- Engage them very early in the process to understand what they are looking for. Because they see this a lot, they often have great advice for owners making transitions.
- Start building the relationships with the management team early.
- Get a good understanding of the capital and collateral that will be required to be left in the company for the bank, surety, and insurance.
- Build these requirements into your financial model of the transition and build some cushion in because things will never go as planned.
- If a personal guarantee will still be required from the current owner(s) for a period of time, set a value for what that guarantee will be worth for them if they are willing to take that risk at all. This will typically be a percentage for what is guaranteed paid annually.
- Depending on the exit strategy, this may or may not be that big of an issue, but the financial partners are one of the major stakeholders in the transition.