M&A Exit Strategy: Conducting a Full Business Assessment

Explore how a full business assessment is key in your M&A exit strategy, evaluating strategic positioning, operations, and financials to maximize company value.

You’ve  heard the saying, “It’s not personal, it’s business.’ But when it comes to selling your company, it’s both. Your business is more than just an asset. It’s your legacy, your retirement nest egg, and a reflection of years of hard work and personal sacrifice. Yet, the stark reality is that, according to the Exit Planning Institute, fewer than 30% of businesses that go to market actually sell. This alarming statistic indicates that most business owners haven’t prepared a comprehensive exit plan.

To get top dollar for your business, you need an M&A exit strategy. At Freeman Logan, conducting a full business assessment is one of the first, perhaps most critical, steps we take to prepare a business for exit. Its purpose is straightforward: To identify what it will take to maximize your business’ value and make it appealing to potential buyers. 

In a full business assessment, your mergers and acquisitions advisory firm thoroughly evaluates your company’s strategic positioning, operations, and financials. This in-depth analysis informs your exit strategy and readies your company for sale, ensuring that you are not just selling — but selling smart.

In this article, we’ll walk you through what a full business assessment for M&A purposes entails, showing how each step is critical in yielding a successful and lucrative exit strategy for your business. 


Why a Full Business Assessment is Crucial for M&A Exit Planning

Whether you’re considering selling your business in 12 months or 12 years, it’s never too soon to develop your exit strategy. The first step is to thoroughly assess your company, focusing on its strategic positioning, operations, and financials. This assessment lays the groundwork for your exit plan, helping you understand the full scope of your business activities to better prepare and optimize them for a future sale.

Here are the five objectives of our full business assessment:

  • Determine an Accurate Value: We help owners understand a realistic value range for a potential sale, considering all tangible and intangible assets. 
  • Identify Strengths, Weaknesses, and Risks: We look for the value-drivers in your business that attract buyers and highlight areas needing improvement. We also identify and mitigate risks along the way.
  • Prepare for Due Diligence: We start organizing essential business information that a potential buyer will scrutinize, like financial records, legal documents, contracts, and operational data. This process facilitates a smoother and more efficient transaction.
  • Reveal Opportunities for Improvement and Growth: We uncover new areas where your business can grow and become more efficient, enhancing future prospects and market attractiveness.
  • Strengthen Stakeholder Confidence and Negotiating Position: With a clear understanding of your company’s health and potential, you are better positioned to get stakeholder buy-in and negotiate favorable terms.

Now that you know why a full business assessment is a critical first step in your mergers and acquisitions exit strategy, let’s dive into the three main areas of assessment:  Strategic positioning, operations, and financials. 


Strategic Positioning Assessment

In a Strategic Positioning Assessment, your mergers and acquisitions advisor closely examines your company’s current position in the market. As part of Freeman Logan’s Exit Prep Academy, we analyze your company’s overall strategy, business model, performance metrics, marketing strategies, and whether your company is organized effectively to meet your goals. 

This assessment aims to identify the company’s strengths and weaknesses, competitive advantages, and potential areas for growth. It’s a critical step for understanding where your business stands in its industry and how you can improve its positioning for a successful sale. 

Key tasks we undertake in this assessment include:

Review Business Strategy 

We analyze your current business strategy to assess its effectiveness and alignment with market trends and opportunities. This review helps us understand whether the current strategy positions the business for growth and success in its sector.

Evaluate Business Model 

We evaluate your business model to understand how your company makes money and competes in the market. We look at what you sell, who your customers are, and how you deliver your products or services to determine business viability, profitability, and scalability. 

Analyze Performance Based on OKRs 

Your OKRs (Objectives and Key Results) are like a report card for your business, showing how well you’re meeting your goals. A mergers and acquisitions consultant reviews these to understand your company’s success and where it stands in achieving important milestones. This analysis is vital in identifying strengths and areas needing improvement. 

Assess Marketing Strategy and Positioning

In reviewing your company’s marketing strategy, we focus on how your business differentiates itself from competitors and how effectively it captures its target market. We review your sales tactics, understand market trends and customer needs, and identify your unique selling points. The goal is to enhance your brand’s appeal and identify growth opportunities, making your business more attractive for a potential merger or sale. Along the way, we look for ways to sharpen your brand message and outreach strategies. These recommendations form part of a broader exit strategy to increase your market reach and company valuation. 

