Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here with Chris Hatten, one of our audit directors on our Transaction Advisory Services team. He’s also a Certified Mergers and Acquisitions Advisor. Welcome back to the Playbook Chris.
Chris: Appreciate it, Jen.
Jen: Chris we’ve talked in a couple other videos about transaction advisory services, due diligence, there’s a lot of prep that goes into that; what does it mean to get a company market ready?
Chris: Well I liken it to three main areas, one being the mental aspect, the administrative aspect, as well as the transactional aspect. When I say mental a lot of times we have clients that are closely held businesses or still within the same family and for them to get to the point where they’re ready to sell the business there’s a lot of hurdles that they actually have to overcome. I can’t relate to anything that they have to go through because as much as I like my business I haven’t been invested in it for 30+ years or sold it off to children or grandchildren at times.
And then from the administrative standpoint there’s a lot that goes into it and sometimes that’s an impediment to getting a deal done because you have to get your financial statement set up, you have to go and get all those old, historical records and start documenting processes and procedures that the company’s been doing for sometimes 20 or 30 years that they’ve never actually gone through and documented before. And then from the transaction process, a lot of it is just the education. There are multiple exit channels that they can go through whether it’s selling to private equity, a strategic buyer or sometimes it’s transacting within the family itself or to management.
Jen: that sounds really interesting. How long does a transaction usually take? I’m sure there’s an ideal timeline for a transaction and I’m sure there’s a very hurried timeline; what’s kind of the average?
Chris: Usually they enter some type of period of exclusivity so it’s within 60 days and then there’s usually some extensions that go in there, so ideally by the time they actually get the LOI executed it’s probably 60 to 90 days before it gets closed.
Jen: And on the transaction side when should they start getting somebody like PKF Texas involved; a year, 2 years, 6 months?
Chris: Obviously the more time we have the more we can do with them to transact at a higher value hopefully, so some would say 2 years because there’s a lot of levers that we can throw between now and then. But even if it’s just 60 days in advance to help them get their books cleaned up and help get their records pulled together that will help.
Jen: Perfect. Well, that’s great, we’ll get you back to talk a little bit more about it.
Jen: Thanks. To learn more about how we can assist you with potential transactions visit PKFTexas.com/transactionadvisoryservices. This has been another Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook. Tune in next week for another chapter.