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Helping clients build businesses that sell: It's time for a little due diligence

by Meredith Erlewine

June 2002

A couple of years ago, entrepreneurs planning to tap into their companies' equity may have had exit strategies that included securing venture capital or making an initial public offering (IPO). But in the wake of the dot-com bust and facing a dearth of venture capital, many up-and-coming entrepreneurs will look to sell up or sell out. Many will get rich in the process. But what will buyers look for? Merger and acquisition (M&A) expert Bruce Milne has a good idea.

Milne is president of Corum Group Ltd., which provides M&A services to software and technology companies worldwide. With more than 30 years of experience in the software industry (including owning three software companies), Milne has executed nearly $4 billion in mergers and alliances for small technology companies. In the process, he's seen firsthand what can make or break the sale of a company.

Selling up into a strategic alliance, majority investment or business partnership, or selling out through a merger, asset sale or stock purchase can be the most important transaction of an entrepreneur's life, according to Milne. It requires extensive knowledge, experience, planning and preparation. Milne says entrepreneurs preparing to sell up or out should start with due diligence of the internal variety. "What would your clients find if they performed due diligence on their own companies?" he asks. The answers may be surprising.

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Keywords: benchmarking clients, business planning -- client, company valuation, human resources -- client

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