MERGERS & ACQUISITIONS

SOLUTIONS AS UNIQUE AS YOUR BUSINESS

We pride ourselves on creating custom solutions that maximize transaction value for sellers. Each company reflects the character and characteristics that its owners bring to it. No two companies are ever alike, and neither are their exit strategies. We believe the “cookie cutter” approach often proposed by other firms is rarely the most efficient or cost effective approach. In most cases such an approach creates deal fatigue and a frustrated client. Allow for one of our bankers to perform a customized Economic Reality Analysis (ERA)© and together we can determine if we can serve you. The wealth of information our ERA© yields will provide you with a real time sense of your exit reality.

TRANSACTION SERVICES

HOW WE MANAGE YOUR PROCESS

Kratos Capital’s Transaction Service spectrum answers a variety of broad-based and specialized needs. For business owners seeking the creation of liquidity or a well vetted exit process, the Kratos team has a well documented history of building markets on behalf of our clients. For those seeking to sell a percentage of their business, the acquisition of a next level partner, or the profitable divestiture of non-core operations, we provide combinations of search, pairing and sale development. For organizations and individuals requiring negotiation, evaluation of offers, or succession planning, we provide negotiators, analysts, and strategic planners.

We invest significant time with clients developing a deep understanding of their goals and exploring all alternatives that may be appropriate for them.  We know that timing plays a massive role in the successful outcome of any transaction.  If the owners of the business are ready for transfer, but the market does not support the selling process, the transfer may occur but often at less than optimal prices and terms.

Kratos guides clients through every step of the sale process. Typical steps in a seller advisory or recapitalization engagement include the following:

THE BEGINNING

EDUCATION OF ALTERNATIVES

Before engaging in a transaction, we take the time to educate our clients about all the alternatives available in today’s market. We conduct extensive company and industry due diligence to understand your company’s strengths and weaknesses, opportunities, economic benefit and finally competitive niche. This includes discussions about your personal and financial objectives as well as range of value expectations. We make sure you have proper expectations and thorough understanding of the entire process before we begin so you can make the best decisions for you and your company.

THE MIDDLE

BUILD THE MARKET

Kratos examines your company from the perspective of a potential buyer or investor. We work closely with you and your management to develop our detailed, confidential, Offering Memorandum that tells your company’s unique story—the skill of your leadership team, and the competitive advantages you have developed. Valuations don’t sell businesses; the proper forward looking buy-side mindset, including a low risk, scalable business, does! We accomplish this critical launch point by proactively researching purchasing behavior in our client’s industry, either through our direct relationships, or through our vast libraries of transactions. Our deal team doesn’t use broad brush strokes. The Kratos deal team builds the market with our client involved and approving our reach out every step of the way.

THE END

 NEGOTIATING & CLOSING

We know the middle market, and middle-market buyers know us. As a result, we can present your business on a confidential basis to a large group of qualified and interested buyers, both strategic and private equity. We don’t send out mailers, or list your business on a website. That’s just flat out lazy. Our process accomplishes this critical momentous launch point by proactively reaching out to every potential buyer personally. Again, our deal team doesn’t use broad brush strokes. Doing so can and will damage confidentiality. After our client approves their mutually exclusive market build, our deal team develops the proper pitch, rolls up their sleeves, and goes to work. Kratos has a well-documented history of success, where other firms have fallen short. This is the result of experience as well as the proper neoclassical outlook. Everyone talks about the HIGHEST value for their client’s business. Most advisory firms fail to create the optimum economic benefit required to get the highest price – that’s the Kratos advantage!

Once we’ve established the preliminary commercial terms of your deal, we manage as well as help you, your accountants, and attorneys navigate through the due diligence process, contract negotiations, and closing.

  • THE BEGINNING

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  • THE MIDDLE

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  • THE END

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Case Study Title here

Background

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Proposed Solution

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0 Years
Selling Businesses
Over 0
Businesses SOLD
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Offices Nationwide
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Houston Buyers

EDUCATION

THE WELL INFORMED CLIENT

We believe that one of our main goals is to provide our clients with information about options and business opportunities that they may not have been aware of prior to engaging us. Owners that understand, anticipate, and feel comfortable with each step of the transaction process are more likely to complete a successful transaction. They are also much more likely to be satisfied with the outcome of transaction long after its completion.

