Understanding the Crucial First Phase of Due Diligence in Company Sales

The process of selling your company can be neatly categorized into four phases, taking place roughly over a period of 16 weeks. 

The four phases are:1) Pre-Marketing2) Go to Market3) Management Presentations / Buyer Due Diligence, and4) Exclusivity / Documentation.

In this inaugural episode of the Middle Market Mergers & Acquisitions podcast, Gina Cocking and Jeff Guylay focus on the first of the four phases: Pre-Marketing.

To conclude the episode and to hear the perspective of a CEO who has recently been through the sales process, we are joined by Elizabeth Davies of Stonemark.Please stay tuned for the upcoming episode 002 where we discuss in detail phases two through four of the process of selling your company.

Takeaways from Gina and Jeff in this Episode:

• Jeff Guylay outlines the 16-week sales process timeline in four phases: pre-marketing, go to market, management presentations / buyer due diligence, and exclusivity / documentation. (1:00)  Download the sales process chart here: https://coladv.com/wp-content/uploads/Four-Phases-with-graphic.pdf
• Gina discusses why phase one, the pre-marketing phase, can take the longest (4:30)
• Jeff and Gina discuss Colonnade’s due diligence process (what documents and requests are made during their initial diligence) (05:32)
• The role of the investment banker as the “confessor” to benefit buyer and seller (07:34)
• Gina talks about how diligence helps develop the story - the narrative and the financial model (09:22)
• Jeff outlines the importance of having an accountant for telling the financial story of the business (16:17)
• Gina and Jeff discuss how phase one (pre-marketing) is a difficult, but necessary, first step (21:03)
• Gina touches on the importance of retention packages for management during the sale process (22:03)

Takeaways from Elizabeth Davies in this Episode:

• Elizabeth Davies describes the sales process as if baking a cake. We (the business) make the cake, and the investment bankers (Colonnade Advisors) put the icing on the cake to make it as pretty as possible. Being a decorated cake is the ideal way to sell your company (28:26)
• Elizabeth emphasizes the importance of having a realistic idea of your company’s value, and staying focused on running the business during the sale process (29:28)

About Gina Cocking

Gina Cocking serves as the Chief Executive Officer of Colonnade Advisors.  She returned to Colonnade as a Managing Director in 2014. Gina began her career in investment banking at Kidder Peabody, was an analyst at Madison Dearborn Partners and an associate at J.P. Morgan & Co. She was a Vice President at Colonnade Advisors from 1999 to 2003. She left Colonnade to gain operating experience as the Chief Financial Officer of Cobalt Finance, a specialty finance company. She went on to become the Chief Financial Officer of Healthcare Laundry Systems, a private-equity backed company for which she oversaw the successful sale to a strategic acquirer. Gina served as the Line of Business CFO – Consumer Banking and Lending at Discover Financial Services. Gina serves on the Board of Directors of CIB Marine Bancshares, Inc., a bank holding company based in Waukesha, Wisconsin, that operates banking offices in Illinois, Indiana, and Wisconsin. Gina received her BA in Economics and an MBA from the University of Chicago. Additionally, Gina holds the Series 24, 28, 79 and 99 securities licenses.

About Jeff Guylay

Jeff Guylay is a Managing Director of Colonnade Advisors. Prior to joining Colonnade in 2000, Jeff was an investment banker at J.P. Morgan in the firm’s Mergers & Acquisitions and Fixed Income Capital Markets groups in New York. He also spent several years in J.P. Morgan’s Chicago office. Jeff has over 20 years of M&A and investment banking experience and has served as lead execution partner on over 25 M&A and financing transactions at Colonnade. Jeff received an MBA from Northwestern University’s Kellogg Graduate School of Management and a Master of Engineering Management from the University’s McCormick School of Engineering. Jeff received a BA from Dartmouth College and a BE from Dartmouth’s Thayer School of Engineering. Jeff holds the Series 7, 24, 63, and 79 securities licenses. Jeff serves as a director of the non-profit Nurture, an organization dedicated to enhancing the nutrition and wellness of children and families.

About Elizabeth Davies

Elizabeth Davies is the President of Stonemark Inc., a full service insurance premium finance company founded in 1983 and headquartered in Frisco, Texas. Elizabeth brings over 30 years of financial services expertise to Stonemark and oversees all corporate functions, including sales and marketing and Stonemark’s banking relationships. Elizabeth is focused on sales growth and expansion into new markets.

Under Elizabeth’s leadership, Stonemark was acquired in 2018 by H.W. Kaufman Group, a global network of insurance companies. 

Website: www.stonemarkinc.com 

About the Middle Market Mergers & Acquisitions Podcast

Get the insiders’ take on mergers and acquisitions. M&A investment bankers Gina Cocking and Jeff Guylay of Colonnade Advisors discuss the technical aspects of and tactics used in middle market deals. This podcast offers actionable advice and strategies for selling your company and is aimed at owners of middle market companies in the financial services and business services sectors. Middle market companies are generally valued between $20 million and $500 million.

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Learn more about Colonnade Advisors: https://coladv.com/

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