In the digital age, you might think it’s possible to sell your company without ever meeting the buyer in person. However, while technology has indeed enabled more trust-building virtual encounters, in-person meetings, particularly in the middle market, still hold significant value. Yet, prior to these face-to-face encounters, virtual management calls have become a critical part of the M&A process.
What is a management call? It’s a pivotal conversation where your potential buyers meet you and your key team members. Its purpose? To establish a mutual understanding, cultural alignment, and to assess and address any pressing queries. This usually happens after the potential buyers have perused your materials but before any formal commitments like an IOI or LOI are made.
Now, let’s delve into how you, as the seller, should prepare for this call:
When Should You Expect the Call?
In middle market M&A transactions, especially with family-owned businesses, a management call typically precedes an LOI. By this point, buyers have reviewed materials your M&A advisor has prepared, such as the Confidential Information Memorandum (CIM). After understanding your business on paper, the buyers will have follow-up questions, and they want these answers directly from you.
Remember, while your investment banker plays an indispensable role in facilitating and advising, you’re the one who built the business. The buyers want to hear from you. Your stories, your challenges, your vision – all become pivotal at this stage.
What Kind of Questions Will Buyers Ask?
- Your company’s origin and growth trajectory.
- The reasons behind your decision to exit.
- Potential growth opportunities and perceived threats.
- How your business could align with their existing portfolio.
While your M&A advisor can prep you on potential questions, it’s essential for you to internalize your CIM and be ready to answer or delegate appropriately.
How to Prepare for a Management Call
- Get the Right People on the Call: It’s not just about you. While you’ll spearhead the conversation, having other key team members—like your CFO for financial queries or your COO for operational insights—can be invaluable. These are the individuals who’ve been instrumental in building the company with you, and their perspectives can be pivotal.
- Embrace the Unexpected: You can’t predict every question. If stumped, it’s perfectly okay to take a moment or promise a follow-up with a detailed answer later. Honesty and transparency are crucial; they can often build more trust than immediate answers.
- Set Clear Boundaries: While it’s vital to address buyer queries, there has to be a limit. Overly prolonged negotiations can sap momentum. It’s essential to set clear deadlines to ensure the process remains streamlined.
- Conduct Your Own Due Diligence: While the buyers are assessing you, you should be evaluating them too. Understand their investment history, their usual deal size, and their long-term visions. This two-way assessment ensures a mutual fit.
Family-owned businesses, in particular, carry a legacy and emotional weight. Management calls in such scenarios are not just about numbers and growth charts but about ensuring that legacy is honored and furthered.
To successfully navigate a management call, remember that while your M&A advisor is there to guide you, your preparation and genuine engagement are what will truly resonate with potential buyers. The authenticity of your story, the clarity of your vision, and the passion with which you’ve built your business will be your most influential assets. So, harness them effectively.
Preparing for your management call is pivotal in the M&A journey. Need expert guidance tailored to your unique business? Reach out to Astria LLC today, and let’s collaborate to ensure your narrative deeply resonates with potential buyers. Let’s partner for success!