Research and analysis are the foundations of sound strategy. Cohesive plans and solid execution are only possible if the course is mapped out well in advance.

We pay close attention to trends, generalized and specific business climates, and fluctuations of the buyer’s / investor’s attitude. This combination gives our clients and us a head start, in the race for wealth.

Many business owners reach out to us seeking the reduction of risk to their wealth.  Usually, they have more questions than answers. Most questions have to do with establishing an exit strategy, and seeking advice about achieving short and long-term liquidity events. Over 90% of our clients come to us with the belief that their only option is to sell 100% of their business; but, at the same time, because of personal pride in what they have built and fear of what their future looks like, they are reluctant to sell the entire company. Our goal in answering to these questions is to provide information and expose options that owners never knew existed for them or their business.

ECONOMIC REALITY
ANALYSIS ©

REALIZE YOUR EXPECTATIONS BY BENCHMARKING

The purpose of the Economic Reality Analysis© is to work toward identifying the highest potential value of a business interest in the open market. No one can look at a company and tell precisely what it will bring when preparing a business for sale.

Owners tend to view the value of their businesses based primarily on the compensation the business provides and all of the items that personally benefit them as part of the income stream. The market will view it quite differently. A private business interest actually has at least as many accurate values at any given time as the number of entities that are placing a value on it; therefore, developing an executable exit strategy is deal critical when starting the exit process.

An estate planning value is different from a tax planning value. Both of those can and frequently do vary from a company’s strategic value. And, the market value will most likely be different from all of those. In short, every private company, therefore, has a large number of different values at the same time, depending on the purpose and function of an appraisal.

By conducting an ERA©, Kratos can look at a business objectively through the eye of a buyer or an investor. The process identifies key items that either enhance or detract from the potential market value of a business interest. One of the outcomes of the study is the identification of market trends in terms of pricing and deal structure; this will provide clues about the structure and the amount of money the market may be able to support in a transaction scenario.

FEASIBILITY STUDIES

TIMING THE PROCESS

Did you know that 92.2% of owners “miss” their market timing?

Successful transference of ownership of a business, whether it’s selling your business outright, or seeking new investment in the business, is often a matter of getting the timing right.

How do you know when the time is right to execute an exit strategy, make an acquisition, or attract liquidity?

As with almost everything else in business, if you are under financial, physical, or emotional pressure to close a transaction, you’ll probably end up having to settle for a less than optimal outcome − either less money or less favorable terms. If you are able to plan and properly prepare, you’ll likely do a lot better.

To avoid the frustration of “deal fatigue” or low-ball offers, the help of Kratos Capital, an experienced Mergers & Acquisitions specialist can give you solid, unbiased advice regarding the timing, the pricing, and the management of the transaction.

Kratos Capital has a process in place to take care of all this. We do in-depth feasibility studies during our Economic Reality Analysis©, which will give you invaluable insights into what you might expect under various scenarios and how to make the most of the transaction should it be necessary for you to take action immediately.

We look at more than just the financials. A major life change such as a retirement or divesture can have profound personal and business ramifications. We help you identify and think about things such as what you will do when you retire, or how the shareholders may react if you make an acquisition or attract new investment partners.

VALUE ENHANCEMENT ACTIVITIES

PRE-DUE DILIGENCE

For middle-market companies seeking a sale or divestiture, Kratos Capital’s Value Enhancement Model can help to increase shareholder wealth. Often, value is not realized from a private business investment until the transfer of the enterprise occurs.

Growing businesses are like hungry children: they must be fed. If only a transfer unleashes value, what can owners do to increase the value of their firms? While no single activity is likely to create value, it is possible to identify activities that can enhance the value of a business. As with most things that really matter, planning is the key.

By using the items identified during the Economic Reality Analysis©, Kratos can work with owners to clean up areas that buyers and investors typically would not find attractive. The items that were marked as enhancing the value of the company can be carefully packaged to get the attention they deserve.

Good timing for a prudent exit is typically when the company and the market are in sync for a transaction. This means growth internal to the business as well as macro growth in the industry. A well-positioned company will attract positive attention by virtue of its internal operations, management techniques, systems, and financial performance. If the business is not ready to a transfer, it is unlikely that outside offers will be attractive to the owner.

Interested in Starting the Process?