The M&A marketplace has witnessed brisk activity over the past several years, with medium- and large-sized office technology dealerships augmenting their holdings with strategic acquisitions. Some dealers are backed by private equity, others have large coffers fortified for the specific purpose of expanding their geographic and market footprints.
Dan Ruhl,
Oval Partners
Not all M&A strategies involve owners selling their full interest in the company to another dealership before riding off into the sunset. San Francisco-based Oval Partners has devised a unique model, where owners who join its strategy (which includes Flexprint, Laser Options, Pro Copy and Cannon IV) invests a significant portion of the sales proceeds back into the holding company. This enables the seller to remain as the chief executive for his or her individual company and provides that person an equity interest in the holding company.
Thus, the M&A landscape offers various outlets for owners seeking to leverage the value of their often-lifelong investment and either take all their chips off the table or still keep some skin in the game. But once the decision to buy or sell is pondered and a potential partner has been identified, there is still a long road ahead in deciding whether the proposed union is a good fit for buyers and seller.
Dan Ruhl, a partner at Oval, offers a checklist of questions to ask from both sides of the table that should provide a strong indication of whether a synergy exists, or a potential disaster awaits.
What questions should I ask when selling my dealership:
- Do I want to generate liquidity and stay involved, or generate liquidity and exit?
- Who are the key people on the team and how should they be incented going forward?
- Is the business operating at a level that will result in a satisfactory valuation?
- Are my financial statements clean and will they hold up to financial due diligence?
What questions should I ask when buying another dealer:
- What is the reputation of the seller’s business?
- Will the owners, executives and company culture be a good fit with our own?
- Is the seller’s company growing or declining?
- Does the company bring revenue and expense synergies to our operations?
- Is there strategic value?
- Do the strategies of the buyer and seller align?
- Am I ready to bring on a new partner?
- Is there customer concentration within the seller’s client list?
- Has the revenue been consistent?
- Are the acquiree’s financials clean?
Obviously, these questions only scratch the surface of a long, sometimes tedious and often frustrating vetting process. But the sooner both buyer and seller can get the preliminary considerations out of the way, the quicker both parties can perform a deeper dive and hopefully emerge with a letter of intent and the ultimate completion of a deal.
