Whether a company sells a minority stake in a Series A round of financing in order to fuel additional growth, a majority stake to a private equity group to take some cash “off the table” and fuel additional growth, or sells the complete business to a strategic buyer, the CFO needs to understand the objective and tailor the strategy around it. The CFO should look at the company through the eyes of the targeted investor group and determine what aspects of the business may impede the sale, then determine what can be done to address those issues. For example, a concentrated customer base may maximize your short-term margins and simplify your business, but a more diverse customer base will be more attractive to buyers. If a particular division of the business may scare off potential buyers, it may be best to spin it off or discontinue it. Decisions about your ERP system, audit firm, tax strategy, pricing strategy, hedging strategies, legal issues, staffing, and financing all need to be made with the sale objective in mind.
If the CFO does not have first hand experience in selling a company, it would be wise to bring in an interim CFO to provide additional advise and help them through the process. It would also be wise to supplement your accounting and finance team as you go through the due diligence process. This will not only reduce the considerable stress on your existing staff, it will help to ensure a more successful result and may pay a multiple return on the additional investment required.
The Middle Market CFO 