revenue concentration concerns on behalf of the buyer, as is evidenced by the following representative transactions:

• Injection Molder - 85% customer concentration
• Injection Molder - 90% customer concentration
• Metal Fabricator - 93% customer concentration
• Metal Fabricator - 90% customer concentration

Missed Financial Projections -- A proven track record of strong financial performance and promising trends can change in an instant. A myriad of factors, many outside of the owner's control, can quickly eliminate current profits and short-term projections. If a downward hiccup occurs while the business is being marketed, it is magnified and often the source of significant angst on behalf of both prospective buyers and sellers. However, it does not have to be a deal-killer. Billow Butler strives to keep the management team focused on running its business by limiting transaction-related distractions.

Accounting Issues --Financial statements for our clients have historically ranged in sophistication from those prepared without the use of a computer to audited statements. This variation in sophistication and reliability, in conjunction with differing motives amongst owners - tax planning, loan covenant compliance, etc - requires considerable upfront analysis in order to address any potential issues that could potentially kill a deal down the road. Translating the varied messages of these financial statements into a story that can be recognized and appreciated by a buyer is one of many keys to success in the middle market.

Environmental Compliance -- Having served numerous manufacturing clients over the years, our professionals have substantial experience dealing with environmental issues in the context of a business sale. We strive to identify potential areas of concern early in the process and leverage the services of civil and environmental consultants in order to properly assess potential exposure and possible remediation alternatives. Surprises are minimized and the buyer is given ample time to determine how best to address any material issues. As a result, in our history, environmental issues such as hazardous material disposal, underground storage tanks, contaminant transport or the like have not caused a deal to fall apart.

Negotiate Terms

Issues such as post-closing balance sheet adjustments, survival periods, representations and warranties, indemnifications and liability baskets and deductibles can all have a significant effect on both the net proceeds received and the amount of risk retained by the seller post-closing. Accordingly, we devote significant attention to the non-economic terms in the purchase agreement in order to ensure that our clients receive the most favorable contract terms.

During the negotiating process, our clients are shielded from the sometimes emotionally tense discussions with the buyer. Our experience negotiating transactions enables us to assist business owners in their effort to extract better pricing. This experience is particularly valuable when a business owner has not previously been involved in a sale transaction. Our professionals are more experienced and comfortable pushing a buyer to the brink, but know when to compromise in order to ensure the deal happens. Meanwhile, the relationship between our client and the buyer is unaffected, especially important during the transition period.

Help Ensure Confidentiality

Confidentiality is interwoven with every step of our marketing process in order to avoid disruption of management and employees and to maintain positive relationships with customers and suppliers. Everyone requesting confidential information is required to sign a Confidentiality Agreement. For competitors that are included in the process, we tailor the timing of our approaches and marketing materials in order to ensure that sensitive information is not placed in the wrong hands.

Speed Up the Deal Process

In deal making, time is the enemy. Hazards, including economic changes or developments within our clients' businesses or markets, can befall a deal with the passage of time. Therefore, the speedier the transaction and the greater the momentum we can foster, the lower the risk of failure to close. Accordingly, we offer our clients fast service without compromise in quality or results.

Minimize Burden On the Owner

During the marketing process, is it essential that our clients' businesses continue to achieve the aggressive strategic and financial goals set by management and communicated to potential buyers. Accordingly, our collaborative role is one that emphasizes minimal burden on the seller, so that they may continue to run the business effectively.