Business Articles
Mergers & Acquisitions: What to Expect and How to Prepare
Mergers and acquisitions (M&A) can be complex, especially if you’re navigating the process for the first time. At Dugan + Lopatka, we help business owners and executive teams feel prepared, confident, and supported throughout the entire deal lifecycle.
Whether you’re looking to acquire a company or you’ve just received an unexpected offer to sell your own, it’s critical to understand the challenges ahead and how to overcome them.
For Buyers: Navigating the Unknown
Buying a business is about more than just signing on the dotted line. It requires careful planning and strategic support. “Trying to tackle any M&A processes on your own is like going to court without a lawyer,” says Mike Lee, Principal at D+L. “There’s tremendous value in having an expert guide you through the process and help you get the outcome you deserve.”
Here are some common buyer-side challenges, including the different ways D+L provides support for each:
1). Performing Due Diligence
- We review financial statements, tax returns, and accounting systems.
- We help assess risk areas and assist in integration planning from a financial and systems standpoint.
2). Identifying Risk
- We examine customer and vendor concentration.
- We identify tax compliance risks related to payroll, sales tax, and more.
3). Managing Tax Issues
- We advise on transaction structure and tax implications (e.g., stock vs. asset purchase).
- We support purchase price allocation and post-deal tax modeling.
- We identify state and local tax exposure and key tax attribute limitations.
- We recommend post-close entity structure and accounting method changes.
4). Accessing Capital
- We prepare financial projections and post-transaction cash flow models.
- We connect clients with trusted lenders or work alongside their bankers.
For Sellers: Getting “Deal Ready”
Many sellers don’t plan to sell until the right offer comes along. That was the case for a founder-led, niche B2B service and distribution business with approximately $10 million in annual revenue. The owner wasn’t actively seeking a buyer, but when an unsolicited—and attractive—offer appeared, they knew they needed support navigating the deal.
The client had never been through an M&A process before and wasn’t yet “deal ready.” They also weren’t an existing D+L client at the time.
Here’s how we helped them get prepared and positioned for a strong exit:
- Adjusted financials to meet the buyer’s GAAP-based reporting requirements, including support for normalization and add-back adjustments.
- Identified and quantified state tax exposure for multi-state operations, then helped negotiate a fair holdback to address the risk.
- Educated the client on deal mechanics, valuation drivers, and timing expectations.
- Modeled after-tax proceeds and provided strategic advice during negotiations.
The result? A smooth closing process with minimal friction, clear working capital adjustments, and a confident seller who understood the economics of the deal. We’ve continued working with them post-close to support long-term planning.
When working with sellers, D+L helps with:
1). Preparing for the Deal
- We align deal structure with client goals (e.g., full exit vs. continued involvement).
- We evaluate entity structure and identify risk areas early.
- We work closely with attorneys to ensure the Purchase Agreement reflects the client’s objectives and expectations.
- We assess tax exposure, evaluate financial statement needs, and help prepare records for due diligence.
2). Supporting the Due Diligence Process
- We quarterback the response process and organize historical financials.
- We provide guidance on what to expect and how to prepare.
3). Determining True Business Value
- We calculate normalized EBITDA and assist with add-back schedules.
- We help clients understand how working capital and debt can impact proceeds.
4). Navigating Tax Complexity
- We model after-tax proceeds under different structures.
- We provide guidance on earnouts, installment sales, and purchase price allocations.
- We coordinate with attorneys on pre- and post-sale planning.
- We assist with pre-transaction restructuring and coordinate with estate planning advisors as needed.
- We advise on tax deferral strategies to optimize outcomes in the year of the sale.
D+L: Supporting You Through Every Transaction
A potential business sale or acquisition can raise difficult questions—but you don’t have to face them alone. At Dugan + Lopatka, we’ve spent the last 50+ years helping countless clients prepare for and execute successful merger and acquisition transactions with strategic, tax-smart planning. Whether you’re starting to explore your options or already deep in negotiations, our team is here to provide clarity and confidence every step of the way.
That’s Accounting for What Matters.