If you want to create more value for your company, you might be considering acquiring another manufacturing business. At the same time, perhaps you’re an entrepreneur looking to acquire an existing business to take it to the next level. In both of these instances, it’s advisable to work with a dedicated M&A advisory team that has extensive experience in acquisitions in the manufacturing industry.
Because as Investopedia points out, an acquisition involves:
- Large sums of money.
- Vast amounts of paperwork.
- Complicated accounting procedures.
- Government regulations.
- Other legalities.
It should be clear that navigating all these matters is a challenging endeavor. That’s why it’s key to ensure your M&A advisory team comprises CPAs and attorneys who possess considerable M&A experience.
Why You Need External M&A Advisory Expertise
Forbes advises that it’s important to understand that no matter how good the generalist CPA and attorney are who advise you on day-to-day business matters, they’re unlikely to have the expertise required for an M&A. There are several reasons for this:
- Legal: The details of the purchase agreement need to be hammered out and agreed upon in a watertight contract that is satisfactory to both the seller and the buyer. This includes everything from what assets will change hands to reviewing employment contracts.
- Financial: There will be highly complex financial matters to navigate that involve more than simply calculating the value of the business’s assets and revenue. There will be concerns such as the value of intangibles like patents and other intellectual property, cash vs. stock consideration and of course tax matters.
Obviously, these activities are substantially different from those involved in the day to day running of a manufacturing business. That’s not to say that your regular counsel and accountant can’t be involved in the transaction. It can be helpful to have them review the target’s documentation so they gain an understanding of the business before you assume responsibility for it. But to fine-tune the specifics of the deal, you’re best advised to surround yourself with M&A advisory experts.
What an M&A Attorney Does
The role of an attorney in the M&A process is important. He or she runs the title search, drafts the non-compete agreement, handles the employment agreements for key management staff, prepares the purchase and sale agreement, and creates the bill of sale. Finally, the attorney will check that all closing conditions are met and obtain the different parties’ signatures on the documents.
To find a transactional corporate lawyer with experience in business acquisitions, it’s often best to ask a legitimate source for a referral, according to Nolo. Your regular lawyer, as well as your peers in the business, may be able to refer you to someone. At the same time, if you work with a business broker, he or she will be able to recommend a trustworthy lawyer.
When selecting a professional, you should think of all considerations that pertain to the target company, including corporate governance, real property, intellectual property, employment matters, environmental matters and taxes.
What an M&A CPA Does
During an M&A, a CPA assists with due diligence. He or she is responsible for verifying the company’s financial position and continued viability based on the income statement, balance sheet and cash flow statement. They will also help the buyer understand the historic and future working capital requirements. His or her findings will be checked by any underwriter of a business loan, which makes it even more critical that the numbers are correct.
It’s interesting to note that according to Accounting Today, the market for M&A CPAs is growing exponentially. This is due to the high number of acquisitions currently taking place as a result of Baby Boomers leaving the workforce. Consequently, there’s a greater choice of M&A CPAs available.
To find an experienced professional, it’s wise to ask your CPA or another trusted source for a referral. At the same time, if you choose to work with a business broker, he or she will likely be able to refer you to a reputable CPA with expertise in your specific sector.
Experienced Professionals Can Help You Get the Best Deal
Acquiring a manufacturing business can be an outstanding way to grow your income and assets or to expand your existing company. When you consider how much is at stake — in terms of finances, intellectual property and human capital — it makes sense to ensure you have the best possible CPAs and attorneys supporting you.
Just keep in mind that when you work with a business broker who specializes in manufacturing, he or she will be able to recommend legal and accounting professionals with significant M&A advisory experience in this sector. And that, in turn, will help you get the best possible deal for the company you want.