FAQs of Selling Shareholders

Why are most privately-held companies sold?

Our experience indicates that the most frequent reason privately-held companies are sold is the desire of the key shareholder to make a lifestyle change. Lifestyle changes include retirement, health, or a desire to pursue other business interests.

We believe you should sell your company when you are ready for a lifestyle change and when the company’s outlook is reasonably positive. In order to receive maximum value for your company, you should plan to remain with the company for a few years after a transaction closes to ensure a smooth transition.

What are the unique strengths of Capital Alliance?

Capital Alliance has many unique strengths, but three stand out from the rest. They are: extensive buyer contacts, a strong team of seasoned professionals, and superior transactions skills.

We carefully screen the front line dealmakers at Capital Alliance for outstanding operating experience. These are senior level people with high levels of integrity and a track record of success.

Though well-qualified to address complex financial matters, unlike most investment banking firms, our people focus on operations and operational fits, not numbers. By bringing together companies with complementary strengths, we create substantial value for our selling shareholders.

We maintain an extensive, growing list of contacts. In over 30 years of dealmaking success, we have interacted with more than 8,000 acquirers on specific programs. These acquirers look to Capital Alliance as a source of quality opportunities. Our professionals have worked in a broad spectrum of industries and have numerous personal contacts who can provide insight into market trends. We also have thousands of direct telephone numbers and email addresses for key decision makers.

Additionally, we also use several sophisticated databases that immediately supply us with the identity of every acquirer who has recently completed a transaction in nearly every industry worldwide. Our databases also provide the names and contact information of key executives in hundreds of industries worldwide.

Extensive contacts developed through our 20+ year membership in M&A International complement our firm's own resources. The 600 professionals in over 40 investment banking firms in the M&A International alliance specialize in mid-market transactions and have offices in over 40 countries.

Superior transaction skills also distinguish Capital Alliance. Our team employs an effective set of procedures and strategies that has been proven to drive high company valuations and to deliver closed transactions.

How does Capital Alliance handle confidentiality?

Capital Alliance considers confidentiality a critical factor in every transaction. We apply many field proven, overlapping programs to ensure confidentiality when a company is sold. We recognize that confidentiality is vital to the interests of both the selling company and Capital Alliance. In over 30 years of interacting in the marketplace, we have refined a comprehensive approach to ensure that we maintain maximum confidentiality during each company sale.

Why will Capital Alliance bring better acquirers?

Capital Alliance will bring you better acquirers because we have more extensive contacts. We know how to attract good acquirers using superior documentation and presentations. Acquirers solicit us to help fulfill their acquisition goals. We work with thousands of strategic and financial acquirers who have active acquisition programs and the capital to close transactions.

How does Capital Alliance bring overseas acquirers to me?

For over 20 years, Capital Alliance has been a part of M&A International (MAI). With offices in over 40 countries, MAI specializes in mid-market transactions worldwide. The organization consists of a headquarters staff and over 600 M&A professionals operating in every major economy of the globe.Capital Alliance has established personal relationships with many MAI member professionals, who can be called upon to help on specific transactions. A secure intranet system enables members of the alliance to confidentially share transaction opportunities.

When does the CEO of the selling company get involved?

The selling company’s CEO normally gets involved at the start of every engagement and stays involved through the closing. In some cases, another officer, such as the CFO, may be designated as the focal point for information to be provided to Capital Alliance and to prospective acquirers.

The CEO is frequently the lead negotiator for the selling shareholders. As the key member of the negotiating team, the CEO is asked to approve the negotiating positions taken by Capital Alliance negotiators.

We know a CEO’s time is very valuable. Until a letter of intent is signed and a transaction closing date is set, the CEO should be able to spend over 90% of his/her time managing the company.

What are the major milestones of a typical sell-side transaction?

A typical sell side engagement begins with a discussion of the key objectives of the selling shareholders. If we believe we have a reasonable probability of achieving the key shareholder goals, we sign an engagement agreement with the selling shareholders.

We then prepare the written and verbal offering material. We will ask a large number of standard and customized questions to better understand the key characteristics, liabilities, and strengths of the selling company. A briefing, or confidential offer memorandum, is normally complete within 30 days after the engagement begins.

In parallel, we compile a list of acquirer candidates from personal knowledge, our internal databases, contacts through M&A International, confidential and blind industry inquiries, and recent industry closings.

We then contact potential acquirers with a “blind,” one-page profile or a telephone call. We provide interested prospects with a copy of the company briefing materials after signing a non-disclosure commitment.

In many cases, Capital Alliance is able to generate interest on the part of multiple potential acquirers. Through a process we describe as a silent auction, we then generate initial non-binding offers, letters of intent and, once a buyer has been selected, assist with closing documents.

In the late stages of the process, we structure due diligence and final negotiations to minimize the disruption of the day-to-day activities of the company. The interval from engagement agreement signing to the closing is typically three to nine months. The current Capital Alliance records are nine years at the long end and two months at the short end. If there are no process delays and the company is highly attractive, the process takes approximately four months.

How do Capital Alliance’s Power Negotiating techniques give me an edge?

Capital Alliance is very flexible regarding the handling of negotiations. Some of our clients want to take the leading role during negotiations, while others want us to handle virtually all aspects of the negotiations. We prefer to handle price negotiations, using the knowledge we have gained by maximizing value for previous clients. We need selling shareholders involvement to confirm the pricing positions we take with acquirer prospects.

For the last 10 years, Ed Dawson, the President of Capital Alliance, has been teaching negotiating skills classes at the SMU Cox Graduate School of Business. Effectively teaching a course to graduate students requires thorough knowledge of subtle, but important, negotiating tactics that really work. Experience is the best teacher, and we have abundant negotiating experience. We bring power to your negotiating position.

I want cash, not paper; can Capital Alliance deliver?

Capital Alliance specializes in cash transactions. Most of our transactions consist of a very high cash percentage. Many of our clients want and need cash to accommodate personal needs, such as retirement. We do not deal in obtuse paper transactions or highly complex financial structures because they rarely fit the desires or needs of our clients.

It is also important for you to understand that Capital Alliance is paid at the same time you are paid and in the same form as you receive your proceeds. From the beginning of the sale process, you will find that Capital Alliance will insist on aligning our interests with yours, guaranteeing you the most favorable consideration and terms.

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