Unlocking the M&A Landscape: Insights for 2024 and Beyond

Forchelli Deegan Terrana

Founded in 1976, Forchelli Deegan Terrana LLP (“FDT”) is one of Long Island’s largest and most distinguished full service law firms. Headquartered in Uniondale, NY, the firm employs 70+ attorneys in nearly 20 practice groups. FDT has a robust Corporate and Mergers & Acquisitions practice group that services a broad range of industries nationally.

Who is on your M&A team and why?
Our M&A team is composed of a diverse group of attorneys, each concentrating in critical aspects of M&A transactions. This allows us to operate efficiently and effectively manage legal expenses.  This multidisciplinary approach ensures that our M&A group provides our clients with seamless and comprehensive legal services.  Our M&A team focuses on the following:

M&A: drafting and negotiating the key transaction documents, (i.e. the asset purchase agreement and equity documents). They ensure that the core legal framework of the deal is solid and protects our clients’ interests.

Employment and Human Resources: drafting and negotiation of  employment agreements and ensure overall HR compliance with labor laws, benefits and other HR-related issues.

Real Estate:  the real estate components of the transaction, whether it involves leasing or purchasing property, they ensure that all real estate matters are handled efficiently and in compliance with relevant laws and regulations.

Compliance and Regulatory Attorneys:  When involved in transactions within highly regulated industries such as healthcare, these attorneys manage compliance with DEA regulations, corporate practice of medicine laws, and other regulatory requirements.

Tax Planning and Strategy: We are particularly fortunate to have an experienced tax partner.  Our tax group’s extensive experience is invaluable in structuring deals to maximize tax efficiency and ensure compliance with tax regulations and allows us to provide comprehensive tax advice in-house, streamlining the process and reducing the need for external tax consultants.

You have been approached to sell, what now?
If you have been approached to sell your business, it is essential to follow a structured process to ensure that you achieve the best possible outcome. Here are the key steps and considerations to keep in mind:

-No Signing: Assemble a team of professionals before committing to any terms.

-Hire an Investment Banker or Business Broker: They will help you get the best terms and assist through the due diligence process.

-Ensure your company’s financial records and other important documents are well-organized and accurate. Potential buyers will scrutinize these during the due diligence process. Hire a CPA firm with experience in M&A transactions. They will help you prepare financial statements, understand tax implications, and support you through financial due diligence.

-Have a clear understanding of your company’s value. This involves not only looking at financial statements, but also understanding market conditions and comparable sales.

– Engage an attorney familiar with your industry who concentrates in mergers and acquisitions.

By taking these initial steps, and working with a team of experienced professionals, you can navigate the complexities of selling your business and achieve a successful outcome.

What steps can a business owner take to be prepared?
To be well-prepared for a business sale, take the following steps:

  1. Work with your accountant to ensure your books are clear and accurate for potential buyers.
  2. Discuss with your accountant adjusting EBITDA to reflect the true earning potential of your business. Consider:

(a)  Owner’s Salary: Adjust to market rates.

(b) Personal Expenses: Identify and add back personal
              expenses paid through the business.

(c)  One-Time Expenses: Exclude unusual or non-recurring
              expenses from EBITDA calculations.

  1. Upgrade Facilities and Equipment: Depending on your industry, consider making improvements to your business premises and equipment to make the business more appealing to buyers.

By following these steps, you can better position your business for a successful sale and potentially achieve a higher purchase price.

What makes a successful M&A transaction?
By prioritizing certain factors and meticulously managing the various aspects of the transaction, parties can increase the likelihood of a successful M&A deal that delivers value to both sides.  These factors include:

  • Alignment with Strategic Goals: The transaction should align with the strategic objectives of the purchaser, complementing its strengths and filling gaps in its product/service offerings or capabilities.
  • Thorough Due Diligence: Conduct comprehensive due diligence, including financial, operational, and legal reviews both to understand the target company’s business and to identify potential liabilities. This helps prevent breaches of representations and warranties and post-closing indemnity claims.
  • Transparent Communication: Communicate openly and transparently internally (with employees of both the buyer and seller) and externally (with shareholders, customers, and suppliers). This fosters trust and confidence among stakeholders, which is crucial for a successful transaction and post-closing integration.
  • Compliance and Regulatory Approvals: Address compliance and regulatory approvals early in the process. Ensuring that the seller is compliant with laws and regulations, and securing all necessary permits and licenses for the purchaser to operate post-closing, mitigates risks and prevents delays in the transaction.
  • Integration Planning: Develop a detailed integration plan to smoothly combine the operations, systems, and cultures of the buyer and seller post-closing. This minimizes disruptions and maximizes synergies, ultimately contributing to the success of the transaction.