Chapter 5
With a Little Help from Your Friends: Working with M&A Advisors
In This Chapter
Noting advisors you need when buying or selling a company
Establishing effective communication with advisors
Ringo Starr nailed it. Well, actually John Lennon and Paul McCartney nailed it; Ringo just sang it. But it’s true: Everyone needs a little help from his or her friends, whether those friends are genius writers of timeless pop music or the lawyers, accountants, and business advisors who help you engage in M&A activity. This chapter helps you pinpoint those advisors and ensure strong communication.
Choosing Wisely: Identifying Ideal Advisors
Whether you’re a Buyer or Seller, successfully completing M&A transactions requires a skilled team of advisors who have negotiating experience, the right temperament to deal with many different personalities, and the willingness to listen to you whine and pout.
At the core, a deal is very simple: A Buyer gives a Seller money or some other store of value in exchange for a company. But a deal isn’t just about numbers; it’s about the personalities of the Buyer and Seller. Those personalities, along with the myriad motivations, needs, and wants on both sides that go hand in hand with putting together a deal, are what make completing a deal complicated.
The M&A deal-maker (Buyer or Seller) should be a generalist (have a broad knowledge of all the deal’s aspects). The advisors should be the specialists for specific issues, such as accounting or negotiating business or legal issues.
Ideally, your deal advisors should have the following traits:
Depth of correct experience: Clearly the most important aspect of any advisor is his experience! But don’t stop simply at area of expertise. In addition to being an expert in law, accounting, tax issues, or whatever, make sure the person is an expert in M&A deal-making. For example, the attorney who wrote your will or disputed your property taxes may not be the person to advise you during an M&A transaction because that lawyer’s professional experience probably doesn’t translate to M&A prowess.
Confidence and self-assuredness: You don’t want an advisor who’s a pushover. You need someone with a backbone, someone who’s willing to challenge you and tell you when you have a bad idea. After all, if your advisor can’t or won’t tell you your idea is bad, how can you know when you legitimately have a good idea? Challenging you is just half the equation, of course; your advisors should be able to stand up to the other side as well. Wavering is fine in your gelatin, but it’s a poor quality in an advisor, especially in M&A.
Tact and professionalism: Your advisor shouldn’t be so self-confident that he forgets to be polite. Negotiations during the sale of business can often become contentious and frustrating, thus devolving into name- calling and recrimination. An M&A professional should always refrain from letting business decisions and discussions become personal.
Ability to serve as a sounding board: A good advisor should be able hold your hand (figuratively, of course) as you navigate the ambiguities of M&A. You also want an advisor who can offer you a shoulder to cry on when things get difficult or frustrating, an ear to listen when you vent, and a firm hand to slap you back into reality when you need it.
Logic and reason: Negotiating doesn’t mean forcing your will upon the other party. It involves understanding the needs and wants of the other side and working together, in good faith, to craft a mutually beneficial agreement. The ability to reason and logically explain your rationale is a key consideration for an advisor, and someone adept at the Socratic method is ideal.
The Socratic method is a process of using questions and answers to determine whether ideas, suggestions, and so on are logical and reasonable.
Calmness: Advisors need to be calm, cool, and collected rather than prone to being overly emotional. (Think the Fonz, not Richie Cunningham.) Emotions can run hot in mergers and acquisitions. A company often represents a Seller’s life’s work, and dissecting that through the M&A process often makes Sellers feel open and vulnerable as they look back on mistakes they may have made and how those errors are affecting the proceedings. Buyers worry about financing and whether they’re making a good buy; a bad acquisition can ruin a career. When you’re in that kind of state, a team full of drama queens isn’t very helpful.
Creativity: A creative brain is a huge asset for an advisor. Just like skinning a cat, there’s more than one way to pull off an M&A deal. If one plan doesn’t work, you want an advisor who can jump in with another idea.
Willingness to negotiate: Deals rarely get done if one side is digging in its heels. Advisors who are willing to negotiate and try different ideas are what often get deals across the finish line.
Perseverance and foresight: A good advisor, especially one of the “been there, done that” variety, knows that deal-making is often a marathon, not a sprint. It inevitably has ebbs and flows and ups and downs, and the advisor’s ability to see long term, anticipate problems and the other side’s next move, and stick with the deal is an enormous boon to getting deals done.
When hiring consultants ask for referrals from other members of your M&A team, interview more than one candidate, and don’t be afraid to ask about fees. Specifically, consider asking whether a consultant, especially the legal or accounting type, would be willing to work on some sort of flat-fee basis. You can always offer those consultants the long-term relationship in exchange for a lower rate or flat fee now.
Utilizing Inside Advisors
The most obvious set of team members for deal-makers is the inside team — that is to say, those employees who already work for the company. Working with inside advisors makes sense because they don’t represent any additional dollar cost for the company. The company is already paying them, so it may as well use them!
