Spotlight: Accelerated Transactions
Business owners face many unique challenges both in the market place and in succession planning. SealedBid has provided Mergers and Acquisitions (”M&A”) guidance for nearly 25 years and has extensive experience maximizing value for our clients. In special situations, SealedBid offers business owners a unique Accelerated M&A process that allows business owners to exit more quickly than the norm without sacrificing value.
What is an Accelerated Transaction?
An Accelerated Transaction relates to an M&A process tailored to a specific client’s need and is designed to engage prospective acquirers, create competition and complete a transaction within an expedited timeline.
How Does the Accelerated Transaction Differ from a “Standard” Transaction Process?
Besides the obvious shortened timeline, an Accelerated Transaction would likely be viewed as being closer to a true/stringent M&A Auction. Advisors work to create targeted marketing documents, identify likely prospects and define a strict timeline of events. With an increased sense of urgency, both sides of the table (seller and buyers) must be responsive and engaged to meet bid deadlines and ultimately finalize negotiations.
In addition to shortening the marketing timeframe, Advisors must collect all relevant documentation and reports in advance and prepare for an expedited due diligence period. In a standard transaction a buyer may request 90 ± days to complete their review, an Accelerated Transaction may call for the same process to be completed in 30 ± days.
The motivating factor for conducting an Accelerated Transaction is unique for each ownership group. Below are examples of the many outside forces that drive transactions:
Why Choose an Accelerated Transaction?
1. For many entrepreneurs and private business owners, their Company and its assets represent a substantial portion of their wealth and are connected with personal credit guarantees. A transaction may be necessary to prevent a default and/or call of a delinquent note - - owners stand to receive significantly more value by selling their operating Company as opposed to liquidating assets.
2. Transactions are often motivated by changes in the shareholder group to allow exiting owners to capture “market value” for their interest. These situations can be triggered by retirement, divorce or simply the need to part ways.
3. In the unfortunate event of an untimely death or illness, estate planning can influence a transaction to meet Estate Planning and probate needs. In these situations, depending on the impact on the Company, it is often important to replace/install a new leader of the business and stabilize the business.
4. In all market conditions, businesses often encounter opportunities to maximize value within a defined window. Whether it be capitalizing on specific customer/vendor contracts, leveraging economic changes or taking advantage of specific market forces.
Upside and Downside of an Accelerated Transaction
What are Some Common Risks of an Accelerated Transaction?
What Type of Companies Really Benefit from an Accelerated Transaction?
Companies that have a strong strategic base of potential acquirers, with either strong regional competition looking to expand, and or strong vertical companies looking to add products/service offerings can benefit from using an Accelerated Transaction. Also, companies that are located in a desired metropolitan area with strong financial prospective acquirers (primarily individuals in small groups). Most importantly, a company that decides to choose an Accelerated Transaction needs to have desirable assets and or have a well-known brand name.
SealedBid's Role in Accelerated Transactions
SealedBid is proud to have successfully served clients for over 20 years with M&A Advisory, Recapitalizations, Succession/Exit Planning, Family Transfers and Management/Partner Buy-outs. As a boutique firm, SealedBid engages in a limited number of projects at any given time to ensure we deliver the highest level of senior attention, expert advice and transaction experience to each client.
Our Transaction Professionals use a team approach and have completed many Accelerated Transactions in the past. SealedBid uses an extremely Confidential approach in standard transactions and Accelerated Transactions that has led to great success. Clients can be assured they are working with a strong deal team that can support Accelerated Transactions from pre-marketing to marketing to Due Diligence to closing.
If you are interested in learning more about SealedBid, our services or our team, please do not hesitate to contact us at (952) 893-0232. SealedBid will work closely with you, your financial advisor, attorney, accountant and banker from the initial stages of pre-marketing through closing and post-closing.