Documents Needed to Prepare to Exit Your Business (What is an M&A Advisor Worth to You – Part Two)

By Generational Equity


A few weeks ago we published a piece entitled, “What is an M&A Advisor Worth to You?”. In that post we essentially examined the standard fees charged by reputable, experienced M&A firms with the conclusion that you get what you pay for. If you don’t make an investment in a professional firm to guide you, it is quite likely that you will get far less than an optimal deal (or close one at all).

In part two today, we give you a really good example of just the type of fantastic service a firm like Generational can provide you. Our friends with SS&C Intralinks (a leading financial technology provider for the global banking, dealmaking and capital markets communities), published an M&A “checklist”.

I found the checklist to be extremely comprehensive and helpful but also incredibly daunting to anyone attempting to sell a company without representation. You can find and download the list here:

They summarize their checklist this way:

Preparing for a merger or acquisition can be a complex, time-consuming process requiring a massive number of documents and data to collect for deal prep and due diligence. Missing key documents, or even supporting ones, can slow down the process and frustrate everyone involved.

I invite you to review it, but warn you that it is huge. So here are a few segments that I found the most challenging if you are a business owner attempting this on your own (I only picked five because I got so tired reading all of them).

Corporate Matters

–  Organizational chart and management structure.

–  Charter documents, operating agreements, by-laws, business licenses, certificates of authority and stock certificates.

– Information and documentation on joint ventures, acquisition and/or disposals of subsidiaries, affiliates or major assets of the company (last 5 years), key contacts by function, management team biographies.

Financial Information (FYI, there are 33 subcategories under this one alone)

 – Consolidated financials (last 5 years and YTD), accounting reconciliation of all accounts for the most recent balance sheet available.

– Description of any off-balance sheet commitments, price and volume data by division and product annually, accounting policies and procedures.

–  5-year projection model including assumptions and granular backup, detailed capex schedule including breakout between maintenance, growth and new products and acquisition (5 years historical and projected).

–   Detailed working capital schedule, summary of the composition of inventory for last 5 years, list of inventory including the result of the last stock physical count reconciled with the accounting balance at the date of physical count.


 – Material supply and sourcing contracts, material customer contracts, list of any guarantees, indemnifications, or similar agreements, loan agreements, credit lines.

– IRBs, derivatives, letters of credit, security agreements, guarantees, equipment leases and other financing documents, all contracts or agreements providing for third party consent to this proposed transaction.

Labor Relations (31 subcategories under this one)

 – Employment agreements, applications for employment, hire letters, and descriptions of oral/informal promises or commitments regarding terms of employment.

– Employees by location, department, salaried vs. hourly, union vs. non-union, and current compensation and employment status, summary of any strike/work stoppages/grievances, list of all executives that provide services to the company.

– List of outsourced companies providing services to the company, containing name, initial date of provision of services, amount, description of the services provided, and contract terms (last 5 years and YTD).

– List of the benefits, both formal and informal, given to employees, directors and officers (most recent), bonuses paid out for the past 3 years, claims, actions and proceedings (other than normal benefit claims).


 –  All applicable tax returns filed for the last five years (federal, state, local, property and foreign).

–  Details on any deferred tax assets and liabilities, federal or state tax audits and supplementary materials.

– Nature and location of assets of the corporation and their respective fair market values and tax bases, transfer pricing, strategy, analysis, and advice received.

OK, so you get the picture. Lots of info and it needs to be meticulously accurate. And keep in mind that what I have above is a sample of five out of the 12 categories on the list.

The good news for Generational clients is that the first step in our proven process is a thorough and comprehensive evaluation of the business, where many of these topics are flushed out. The questionnaire that we send to our clients and the subsequent multiple conversations about the questions really helps the business owner get prepared for the most grueling aspect of the exit journey: Due Diligence.

Any topic we have not uncovered in our documentation during the evaluation phase will be brought up by the 200-300 question due diligence checklist. But with our team by your side, the odds of surviving the DD process are improved astronomically. Don’t take my word for it, hear from a few of our clients:

One other item to consider: The selling of a business is a 9-18 month marathon. During that time frame, you not only have to prepare your documentation, even more importantly, you have to continue to run your business and ensure it is on track to reach its financial goals, while growing and remaining profitable. Even the slightest wobble, say your revenue falls by 10% or profit margins dip, can have a huge impact on your valuation. So far better to invest in a team to represent you and to help you walk this journey while you focus on the business side.

Generational has a proven track record of doing this for business owners for years and years. We would love to have a conversation with you about how we can do the same for your company. We offer complimentary Growth and Exit Planning Conferences throughout North America where you can start to learn about what we provide. Please use the following links to learn more:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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