Tim Bullard and His Number 1 M&A Team
Over 10 years ago, Tim Bullard started Lakes Business Group, and became part of the VR network. VR (Valued Representation), established in 1979, is the leading international transactional advisory firm serving the privately held middle market. In the past 10 years, Lakes Business Group has been the number 1 VR Office internationally in 5 of those years with 2017 marking the fourth consecutive year of being #1. Tim was awarded the VR Most Valuable Intermediary Award in 2013 and again this past year, 2017.
JoAnn Lombardi, President of VR Business Brokers / M&A stated, “VR recognizes the achievements of its owners on an annual basis. To be a two time winner of the VR Most Valuable Intermediary awards allows us to acknowledge Mr. Bullard’s continued contribution to the entire VR organization. I personally thank him for setting standards that everyone in VR can aspire to with hard work and dedication.”
Tim thanked everyone on his team in Waukesha and everyone in VR. “I get to work alongside great people and assist others in their quest for the American Dream.”
Northern Illinois Wholesale Food Distributor Successful Transaction
An Illinois food distributor has been successfully transferred to a new owner. The seller was ready to retire after operating the business for several years. The new owner has an incredible brand that is known for customer service and reliability.
This company has a niche in providing a wide variety of ingredients throughout the bakery industry.
This wholesale food distributor was on the market for 5 months and had over 90 inquiries. So congratulations to our sales rep, Joe Braier and to the new owner. Also, best of luck to the seller in his retirement!
Bankers’ Objections in Business Acquisitions
A recent article from the International Business Brokers Association (IBBA) talks about the ‘Banker’s Dozen’ objections compiled from one of the top SBA lenders in the country. To have a successful and timely closing, start discussing documentation needed and addressing concerns early in the process.
Below are some of the due diligence items needed to avoid delays in getting a deal done.
Citizenship of the Buyer
- Early on determine the citizenship status of the buyer and obtain a copy of the documentation of proof.
- A buyer can secure SBA financing if they have a green card and are legal permanent U.S. residents.
Buyer’s Personal Credit Report
- A resume and Statement of Personal History questions are required for each guarantor. Knowing any issues early on give the bank time to clear through them during the underwriting. This will help avoid delays.
- If the buyer’s credit score is under 700, a written explanation should be provided.
More Equity in the Deal is Needed
- The Equity requirement for business acquisitions are changing with the release of the SBA’s new version of its Standard Operating Procedures (SOP).
- The SBA will be providing additional insight into these changes, the basic change is that the buyer must contribute at least 10% equity towards the entire transaction and there must be at least 10% equity on the post-transaction pro form balance sheet. A seller note can still be used and can provide for up to half of the required equity injection. However, the seller note must be on full standby (no payments at all) for the life of the SBA loan.
- If the buyer’s equity is coming from a gift, it will be required to have a Gift Letter with 2 months of bank statement showing the source of this gift.
Pledge of Personal Assets as Collateral
- If the business assets do not fully secure the loan, the SBA will require that any personal real property with lendable equity must be pledged as collateral. If your business plan and financial statements are strong, you might avoid putting up a lot of collateral.
Due Diligence Helps your Success Rate
In the due diligence process, we keep a spreadsheet of the items needed and completion dates to keep our client and the buyer group on task. For our lower-middle market businesses and private equity groups, there are pages of items needed for a comprehensive due diligence process which is needed for a successful deal.
Last year Terence T. Burton posted an article on LinkedIn on a due diligence and in the article he stated the purpose of a deeper, more thorough Operations Due Diligence. It was a lengthy article giving reasons for it and examples of what happened when a deep, thorough Operations due diligence is not done.
Below are the key four points he put in his article on the why you want a comprehensive Operations Due Diligence.
- To find hidden, unknown and undiscovered problems that will have a severe impact on operating and financial performance of the acquisition. A few examples he gave are:
- Obsolete inventory and equipment;
- Inventory performance and variances off the books;
- A warehouse full of new products that will never work in the field;
- Employee morale and attitudes, and broader cultural readiness to adapt and execute the necessary changes that are required to grow into a compatible and highet performing part of the larger entity.
- Identify, prioritize, and deploy the right corrective improvement efforts to create maximum operational value quickly – like in the first 60-90 days of new ownership. These represent the tactical “quick strike-high impact” opportunities for improvement. These opportunities are the known low hanging fruit to the seasoned improvement practitioner’s eye that produce rapid improvements in business and operational performance. It is important to validate these opportunities with the internal managers to gain acceptance and begin building change ownership. Many acquisitions get to this step where a 50,000 foot boilerplate plan is produced – One that looks nice but is totally exclusionary, dillusionary, and non-actionable at a tactical level.
- Develop an aligned, organization-wide improvement strategy and vision, deployment plan, and practical implementation approach.
- This effort represents the unlimited unknown opportunities for improvement that must be continuously mined, prioritized, and scoped relative to alignment with the company’s business plan;
- The other purpose is to identify innovative breakthrough improvements that competitively position the new organization way out in front of the industry norms.
The big differentiator in great acquisitions is their ability to discover, harvest, and implement the real operating breakthroughs in their industry.
- Implement the required changes thoroughly and successfully during the acquisition integration process. Execution is the key to success and this is where the majority of acquisitions fall apart. The major root cause is management’s underestimation and oversimplification of execution. This leads to the failure to take on and implement major transformation initiatives successfully, while dealing with day-to-day business. In the face of crisis, improvement is always the first casualty.