However, utilizing inside advisors means a company incurs another kind of cost: opportunity cost. Having an employee devote all or some of her time to selling the company or finding acquisitions means you’re taking that person away from the regular business of the company. In the following sections, I highlight some of the main inside-team members.
CFO or other financial bigwig
The CFO or other key finance person at a company is usually an integral part of the M&A process. For Seller, that person is responsible for assembling, preparing, and presenting the company’s financials and explaining, justifying, and examining any add backs (nonrecurring, one-time, or owner-related expenses). For Buyer, she’s also the person who interacts with the bank, lines up the financing, makes sure money is wired or received, and runs financial models to make sure a given offering price makes economic sense for the company.
Corporate development people
Some companies (often those that do a lot of acquiring) have employees specifically tasked with engaging in M&A. These folks usually have the phrase corporate development in their titles, such as Director of Corporate Development, Corporate Development Manager, or even Vice President of Corporate Development. That’s a big one.
Whatever that person’s title, I’ll just call her the Corporate Development Dude. (The title Dude has no gender in M&A.) The Dude is the liaison between the company and the target or the target’s outside advisors (see the following section).
Hiring Outside Advisors
Having someone to look at a situation from a distance, to be able to consider that situation from a perspective of a detached outsider, can often be the greatest benefit to a person who is buried in the minutiae of day-to-day operations and worries. In other words, an outsider just may be the help an M&A deal-maker needs to successfully complete deals.
Both Buyer and Seller need the following advisors:
An attorney to draft (or edit/revise) the purchase agreement (assuming you don’t have an in-house lawyer qualified to do so; see the sidebar “Do you need an in-house lawyer?” for more)
Accountants to audit or review the numbers and more importantly, to interact with the other side’s accountants
Advisors to negotiate the deal and to make sure it gets across the finish line. These folks are usually called investment bankers.
And depending on the complexity of the deal and other factors, Buyer may also need marketing, environmental, and perhaps IT/database consultants.
Here are some other considerations to keep in mind when hiring outside advisors:
Don’t be afraid to manage your outside advisors and hold them accountable. At the same time, let them do what you hired them for. They’re deal experts.
Find the right-sized firm for your company. M&A transaction experience is a must, of course, but an advisor should specialize in working with companies the size of your company.
Consulting wealth advisors when you’re ready to sell
A wealth advisor is a person who manages other people’s money. But I don’t merely mean a stockbroker. Most financial services firms have a specific department or division designed to work with wealthy people. These advisors consult their clients on a wide array of issues, ranging from investment choices to estate planning to tax strategies.
Selling a business can generate a great deal of personal wealth, and working with a trusted advisor to help manage and shepherd that wealth is an important consideration during the M&A process. An advisor worth his salt can advise Seller on a preferred structure, one that minimizes taxes and/or moves wealth to the next generation.
Sellers should sit down with a wealth advisor before embarking on the M&A process, especially if they’re contemplating retirement. As amazing as it may sound, Seller may discover that the lifestyle he wants to lead post-sale requires less money than he previously thought with some specific planning rather than back-of-the-envelope guesswork.
Pick your wealth advisors very carefully. The dirty secret of many firms, even the largest, most well known, household name firms, is much of the work is done by junior people who don’t have any wealth, don’t know much about investing, and may not even care that much about your goals and plans and desires. Because managing wealth isn’t so much about your future but rather the future of your children, grandchildren, and charities — your legacy, in other words — choose your advisors carefully.
Considering an intermediary
An intermediary is a person who represents Buyer or Seller in an M&A transaction. Commonly called investment bankers or business brokers, this breed of M&A advisors is essentially salespeople, and what they’re selling is a company. The intermediary is often the quarterback during the M&A process, and Buyers or Sellers thinking about hiring an intermediary should look for deal experience, demeanor, confidence, business understanding, creativity, and accounting skills when hiring that quarterback. The following sections look at how intermediaries operate for each side and how the two main varieties differ.
Understanding an intermediary’s role
For Seller, an intermediary is the one who helps execute the M&A process I lay out in Chapter 3, including contacting buyers, structuring the deal, and performing due diligence. The intermediary can also be the voice of reason for an otherwise-emotional Seller. The business sale is likely to be the largest transaction of Seller’s life, and he needs someone who isn’t emotionally tied to the business to represent him. (That’s why Sellers should never represent themselves in a sale.)
For Buyer, an intermediary is the one who does the most difficult of jobs: contacting Sellers (flip to Chapter 6 for more information) and getting the appropriate information for Buyer’s offering document (see Chapter 8) and due diligence (see Chapter 14). Depending on the needs of the client, the intermediary may also help with the negotiating and structuring of a deal, although many Buyers who utilize an intermediary for help with finding targets prefer to do the negotiating and structuring themselves.
