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Many company owners, presidents and other executives who have struggled to build a company have years of blood, toil and sweat invested. They have faced financial hurdles, demanding customers, and fierce competition, hired and trained staff and usually poured every extra dollar back into their firms.


Few of these individuals invest that time and energy solely for the hope of one day selling their company. But the reality is, that companies go through different lifecycles, ownership changes, and often renewed investment from a larger firm is needed to take a company to its next level of development.


In my many years of working at helping companies’ position themselves to the logical strategic suitors, I have discovered some common issues and hurdles that they face in positioning and preparing their company. This often results in…. creates delays in…. and ultimately can result in the ownership getting less value for their valuable company


So if the day comes to sell or merge or company and you have decided to go out and seek an international logical suitor or have been contacted a logical buyer to acquire the company, here are some tips that can help you prepare for the process and maximize your value. It will also help you maintain a healthy and productive staff during the transition and have all sides create a win/win/


The first decision is the gathering together all of a company’s detailed business records and history for potential suitors. This information is only provided to those who have signed iron clad confidentiality agreements.


Here are some guidelines on how to go about organising this vital information.

1). Financial Information

The most important documentation to have readily available and organised for review is a company’s financial statements. It is best to have at least four or five years of complete financial statements ready. The next important step in the information process is to have a sales history on the company.

A current listing of inventory and accounts payable and accounts receivable ageing schedules are a must. Also valuable is the owners or key executives compensation, listing not only the owner’s salary(s) but also their bonus, pension, life insurance, car, perks and all other company paid personal benefits. This information is crucial in determining what the company’s actual “cash flow” is as it significantly influences the purchase price.

A general valuation formula for the advanced manufacturing industry that determines sale price is based on a multiple of normalized “Earnings before Interest, Taxes, Depreciation and Amortization”. This is referred to EBITDA. Although there are other methods of valuation depending on the nature of the printing business, a multiple of EBITDA is the most common.

A set of pro-forma sales and profit projects looking down the road at least on year is essential. Buyers need to understand where their payback is coming from. Any companies with substantial physical assets should have full appraisals done on these assets before moving into this process.


2). Business Information

Your acquisition prospectus or Information memorandum should contain a “mission statement” that, in a few words, encapsulates the purpose and direction of the company. Your presentation must include a brief but through business history on the companies and markets you have served. One very sensitive matter is to guard your company customers. Until a serious intention has been expressed, this information should be guarded.

3). Licenses, Leases and Contracts

Part of what makes a typical advanced manufacturing company worth pursuing is it’s important contracts and obligations. These should be easily available, including leases, notes, liens, loans, agreements, contracts, licenses, employment agreements and other important contracts.

4). Organization

You will need to provide a prospective suitor with short (no name) resumes on your key managers. A complete management chart annotated with salaries and job titles is important.

There is no benefit to sellers to hold back information and make the buyers pull it out piece by piece. The best negotiations are quick and smooth. Bringing in the right professionals to drive the process is also essential to make this process work. A prospective seller can only negotiate the purchase price when they have provided the prospective suitors with information to fully evaluate the company.


Copyright 2004
Mark Borkowski


Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation, a mergers & acquisitions brokerages firm since August 1987 and has consummated over 80 transactions. He can be reached at (416) 368-8466 ext. 232 or via email at mercant@interlog.com