Organizational Alignment and Functionality

We also assess how well your company’s organizational structure, culture, and operational mechanisms align with its strategic objectives. The goal is to ensure that every part of your company works well together; a well-aligned and functional organization is more attractive to potential buyers, as it suggests a smoother transition and continued success after the merger or sale.

Each task in a Strategic Positioning Assessment provides a comprehensive view of your business’s current status and what strategic moves are necessary for a successful exit.


Operational Assessment

In our operational assessment, we closely examine how your business runs. We check out what you sell, who you work with, and how your team is set up. We also see how you handle sales and use your office and technology. In short, the Operational Assessment gives us a clear idea of how your business works daily.

As we learn more about your business, we’re examining its operational strengths and weaknesses in the following areas:

  • Products and Services: What products or services do you offer? Do they meet customer expectations and keep up with the competition?
  • Human Resources: How is your workforce structured? What kind of leadership is in place? Are the skills employed in line with your business needs? How engaged is your workforce, and what is the company culture like?
  • Technology and IT: Are your technology and IT systems up-to-date and adequate for your business needs?
  • Physical Infrastructure: Is your physical infrastructure suitable for your current and future business operations?
  • Supply Chain and Logistics: How reliable and cost-effective are your supply chain and logistics? Are there any vulnerabilities or areas for improvement?
  • Production and Fulfillment: What are your processes like in production and fulfillment? How is quality control managed, and what is the level of customer satisfaction?
  • Legal and Compliance: Are all legal and compliance aspects up to date and in order, including regulations specific to your industry?
  • Operational Scalability: Can your current operations support future growth? What changes might be needed to facilitate expansion?
  • Risk Management: How effective is your risk management strategy? Are potential risks being identified and mitigated?

Through these inquiries, we gain a comprehensive view of your operational strengths and areas for improvement, guiding the development of a robust exit strategy. 

Selecting an M&A advisory firm specializing in your industry or sector is crucial for an effective Operational Assessment. They understand your market’s competitive landscape, are up-to-date with current trends, and can effectively communicate in industry-specific terms during negotiations. For example, Freeman Logan, with its expertise in the IT Services & Software, Telecom, Digital Marketing & Media and Business Services sectors, deeply understands the operational challenges and opportunities unique to these fields. This specialized insight is critical to making informed decisions that can significantly enhance your company’s value, ensuring you achieve the highest possible bid.


Financial Assessment

A thorough financial assessment is essential to inform your M&A exit strategy. It serves two purposes: firstly, to organize and tidy your books in preparation for an acquirer’s due diligence, and secondly, to explore ways to restructure debt, manage capital, and improve cash flow, all aimed at increasing your company’s value. At Freeman Logan, our financial assessment covers several important areas, such as:

  • Revenue and Profit Analysis: We study your revenue streams and profitability to understand the financial strength of your business.
  • Operating Expenses: We identify cost-saving opportunities and aim to understand the total cost of your operations.
  • Cash Flow Analysis: We analyze your cash flow to assess the liquidity and day-to-day financial health of your business.
  • Asset and Liability Review: This involves evaluating your company’s assets and liabilities to gauge its net worth and financial stability.
  • Financial Record Keeping: Accurate and organized financial records are vital for due diligence and valuation purposes.

A well-conducted financial assessment ensures that your financials are in order and equips you with the knowledge to make strategic decisions that enhance your company’s appeal to potential buyers. 


Plan Your Owner Exit with Confidence  

A recent Deloitte 2024 M&A Trends survey revealed that having an M&A exit strategy is the most important factor for a successful exit, highlighting why you should plan early and take consistent steps to enhance your company’s value. Conducting a full business assessment is the foundation of your entire M&A exit strategy, providing insights for improvements in operational, financial, and strategic positioning to increase your company’s appeal in the market. 

At Freeman Logan, we leverage our extensive experience in mergers, acquisitions, and alternative deals to guide you through this essential process. Our team is committed to providing tailored solutions that align with your unique business needs and personal goals. 
Reach out to schedule a consultation with us today.