Most Buyers (and their advisors) these days review the copious amounts of data generated by due diligence in a secure, online data room, so when hiring an intermediary, make sure that person is well versed in online data rooms.
What the intermediary doesn’t do is hammer out all the details of the purchase agreement (that’s for the lawyers) or go through all the books in order to perform a comprehensive financial analysis (that’s the job of the accountants).
Buyers should note that Sellers are usually extremely reluctant to speak to a competitor or a company they perceive as a competitor. For that reason, using an intermediary can be a very useful buffer when contacting Sellers. A Seller is more apt to talk with an intermediary and quite often more willing to open up and provide quite a bit of information.
Knowing the difference between a business broker and an investment banker
Intermediaries come in two flavors: investment bankers and business brokers. An investment banker likely provides a fuller service for a Seller, but that fuller service usually means higher fees. Investment banking firms are more expensive because they have more overhead. In other words, they have more professionals (including specialized employees such as business development teams, researchers, and a host of analysts) and often fancier offices in fancier buildings. All those extras cost money.
In a very rough sense, the revenue threshold for working with an investment banking firm is $10 million. Companies with revenues north of $10 million will most likely be able to afford the fees associated with a full-service firm.
For companies under $10 million in revenue, a business broker probably makes the most sense; transactions that small probably won’t interest an investment firm.
A business broker does much of the same work as an investment banker does, just with fewer people and lower overhead. In some cases, the broker is the person who signs the new client, writes the offering document, conducts the research, develops the target list, makes the calls, organizes the meetings, and negotiates the deal. The broker can charge a lower fee and still make a good living, but the extent of the service won’t be the same as a larger firm, simply because the larger firm has more resources.
Brokers are more apt to work on a contingency basis, meaning they’re often willing to only get paid if a deal successfully closes. Investment bankers probably will require an initial retainer, monthly fees, and a success fee.
Due to recent changes in securities laws, both Sellers and Buyers should work with an intermediary that is affiliated with a regulated investment firm (called a broker-dealer). Any individual involved in transacting an M&A deal needs to be registered with the Financial Industry Regulatory Authority (FINRA). Basically, this entity makes sure people involved in securities transactions haven’t committed financial crimes and also have a certain level of financial proficiency. To become registered, an individual needs to pass a couple of securities exams — usually, the series 7 (or 79) and series 63.
When hiring a firm to conduct an acquisition search make sure you ask who is making the calls to business owners: an experienced professional or some kid straight out of business school? Some M&A firms that focus on acquisition search work are little more than what I call “dialing for dollars shops.” Often these firms utilize the boiler-room approach — that is, packing a slew of young people into a room and having them make call after call after call with little or no thought about what they’re saying or to whom they’re speaking.
Don’t allow one intermediary to represent both sides. Representing both sides is a conflict of interest. Anyone who offers to represent both sides is inept and/or is acting in a highly unethical manner.
Lawyering up on both sides
Legal issues are always at the forefront. The lawyer is a very important advisor to both Seller and Buyer. Similar to the intermediary (see the preceding section), each side has its own lawyer. The lawyer should be someone who is well versed in M&A; only use an attorney who has actually engaged in M&A transactions.
The lawyers for both sides work together and craft the details of the purchase agreement. These agreements are very complex and often utilize arcane terms and phrases, so I can tell you from experience the best thing you can do is to let the lawyers do their lawyerly alchemy and craft a document they think makes sense. Stay out of their way, but always stay abreast of the situation.
Here’s why you want to stay on top of what the lawyers are doing: Many law firms turn over the mind-numbing exercise of negotiating the myriad legal points to junior associates. These associates often can be sweet, caring, and utterly passive creatures. As a result, one lawyer will mark up the purchase agreement (called a redline”) and e-mail it over to the other side.
Redline refers to an edited document that retains the edited text. Edited text is crossed out and the new text is easily identifiable because it’s blue, green, or, surprise surprise, red!
The other side’s junior associates, also sweet, caring, and utterly passive creatures, undo the changes and revert back to the original text. This passive e-mailing can continue ad infinitum because these passive creatures often prefer the easier e-mail route to having a conversation. Coincidently or not, this back-and-forth also results in running up the legal fees of Buyer and Seller.
Of all the advisors, lawyers are prone to try to take over the process. Keep your lawyer focused on negotiating the legal terms of the purchase agreement, and leave the negotiating on business terms to your investment banker. You’re paying the lawyer, so don’t be afraid the tell her to stand down.
Check out the later section “I’m the tax man!” for more on issues that fall under the jurisdiction of both the lawyer and the accountant. (And for more on accountants, head to the following section.)
Looking at accountants and auditors for Buyers and Sellers
Accounting is another issue that can cause a deal to crash and burn. Accounting may be a science, but the application of accounting, especially in companies utilizing family-accepted accounting principles (FAAP; see Chapter 8), can become an art. A capable accounting advisor is a must.
