With a background that includes sell-side M&A, real estate, family investment and, as a CEO, a recent private-equity-backed merger of his company MADSKY with a business called CodeBlue, Hunter Powell, the combined companies’ CEO, has seen lots of deal activity.
When it comes to driving a successful sale as a private business owner, Powell says it’s important to understand that you can create the marketplace for your business. There are many private equity firms and potential strategic partners to choose from, so choose the one that fits best.
Then, when you're thinking about getting ready for a sale, look out at your forecast and pick a time when you can perform.
“Surprises are never good in processes,” Powell says. “Performance is always very helpful for getting through bumps in the road, which inevitably happen. And if you're performing, that just always makes things go smoother.”
To be successful, owners should be transparent. That’s because surprises kill deals. Powell says he took an upfront approach with both his board, investors and with Aquiline Capital Partners through the MADSKY and CodeBlue merger. That helped because he says there were surprises in the process, but he had prepared everyone for those, which helped them get through what was a bumpy deal and come out on the better in the end.
Powell also advises business leaders to insulate their team.
“Performance is so critical,” he says. “If your team gets dragged into the rumor mill, the anxiety, the distraction of due diligence, that doesn't help your business sell itself. And at the end of the day, the businesses and the clients and the results are what sell.”
On the quality of earnings side, Powell says it’s critical to put the time into the details and go in depth, much like an audit.
“You need cash flow testing. You need to make sure the balance sheet accounts are really tight,” he says.
Powell also suggests meeting as many team members as possible. Owner/operators are more often focused on the bottom line. So to get a broader sense of the business, meet as many team members as you can.
Powell joined BMO’s Jennifer Johnson, CLA’s Adrian Nohr and IDEAL Industries’ Steve Henn, to talk more about transaction preparedness during the Chicago Smart Business Dealmakers Conference. Hit play on the video above to catch the full panel’s conversation.