There’s a common investment banking saying about less-than-ideal clients. It’s “putting lipstick on the pig,” referring to dressing up a company as best as possible for a transaction, but knowing full well it’s still a “pig.”
Not the gentlest of adages, but the point is clear: when you are launching a transaction process, there is only so much that can be done from that point forward.
This can be particularly chaotic if the catalyst for the transaction process is a negative shock, such as financial distress or an unforeseen life event for the owner/leader.
The investment bankers are going to create marketing materials, and they will likely include some financial projections. Typically, these are of the “up and to the right” variety in terms of top line and bottom line growth.
Buyers may think the projection looks good, but then they start asking questions.
Can you send me over your budget for the last two years?
Would you please explain the forecasting methodologies you use to manage the business?
What leads you to believe such projected sales and margin growth are feasible?
If the first time you are creating a budget or forecast is for a deal process, you’re at risk of being a pig.
Don’t be a pig. The ability to get the most out of a transaction comes well before the first conversation with an investment banker.
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