This is a small portion of his article… you can find the full Linkedin article on this page or the link above.
Business Sales Awards
2017 marks Lakes Business Group;s 10th year assisting privately held companies execute their exit strategy in the lower-middle market. Our team has had the privilege of working with outstanding clients over the years. We take pride in designing and implementing our clients’ goals, while leveraging value up and getting maximum dollar for the sale of their businesses.
Throughout the past 10 years, our office has grown to become the #1 top producing M&A advisory firm in the Midwest. We have been providing Merger & Acquisition services in a wide range of industries. Below is a picture of our ‘trophy wall’ in our office. These awards are from 2008 to the present.
These award plaques and trophies include:
2017: Acquisition International’s Leading Mergers and Acquisition Adviser of the Year
#1 Internationally Ranked VR Office – 1st Quarter 2017
#1 Internationally Ranked VR Office – 2nd Quarter 2017
2016: #1 Internationally Ranked VR Office!
#1 Internationally Ranked VR Sales Agent – Mark Smith
#2 Internationally Ranked VR Sales Agent – Joe Braier
#5 Internationally Ranked VR Sales Agent – Nicole White
#6 Internationally Ranked VR Sales Agent – Andrew Falci
#9 Internationally Ranked VR Sales Agent – Michael Szmanda
#10 Internationally Ranked VR Sales Agent – Larry Heck
2015: #1 Internationally Ranked VR Office!
#1 Internationally Ranked VR Sales Agent – Michael Szmanda
#3 Internationally Ranked VR Sales Agent – Mark Smith
#7 Internationally Ranked VR Sales Agent – Tom Alberts
#8 Internationally Ranked VR Sales Agent – Larry Heck
2014: #1 Internationally Ranked VR Office!
#1 Internationally Ranked VR Owner – Tim Bullard
#1 Internationally Ranked VR Intermediary – Mark Smith
#3 Internationally Ranked VR Intermediary – Andy Schmelzer
#4 Internationally Ranked VR Intermediary – Michael Szmanda
#7 Internationally Ranked VR Intermediary – Joe Braier
#8 Internationally Ranked VR Intermediary – Larry Heck
2013: Most Valuable Intermediary – Tim Bullard – President/CEO
#2 Internationally Ranked VR Office!
#3 Internationally Ranked VR Intermediary – Joe Braier
#9 Internationally Ranked VR Intermediary – Michael Szmanda
2012: #1 Internationally Ranked VR Office!
#2 Internationally Ranked VR Intermediary – Mark Smith
#3 Internationally Ranked VR Intermediary – Joe Braier
2011: #1 Internationally Ranked VR Owner – Tim Bullard- President/CEO
#2 Internationally Ranked VR Office
#7 Internationally Ranked VR Intermediary Joe Braier
If you are considering selling your business call our office at 262-347-2083
Business Information Needed when Ready to Execute your Exit Strategy
You’ve built your business and now ready to execute your exit plan. When contacting your business consultant, they will ask for the following information to complete an offering memorandum outlining the details of the business.
- AR Aging Report
- AP Report
- Number of Customers in Database/Number of Active Customers/Customer Concentration
- Number of Suppliers of Vendors/Supplier/Vendor Concentration
- Vending Contracts
- Maintenance Contracts
- Lease/Purchase Agreements
- Corporate Employee Chart
- Employee Benefits Summary
- Corporate Documentation
- Corporate Insurance Policy
- Any Shareholders agreements
IF REAL ESTATE IS OWNED:
- Floor Plans
MISC ENGAGEMENT DOCUMENTATION:
- Partnership/Consent of Spouse or Corporate/Partnership Resolution
- Licenses & Permit Documents & Process to Obtain Licenses and Permits
- Copies of Patents, Trademarks, Copyrights, Etc.
- Description/Documentation of Technology being used
- List of products and services sold Top 5 Income Producing Items
- Any outstanding legal issues
Now’s the Best Time to Sell a Business
Now’s the time to sell a business and retire, but many baby boomers are waiting. Find out why in the article below featuring Lakes Business Group’s Joe Braier where he explains that “The first step in exit planning is to find an advisor who is highly experienced in working with business owners. Do your due diligence and find a reputable mergers and acquisitions advisor who understands business valuation, deal structure, and the overall process of bringing a business to the open market. The right advisor will be willing to meet with you face-to-face, review your business, and discuss your vision for the company’s future and goals for the sale.”
AI Magazine’s Leading M&A Advisers of the Year
Please read the article below to discover the difference between listing and selling your business.
M&A Expectation in the New Year
Now that the year is coming to a close, what can we expect and hope for in 2017? Will a new administration help mergers and acquisitions in the business world? Some of the post-election chatter is projecting this will be good for domestic M&A. Right after the election, in early November, Bloomberg .com posted that Trump’s win is a positive for M&A overall. A Financial Times article quoted Eric Siegel, a corporate lawyer at Dechert, “Trump is a life-long dealmaker. Combined with the Republican Party platform, that bodes well for the deal environment generally.
In early December, Fortune posted an article about the telecommunications industry having a sense of excitement as they expect the incoming Trump administration will likely be more agreeable to mergers and acquisitions.
Two of the main reasons that the environment has the potential to be more favorable for consolidation: First is the lower corporate taxes that President-elect Trump has promised will free up capital that companies can spend on acquisitions. And second, is the scaled-back regulatory environment would help M&A deals that may have otherwise been obstructed.
In the next thirty days we’ll see how this all plays out, but hoping to a prosperous New Year for all!