Mergers and Acquisitions For Dummies (53 page)

Q and A:
A good meeting should allow at least two hours for a question and answer session. During the Q and A, Buyer usually takes the lead and asks Seller a lot of very difficult questions, although Seller can certainly return the favor as well.

Notice the flow of this agenda. The meeting starts with the basics, segues into the benefits Seller can offer Buyer, provides updated information and a forecast, and then addresses where Buyer will be able take the business. In other words, the meeting gets the basics out of the way first, thus clearing the table for where you want the discussion to go: doing a deal.

Seller should maintain strict control over the interaction between Seller's staff and Buyer. The employees may not know about the pending deal, and if Buyer starts calling employees to ask questions, the cat will be out of the bag. Also, Seller's employees don't work for Buyer yet, so Seller needs to guard against Buyer wasting the employees' time with question after question.

Perfecting the Seller's Presentation

The presentation deals with Seller: past, present, and future. Because many months (probably three to six) have transpired between finishing the offering document and sitting down with various Buyers in management meetings, Seller should focus on providing Buyer with an update from when the offering document was written. But you're not just throwing some updated figures on the table and leaving; you're presenting the info to Buyer. The following sections give you some guidance on acing that presentation.

The goal of management meetings is to get Buyers to submit a letter of intent (LOI) and then choose one lucky Buyer to close a deal with.

Gathering the right material

First and foremost, a management meeting should provide a financial update as well as updated guidance for future performance. Discuss the sales pipeline; in fact, the
pipeline report
(a listing of upcoming potential sales) often makes a good handout during the meeting. Specific customer names do not need to be divulged at this point (using codes such as prospect A and prospect B is perfectly acceptable).

I note in Chapter 8 that Sellers should avoid overly optimistic financial projections in the offering document, and the management meeting is why. Eventually, Seller needs to defend those assumptions in the management meeting, and the best way to do so is to simply do what he said he'd do: achieve the projections.

You should also discuss any and all material changes. These items can include, but certainly aren't limited to, new key employees, new customers, new contracts, new competitors, changes in the industry, lawsuits, and so on.

Don't re-create the wheel! Although the presentation will undoubtedly cover some information from the offering document, the focus should be on providing Buyer with new information.

Making Seller's presentation shine

The greater the number of people who attend a meeting, the greater the odds someone hasn't actually read the offering document. At the beginning of a management meeting, ask, “Okay, so who has read the book?” If few people raise their hands, you may need to take a few moments recapping the basics of the business. Of course, you (or your intermediary) should be well versed in the offering document so that you can refer Buyer to the appropriate page or section if she asks a question that's already covered in the book.

Divide and conquer the parts of the presentation. In a general sense, the intermediary should provide the introductions and act as a navigator. Different members of your team should handle the various parts of the presentation based on their areas of expertise. If you don't have an intermediary, the employee or owner who's been the main point-person during communication with Buyers is probably the best bet to be the navigator.

A good old slideshow is a great way to give the presentation. Make sure the meeting room has a projector and a screen or a clean white wall. Yes, a slideshow. I know. You've sat through far too many painful presentations using the tiny fonts with enough text per page to make it seem as if the text was ripped from
Atlas Shrugged.
But your slideshow doesn't have to be that way. Here are a few pointers for effectively presenting your information to Buyer with slides:

Don't pack in tons of information per page.
Keep each slide to two to five bullets. Each bullet should be short and to the point: no more than five or ten words.

Make your font readable.
No 10-point fonts! Use big 30- or 40-point fonts. Also, avoid cutesy or hard-to-read lettering; you're in a business meeting, after all.

Use the bullets as a memory cue only.
The bullets aren't the presentation; they're just there to help with the flow. Read one bullet and elaborate on it, and then continue similarly through the rest of the bullets. Reading word for word from the slide makes the presentation sound boring and canned, and you want to come off as conversational.

Do a practice run of the presentation prior to the first Buyer's meeting. Inevitably, the presentation has some kinks that need smoothing out. Better to find those kinks in practice than during the first meeting. Furthermore, schedule the weakest Buyer as the first meeting if at all possible. If you're going to screw up a presentation on an early meeting, better it be on the weakest Buyer and not a favored Buyer.

Prepping Buyers for Management Meetings

As Buyer, you should prepare for management meetings by reading the offering document, reviewing the financials and Seller's Web site, and conducting research about Seller (to the extent that public information is available). Spending some time researching the industry and getting a handle on other companies and industry trends shows you're serious.

Come prepared by having read the materials provided; don't expect Seller to review information already discussed in the offering document. I always love seeing a Buyer come to a meeting with a dog-eared copy of the offering document with sticky notes jutting out from numerous pages. This situation tells me Buyer has done her homework and is ready to ask good questions.