In this presentation, Eric Duffee discusses common pitfalls and organizational and operational strategies to adopt prior to engaging in the sale process.

1. Presented by
Eric DuffeeGetting Your House in Order

2. HISTORY

3. Project ODYSSEY
Fragile relationships with disbursed group
of employees, who in turn had all of the
relationships with customers—all of them
could literally just drive away
Required significant and unpredictable
interactions with third parties
Deal team didn’t know all of the facts but
weren’t comfortable bringing others into
the circle of knowledge

4. Project WALRUS
Inefficient tax structure
Nobody knew who actually owned
the company
Significant delays to deal with issues that
could have been addressed prior to the
sale—by the time they were fixed, the 2008
recession hit

5. Project GAME OVER
Software company but didn’t have any
intellectual property protection or real
business continuity plan
Internal deal team didn’t have the
bandwidth to keep up
Compliance programs weren’t adequate for
the scrutiny of a big, public buyer

6. Ugly Financials
1

7. Wrong, Convoluted, or
Unknown Organizational
Structure2

8. Uncertain Relationships
with Customers, Suppliers
+ Employees3

9. Lack of Adequate
Intellectual Property
Protection4

10. Loose Lips Sink Ships
5

11. Cutting Corners
6

12. Third Parties
7

13. Unjustified Delays
8

14. Unwelcome Surprises
9

15. So what if my deal falls apart?
I still have my business!

16. Yes, but you may be
viewed as “damaged
goods” by:
Your customers
and/or suppliers
Investors and other
financing sources Potential suitors
Your employees
There is also a
physical and
emotional toll

17. Buyer’s view: Transaction price
depends largely on risk

18. All business have some warts!
The key is how you address them

19. What can you do to minimize
the chances of your deal going
down in flames?

20. Think like a buyer!
Choose an
organizational
structure that sets you
up for success
Financial clean-up:
audits or quality of
earnings (QoE)
analysis
Protect/incentivize
key employees
Pay attention to
ownership issues now
Identify and protect
intellectual property
assets (of all types)
before a deal

21. Protect key
customer/supplier
relationships
Control the flow of
information
Do your own due
diligence review
Prepare to do two
full-time jobs: run
and sell the
business
Strategically assess
risks and address
them
Identify warts and
determine how to
strategically disclose
them

22. Why not just wait to see what
happens when the buyer
shows up?

23. Maximize use of the
seller’s leverage
while you have it
Preserving credibility
Encouraging trust
Sending a positive
message about
how you’ve run the
business

24. Eric D. Duffee
Kegler Brown Hill + Ritter
eduffee@keglerbrown.com
keglerbrown.com/duffee
614-462-5433