C.V.Lemmon & Co. is a proud member of the International Network of M&A Partners.

Benefits

What do you get? What do we do?

In reviewing the options to retain an investment banker for purposes of selling a closely held business, the questions that most normally come up are related to what we do, and how our involvement impacts the transaction. The answers are pretty simple. We provide a plan, we bring qualified buyers, and we assist through the closing. These are things we do in every engagement.

The signal is clear.

When a seller engages an investment banker, the message to the marketplace is that this seller is serious. The owners aren't just shopping the company, they have a plan. By having an investment banker's name "on the cover" of a confidential memorandum, the seller clearly signals his or her intention to consummate a transaction.

Reasonable expectations.

Nothing turns off potential buyers faster than dealing with a potential seller whose estimates of value are totally off base. We won't let a seller look foolish by approaching the market with unrealistic expectations, either too high or too low. Once the seller knows what to expect, why this is the right value, and how to make it happen, then getting it done becomes almost automatic. Our expertise is based on providing these three ingredients, along with our substantial database of highly qualified buyers.

It creates a sense of urgency.

Our engagement lets the prospective buyers know they aren't the only dog in the hunt. If they are interested, they must take action. Whether there are two potential buyers or two hundred, it helps for them to know they must step up the pace or be left out of the race.

We keep the bidding open and the process moving.

A one-on-one buyer will immediately ask that a seller negotiate only with him. He wants to limit the opportunity and gain an advantage in the negotiations. Without paying for it, he will ask for a first right of refusal, his option without terms or consideration. As a seller this seems to be a reasonable request, a hard request to turn down, and it is especially difficult if he is the favored buyer. As an intermediary, we can deflect these question and put the onus back on the buyer to get something on the table. We can negotiate with other buyers, or retain the option to do so, as part of our duty to you. We keep things moving along.

Do we get more for a seller?--or at least offset our costs?

Based on history, we can clearly demonstrate that this happens. It is a somewhat subjective argument because the truth is that nobody ever knows. The method of achieving greater value for the company is simple. Most businesses sell within a range, defined as multiples or percentages of a combination of values. The ranges are different for different businesses. That range, and the methods of calculating that range, are somewhat imprecise, and fluctuate with industry conditions and the overall economy.

Sellers are normally obliged to set their going-in price. If a seller suggests a range, the buyer immediately moves to the low end. If the high end of the range as stated by the seller is more than the buyer perceives it should be, the difference is simply discarded as false optimism.

Our magic, or as close as we come to it, is having more expertise. We are certain to be more informed and better documented than the buyer at setting the "going in" range of values. We aren't sellers; instead, we are full time investment bankers. We come with facts to support our range. Once the range is established, we use prior preparation, documentation, and presentation to achieve a sale at the high end of the range. The true upside in most business sales is not the value from the first dollar, but the value above the low end of the range that most buyers seek to pay.

Third party credibility.

Most buyers (and sellers) spend far more time operating their business than they do buying or selling it. They have less expertise in establishing the range and the value within the range than we do. It is not unusual for us to more than offset our fee by establishing the range of value at the first meeting. Small changes in multiples can create big changes in net proceeds. The buyer is obviously going to work for the low end of whatever range is established. If we have been able to set the range advantageously from the start, the benefits are obvious.

Confidentiality.

The biggest fear of many business owners contemplating a transaction is that the word will leak out, especially to employees, customers, and competitors. We can be totally invisible to the business, or interact in some other stated capacity. We have been introduced as bankers, insurance auditors, and other pseudo's to protect confidentiality.

We'll be ready.

Nothing is worse than premature presentation. Our prior preparation and planning is thorough. The package will be complete and professionally prepared. We've done hundreds of them. We know what they want, and that they always want more. We will be ready to respond immediately with timely and accurate information and access to more. Much of this can be done with minimum interruption to client and employee schedules.

Sell the sizzle.

In packaging your company, and in presentations to prospective buyers, there are things that we can say as factual disclosure or informed opinion that might sound differently coming directly from you. Having someone else toot your horn can be helpful.

Get to the issues.

Buyers often want to express themselves more candidly than they might in a face-to-face meeting. We can absorb that information dispassionately and respond appropriately. At the same time we can convey their reactions to you in a manner that allows you to capitalize on the issues. Every transaction has hot button issues. Our job is to understand those issues and be sure those buttons get pushed. When you bought your house, did you say anything to the realtor that you might not have said to the seller?

Packaging.

Thomas Edison's definition of genius was "Mostly perspiration and a little inspiration from time to time." Gathering materials, assembly, writing the book, many hours of proofing, copying, refining, collating, binding, making it pretty, and putting it all together.

Deal Structure.

Sellers normally want to sell stock. Buyers normally want to buy assets. We can help position the transaction to best suit the needs of our client.

Negotiation.

We carry the mail. Shuttle diplomacy. Focus and determination. Overcome the obstacles. Stay with it until it's done. This is our job. We don't have other priorities or outside conflicts. Get everybody most of what they want and maintain the relationship for the future.

While we negotiate, you get to sit back and react intelligently to the other side without being a direct part of the negotiations. In many cases, the seller has some ongoing involvement with the business. Those relationships are normally easier if they are free from direct face-to-face tensions.

Documentation.

Contracts, non-competes, consulting agreements, real property, lien releases, title changes, staff issues, multiple locations, state laws, equipment, existing leases, employee benefits. Not impossible, but lots of balls in the air.

Closing.

Nowhere is Murphy's law more apparent than at the closing table. We've been there enough to eliminate most of the glitches through prior preparation. Having said that, we're never surprised when some detail pops up at the last minute. It always happens, but we get it handled.

Done deal.

Sellers who have been through the drill more than once will often say that their biggest problem was not getting the deal done the first time. We have a very high percentage of transactions close on the first try. Sellers who represent themselves typically have a much lower success rate. Why?

Is it worth it?

The evidence says, "Yes". Many of our engagements are follow-on assignments with existing clients together with referrals from those clients and their advisors. We assume the reason they like us and are comfortable referring us to their friends and colleagues is that they are happy with the work. This web site provides a listing of "tombstones" published with prior written permission from clients we have represented.

Payday.

The biggest benefit of all is that our clients achieve their financial goals.

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