A thorough analysis of your company is the first step in the M&A process. We examine your entire business model including your mission, products and services, customers, suppliers, systems and procedures, financial statements, personnel, marketing and sales, growth patterns, industry sector, competition, and every other facet of your company. In effect, we perform a pre-transaction due diligence to determine the market readiness of your company. During this time we also jointly determine whether you should have a professional business valuation performed. If not, Murphy can establish an approximate value for the company.
Murphy will develop a complete report as an outgrowth of the above analysis. We will meet with you to discuss the strengths and weaknesses of your company and the approximate value and Most Probable Selling Price (MPSP). We will also discuss possible term and structure scenarios. If the proposed asking price, structure, and terms mesh with your goals, we then move forward to marketing your company. If not, Murphy will identify ways to increase company value for a future sale.
Develop and Implement Marketing Plan
This process entails developing the Confidential Memorandum and Blind Profile, identifying potential buyers among corporate, private equity, and individual buyers. The Confidential Memorandum is an exhaustive marketing report detailing all facets of the business. The Blind Profile is essentially an Executive Summary without name or location so that the company cannot be identified. Those prospective buyers who, after reviewing the Blind Profile, want further information must sign a Non Disclosure Agreement (NDA) before they are sent the Confidential Memorandum. There is typically no price attached to the business and ideally, we expect 2 to 4 offers for the company so that an auction atmosphere is created.
Prospective buyers that respond with interest to the Blind Profile are qualified for their ability to buy and their ability and experience to manage the business. These prospective buyers are expected to provide proof that they are financially able to purchase the business, in addition, they must show the requisite experience in order to manage and grow the business. Only after they have sufficiently shown proof that they are able to purchase and manage the business will they be allowed to submit a Letter of Intent (LOI).
Evaluate Letters of Intent
Each Letter of Intent is analyzed and evaluated relative to the business owner’s goals and objectives. The LOI’s could differ significantly in price, terms, and structure. At this point, there is usually a substantial amount of negotiation that takes place to more closely align the price, terms, and structure to the goals and objectives of the business owner. In a successful negotiation, one prospective buyer is chosen.
Due diligence is one of the final steps in the process of transferring company ownership to a third party. Simply stated, it is the step in which the buyer makes sure that he is buying what he thinks he is buying. At this point in the sales process, a lot of energy has been expended by both parties and a lot of confidential information has been exchanged. Despite signed non-disclosure agreements, this information can seep into the marketplace should the deal be derailed during the due diligence process. And this is where most deals are derailed. Murphy Business will work with you to ensure that the process goes smoothly.
Definitive Purchase Agreement
Upon satisfactory completion of the due diligence process, the buyer and seller will execute the definitive purchase agreement. This document outlines the final price and structure of the transaction including financing sources, representations and warranties, indemnifications, expected role of the owner in the transition, any necessary EPA audits and regulatory approvals and other conditions of the sale.
Closing the Transaction
After painstaking effort, attention to detail, and directing and controlling the transaction, both parties sign the contracts and the buyer transfers the funds. The transaction is closed.