Client Background

Our client was a small, closely held manufacturing business looking to sell their company. Despite initial interest from prospective buyers, they faced challenges during due diligence due to the state of their financial records.

Challenges Face

The business encountered critical obstacles:

1. Financial Transparency and Accuracy: The need to improve financial statements to meet buyer expectations and pass due diligence.
2. Inventory Management: Lack of controls and tracking mechanisms for inventory, hindering accurate cost of goods sold (COGS) calculations and profit margin analysis.

Our Approach

As M&A advisors, we undertook a comprehensive strategy to enhance financial transparency and operational efficiency:

1. Financial Statement Cleanup:
   • We collaborated with the client to transition from cash basis to accrual basis financial statements on a monthly basis.
   • This initiative aimed to provide clearer, more accurate financial insights essential for potential buyers.
2. Inventory Management and Profitability Tracking:
   • We developed inventory counting templates and implemented robust inventory tracking in QuickBooks Online.
   • This allowed the client to accurately calculate COGS for assembled items and track profit margins by product and service monthly.
3. Support During Sale Process:
   • Acting as liaisons between the client, prospective buyers, and due diligence professionals, we facilitated seamless communication and ensured alignment throughout the sale process.
   • Our dual role as M&A advisor and fractional CFO alleviated the client’s burden of coordinating between brokers, investment banks, and accountants.

Additional Services: In addition to preparing the business for sale, we offer comprehensive services to streamline the entire process:

1. Business Sale Representation:
   • We can act on behalf of the client to actively sell their business, leveraging our deep network of private equity firms, family offices, and angel investor groups interested in small and midsize companies.
2. Marketing and Investor Introductions:
   • We prepare a comprehensive financial package and marketing deck for prospective buyers and investors, introducing the client to potential partners who align with their business goals.
3. Legal Support:
   • Through our extended network of trusted business attorneys, we can refer clients to expert firms to handle legal matters associated with the transaction, ensuring a smooth and compliant process.

Benefits

Our integrated approach offers significant advantages:

• Cost Efficiency: By combining sale readiness consulting, business representation, and legal support into one cohesive service, we provide a cost-effective alternative to hiring separate investment banks and accounting firms.
• Expertise and Network: Leveraging our expertise and extensive network, we maximize the client’s chances of a successful sale while minimizing complexity and stress.

Conclusion

Our collaboration with the closely held manufacturing business exemplifies the transformative impact of strategic financial management on preparing businesses for sale. By addressing financial transparency, inventory management, and facilitating seamless communication during due diligence, we empowered the client to achieve their objectives and maximize value in the sale of their business.

As dedicated M&A advisors and fractional CFOs, we continue to support businesses in optimizing financial operations and navigating complex transactions with expertise, efficiency, and a commitment to achieving superior outcomes.