Searchers! How to conduct management calls with Sellers / Owners:

February 28, 2024

by a professional from James Madison University in Washington, DC, USA

Buyers Guide for conducting management calls with Sellers / Owners in SMB Acquisitions - my detailed agenda:

1. Brief Overview of the Business History

· Company Background / Management History

- Provide a general History of the Company and any recent or key inflection points.

· Discuss Primary Revenue Streams

· So how's the business doing today?

2. Management Team / Owner and Employee Structure

· Owner Roles in Day-to-Day Operations

· Accounting Team: Overview, Responsibilities, and Day-to-Day Bookkeeping

· Role of CPA?

· Other Key Personnel, Significant Recent Changes in Management, and Key Departures

3. Revenue & Accounts Receivable (AR)

• Discuss Top Customers

• Any significant New or Lost Customers in the Last Three Years?

• How do you account for Sales Rebates/ Discounts?

• Accounts Receivables: How are customer collections?

• Discuss Customer Payment Terms

4. Employee Matters

• Does the Company offer Benefits? (ie. Health, Dental 401K)

• Are EE's W-2 or do you use 1099 workers?

• Any Bonus/Commission Plans?

• Any Severance Payments or One-Time Bonuses in the Last###-###-#### Months?

5. Property & Equipment (PP&E)

• Major Additions & Retirements in the Last Three Fiscal Years

• Any expected Capital Expenditures need to support the business in the Next###-###-#### Months?

6. Vendor Matters

• Key Vendor Relationships and Payment Terms

• Contractual Agreements with Vendors

• Rebate Programs Offered by Vendors

• What are Vendor payment terms? ie. DPO trends

7. Additional Questions & Other matters Part 1:

• Pending or Threatened Litigation?

• Related Party Transactions?

• Any Changes in Contracts or Relationships expected in the next 3-12 months?

8. Additional Questions & Other matters Part 2:

• Any one time revenue or expenses?

• Did the company pay for any personal / owner expenses which were not business related?

9. Last note on the importance of management calls

- Every acquisition must have at least 1 in person or zoom management call.

- Why? Often these calls uncover material items never mentioned in the CIM or company provided information.

10. What other questions do you ask owners?

Drop them in comments below

full post here

https://www.linkedin.com/posts/patrick-o-connell-3b235177_buyers-guide-for-conducting-management-activity-7168692819606376449-MPLw?utm_source=share&utm_medium=member_desktop

Reply by a professional
from Southern Methodist University in Garland, TX, USA

I would expand revenue collections and AR to other key working capital accounts (fluctuates depending on the industry and sometimes even individual companies). These can provide key insights into areas for improved efficiencies or potential cash flow concerns.

Reply by a searcher
from The University of North Carolina at Chapel Hill in Raleigh, NC, USA

I like to ask about their perspective on the single greatest opportunity? Since they haven't done it, it often highlights a potential concern or something to dig further into during the review process.

+11 more replies.

Join the discussion