Well Capitalized

What are the most important terms in negotiating the sale of a business? We sat down again with deal attorney Brent Pietrafese of Calfee, Halter & Griswold for a deep dive into legal due diligence. Among other things, we discuss:

• Protections business owners retaining minority stake in the new business should focus on during negotiations
• Most heavily negotiated terms in M&A transactions
• Key terms for entrepreneurs when negotiating a post-transaction employment agreement
• Non-compete clauses in acquisition documents and employment agreements
• Advice for business owners who may be negotiating the sale of their company in the near future

We interviewed Brent Pietrafese, M&A attorney from Calfee, Halter & Griswold LLP for an overview of M&A due diligence and what business owners should expect from this part of the transaction process.

• What legal specialty groups are involved in due diligence?
• What type of information is requested from a buyside legal team during due diligence?
• What if a business owner doesn't know the answer to a legal M&A due diligence question?
• Why is it important for a business owner to hire an attorney who's experienced in the M&A transaction process?
• How long does legal due diligence take and who from the company needs to be involved in the process?
• The importance of hiring a team of professional advisers outside of the organization to help with the sales process and due diligence
• Best practices for business owners preparing for a legal due diligence process and most common issues that arise during due diligence
• What are the most common factors that hold up a transaction during due diligence?
• Advice for business owners entering an M&A transaction beyond preparation and organization of documents

We recently sat down with Harry Shimp, Senior Operating Partner at MCM Capital, to discuss his role at the firm and its portfolio companies and thought you might find it interesting. Among other things, Harry covers:

• Types of issues a CEO of a portfolio company should discuss with a senior operating partner
• Setting the communication and reporting cadence between the portfolio company and senior operating partner
• What management teams should expect from weekly calls with a senior operating partner
• Characteristics that make a potential portfolio company attractive to a senior operating partner
• Maintaining a company's culture after a private equity acquisition
• Advice for business owners considering selling to a private equity firm

What really changes at a company after being acquired by an outside investor? The answer largely depends on the acquirer. We interviewed Matt O'Donnell, founder of North Shore Commercial Door, on his experience selling his business to private equity backed strategic Torsion Group Corp. Matt discusses the timing of the transaction, some of the emotions he dealt with throughout the negotiation process, trying to juggle running the business while negotiating the sale, and gives some advice for business owners contemplating a similar transaction.
1:50 - What made it the right time for Matt to sell his business?
3:15 - What to look for in a strategic partner
4:15 - Transitioning into his new role with Torsion Group Corp
7:08 - What emotions did he deal with throughout the negotiation process?
12:35 - His goals for the company and how partnering with a PE backed strategic will help serve those goals moving forward
15:40 - His experience running the day-to-day operations of the company while being immersed in the M&A transaction process
16:34 - Advice for business owners contemplating an exit and things he wish he'd known more about prior to entering into the negotiation process
For further discussion on the M&A process, please visit
https://www.mcmcapital.com/private-equity-resource-guide-and-information/

We interviewed Kelly Lamirand, Senior Vice President at KeyBank to discuss what business owners should expect from Senior Lender M&A due diligence. Among other things, Kelly discusses:

• What information do senior lenders require when performing bank due diligence in an M&A transaction?
• Why do banks conduct due diligence?
• Common lending terms including revolver availability, cashflow recapture, and airball
• Discussion of the "5 C's of Credit," Character, Capacity, Condition, Collateral, Capital
• What debt levels are senior lenders comfortable with from a total debt perspective and a senior debt perspective?
• What factors into the interest rate senior lenders charge? Does a bank's relationship with the private equity firm factor into pricing?
• What are debt covenants and what purpose do they serve?
• How do banks view growth capital expenditures vs. maintenance capital expenditures?