Mergers & Acquisitions
Tuminello Consulting worked on its first M&A project back in 1996. Since that time, our philosophy and approach have changed to an exclusive focus on the seller’s side. While that decision eliminated 50% of the market, we felt our fiduciary relationship as your agent was more important. Mutual trust at the outset is tantamount in any M&A endeavor.
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We are a small boutique firm. This means you won’t have to worry about being passed to a different team member each time a new task is performed. Randy Tuminello, Managing Principal, will be your primary contact throughout. He will serve as your exclusive agent and complete all the services required for the M&A transaction, from initial analysis to close. For this reason, Tuminello Consulting only accepts one or two M&A projects each year. Consider the following service summary.
1. Firm Value Optimization
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One of the questions we’re often asked is ‘When is the right time to sell’? The short answer is when you’ve taken the strategic steps necessary to optimize the value of your firm. As your strategic advisor, we start with an evaluation of your firm’s current value and, if necessary, recommend strategies that can significantly enhance that value. These recommendations are rooted in what buyers have told us they value most. It’s important to understand that, depending on the level of value optimization required, a 12–18-month delay may be needed before initiating the sale. We understand nobody likes delays. But selling too early can be just as bad as selling too late. That said, we have the expertise and tools to help you create and implement these strategies in the most expeditious manner possible.
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2. Sale Preparation
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The next major milestone is sale preparation. This step involves a current and historical evaluation of the firm’s financial performance and the development of a formal valuation report. We use the latest AEC market data and the most appropriate approaches in determining the ‘fair market’ value of your firm.
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Once this step is completed, we will review all the other major aspects of the firm’s business to compile a complete picture—operations, marketing, clients, project portfolio, and staffing, etc. This compilation is then condensed into an approximate 20–30-page document we refer to as an “Offering Memorandum”. This important document is what tells your selected prospective buyers everything they need to formulate their best term sheet and offer.
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The final task is to research and compile your prospective buyer list. We recommend remaining very strategic in determining why and who is included. Typically, we start with no more than 40. Our systematic initial contact with each firm initiates the next phase of the sales process.
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3. Sale Implementation
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The following sequence of events is possible but provided as an example only. Every transaction will vary somewhat depending on the specific circumstances. The sale implementation phase begins with the systematic contact of targeted potential buyers. Information is incrementally disseminated in greater detail as certain buyers continuing to express serious interest while others drop out naturally. From an initial list of 40, about 10 will participate in virtual group discussions involving the owner(s) and key members of the buyer’s leadership team. As your agent, we facilitate all meetings.
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Using chemistry and strategic alignment as a guide, the final group of interested buyers are asked to enter into a non-disclosure agreement. Once the NDA is received, the Offering Memorandum is sent requesting a non-binding Letter of Intent (LOI) and their best term sheet/offer. Buyer responses are then evaluated, and a shortlist is made based on the term sheets/offers received. Negotiations with short-listed firms continue until a final selection is reached. The selected buyer and owner(s) now begin the ultimate phase of the process.
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4. Negotiations, Due Diligence, Legal Agreements and the Close
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This is where your agent’s management experience, communication and negotiation skills become crucial to a successful outcome. Mutual trust engendered by open and honest communications make or break all deals. Once agreements become legally binding it’s natural for some degree of tension to arise. Keeping everyone’s perspective and needs considered throughout is essential. The most important aspects of this phase are negotiating the binding agreements including the Letter of Intent (LOI) and Purchase Agreement (PA) or Stock Purchase Agreement (SPA) if stock is part of the deal structure.
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Selecting the right buyer based on alignment and chemistry helps to ensure the best possible outcomes because both sides are more apt to behave like partners. This is especially true during due diligence, hammering out details like a working capital target, or the length of an employment agreement. Just as important, it provides a greater comfort level for staff as details about the acquisition are presented prior to the close. With all final details resolved, closing documents are officially signed, congratulations shared, and celebrations begin.
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It is a journey but very satisfying at the end as expectations are met. Tuminello Consulting will provide the right spirit, expertise, and approach to guide you every step of the way.
