Northwest Funds Group, Inc.
FAQ
1. What is your process?
2. What is my business worth?
3. Do you have industry experience?
4. What deals have you done?
5. How do you market confidentially?
6. Who are your competitors?
7. How long does the process take?
8. Should I tell my employees?
9. What should I tell my employees?
10. Why should I hire Northwest Funds Group as my mergers and acquisitions firm?
Our process is aimed at minimizing the sellers time, so that they can focus on running their business and having it grow, and maximizing the sales price. To accomplish that, we have the seller fill out a questionnaire regarding the company’s operations, sales, marketing, customers, suppliers, employees. We also collect due diligence materials such as financial statements, tax returns, A/R and A/P aging, et cetera. We then review this with them to gain additional insight into their operations and business practices.
With that done, we can now answer 99% of the questions that buyers may pose, thus minimizing interruptions to the seller. We prepare an Executive Overview (one page) to market to prospective buyers with a Non-Disclosure Agreement and a Business Review (30-50 pages). The Business Review goes into further details about the company and the buyer receives it after signing the Non-Disclosure and we have a conversation with them to qualify them further. Besides targeted mailing, internet site posting, we also call each, and every, buyer target. This is where our client state we are relentless. It takes between 2,500 and 4,000 calls to consummate a favorable transaction for the seller.
We find there are always general rules of thumb for each industry. However, we always exceed those. In general terms, very small firms sell for a small multiple of revenue, earnings, ebitda or assets. ebitda is defined as earnings before interest, taxes, depreciation and amortization.
We put the extra effort to find a buyer who is looking to fill a “hole” in their organization that the seller fits. These “holes” may be products, services, regional presence, distribution channels, customers, higher profitability, or a business model in whole, et cetera.
• Do you have industry experience?
This actually is a double-edged sword to the seller and is frequently one of the wrong assumptions made by sellers. Over the past 13 years we have dealt with many industry specialists who either represent specific buyers, or claim they have contacts in the industry. Here is what we have found:
Industry specialists are transaction driven. The faster they get a deal done, regardless of what the seller wants, the faster they get paid. When a buyer has employed an industry specialist/consultant to assist them in the deal, and we represented the seller, we have achieved twice the offered price from these “experts”.
We have completed transactions in a wide variety of industries. These include, but are not limited to: agriculture, construction, manufacturing, communications, wholesale, insurance, business services, healthcare and technology. For reasons of confidentiality, we do not list company names or sales prices. For further details, see Proven Experience
We do not do commercial real estate, oil and gas properties, banks or financial institutions.
• How do you market confidentially?
We market utilizing the Executive Overview attached to a Non-Disclosure Agreement. In all of our documents we do not disclose a company or owner(s) names, or employee names or pay. The Executive Overview does not include the city or state of the company as well. Our standard Confidentiality and Non-Disclosure agreement is worded to protect our clients for a period of three years regarding any information that is disseminated.
There are less than a handful of true merger and acquisition firms in the Northwest. By that, I am referring to companies whose sole focus is merger & acquisitions. There are firms whose expertise is consulting, e.g., general operations and/or sales and marketing. The sale of the business comes at the end of an assignment, and although they do not have the expertise required, they do not outsource this segment of consulting.
Our number one competitor is the seller. This person generally started the firm, worked 15-20 hour days calling on prospective customers, making or overseeing the production of a product or service, when in the office. In other words, they are the top salesperson. They know the company, it’s products or services, and its customers. What they do not know they figure they will learn. Unfortunately, what they do not know will also cost them in price and terms at the time they are trying to maximize both.
• How long does the process take?
Each transaction has its own timeline. Clients, and company issues, have their own priorities outside of the transaction. The process from beginning to end can take from three months to one year. Typically, the process may flow as follows: 1) documents are gathered (financial statements, tax returns, other financial documents, corporate book, et cetera), reviewed by our firm; 2) marketing documents are created; 3) marketing commences; 4) conference calls and visits with multiple buyers occur; 5) offers are tendered; 6) due diligence occurs; 7) purchase documents are drafted by attorneys; 8) closing occurs.
Generally speaking this is not necessary, since everything is done confidentially. Employees typically do not like change and the unknown. As it may take more than three months to complete a transaction with the “best fit” buyer you do not want to get the employees focusing on this and not on their work.
• What should I tell my employees?
We advise our clients who do tell their employees prior to completion of a deal, that you have been approached, and are now exploring other growth opportunities which a strategic buyer will bring to the company, such as new products, distribution channels, sales and marketing acumen, et cetera.
• Why should I hire Northwest Funds Group as my mergers and acquisition firm?
Preparation is a large part of the process. A seller is up against experienced buyers of companies and that is all they do. They probably have visited the seller’s competitors and suppliers, and may in fact be in discussions about acquiring their competitors as well. These are tough negotiating guys who eat sellers for breakfast and companies for lunch. The principal of NWFG has 12 years experience buying companies, he knows how buyers think and negotiate. Having our firm on your team tilts the playing field to your advantage where it belongs.
“Achieving premium values for sellers”