Accountants and their bean-counting brethren, auditors, are hugely important during the M&A process. Wading through enormous amount of data, especially financial statements, inventory reports, and bank statements, and then applying and double-checking arcane accounting rules, regulations, and conventions against that pile of data is mind numbing, dreadful work, so be thankful you have someone willing to do it!
Your fancy investment banker isn’t going to sit still long enough to do all that counting, and your lawyer will provide you with dozens of equally boring legal reasons, replete with references, why he can’t count up all the numbers.
Perhaps the best thing about accountants, beyond the fact that they gleefully jump into a world of monotony, is the fact that they don’t complain and rarely try to hijack the negotiations. See the following sections for some duties accountants share with lawyers regarding taxation.
I’m the tax man!
In the not-too-distant past, the U.S. tax code contained more than 4 million words and almost 200,000 lines of rules, regulations, exceptions, exemptions, thinly veiled threats, overt threats, twists, turns, and a writing style that can make your eyes glaze over in massive pronoun confusion. Oh, and just for good measure, the code tosses around arcane and bizarre language like a sailing vessel slammed by a rogue wave of bureaucratic tomfoolery. So you definitely need the advice of a tax expert.
Taxes are the bane of doing deals. Yeah, they’re a necessary evil, I get it, but of all the deals I’ve worked on that ultimately didn’t close, taxes were the number one reason for the failed transaction. Sellers are often unaware of the full effect of the taxes their sales generate, so having a tax expert on the team helps insure the best-possible tax treatment of the transaction.
The issue of taxes straddles the expertise of the attorney and the accountant (see the preceding sections). Ideally, Seller works with an accounting firm that is large enough to have a dedicated tax expert on staff.
Tax evasion (not paying taxes owed) is illegal. Tax avoidance (merely avoiding transactions or structures that trigger taxes or higher taxes) is not.
Recruiting more consultants to Buyer’s team
Buyers may need to enlist the services of additional outside advisors including environmental consultants, database/IT consultants, and marketing consultants. However, these consultants are farther down the food chain and aren’t part of every deal.
Technology
If the acquired company utilizes technology (such as the contents of a customer information database or some proprietary software designed and built by Seller) as any component of what Buyer is buying, Buyer should strongly consider hiring an appropriate consultant to test and confirm the strength of the technology. Testing the technology is important because many (if not all) of the decision-makers aren’t computer programming experts. Bringing in an outside expert to test the software may be the only way to determine whether the software truly is as strong as Seller claims.
Marketing
Getting a marketing consultant’s third-party opinion on a company’s marketing strategy may make sense for Buyer as a way to determine where it can make improvements in marketing post-acquisition. However, using this report to argue for a price reduction is a dubious practice Buyers should avoid.
Environmental
Buyers should hire an environmental consultant especially if they’re acquiring land and/or have reason to suspect the site of the business may be on contaminated land.
Responsibility for contaminated land is a hot-button issue as of late. The Environmental Protection Agency (EPA) can make Buyer’s life miserable if it discovers after a transaction closes that land acquired as part of the deal has an environmental problem.
Some key questions the Buyer’s consultant should ask include
What was the land used for prior the being home to Seller’s business? Specifically, was it a gas station, a recycling facility, or a manufacturing facility?
Were heavy metals previously fabricated on these premises?
The due diligence pertaining to land comes in two types of phases:
Phase I: A Phase I is basically a review of records from local, state, and any pertinent regulatory agencies, focusing on the current use and past use of the real estate in question. The review includes photos, maps, and an examination of aerial pictures, as well any information pertaining to the local water table. A Phase I usually includes a walk-through of the premises and lands. The examiner is looking for tanks (oil, gas, chemical, and so on) and other visual evidence of some sort of problem or issue.
Phase II: If, based on the findings in the Phase I review, the examiner believes the property may have issues, a Phase II may occur. A Phase II is a more in-depth, on-premise review and analysis. Some of the problems the Phase II tries to uncover include nasty things such as radon, asbestos, and other hazardous materials.
Buyer may include an environmental assessment as part of due diligence, but it may make sense for Seller to go ahead and conduct a Phase I prior to the M&A process. If the Phase I is clean and relatively recent, Buyer may be able to skip further environmental testing, thus saving time.
Depending on the consultant’s findings, Buyer may be in a position to demand strong representations and warranties as part of the deal if the land presents an environmental problem. Speak to your attorney for more advice.
Seeking friendly advice: Using friends and family as informal advisors
Friends and family are the whipping boys of the business world. Emotional pals and relatives call on them to fund all manner of crazy start-ups. Then the loved ones want free advice! Luckily, friends and family are usually willing to offer advice and thoughts about doing a deal.
Friends and family probably aren’t helpful guides for all the small details and tiny nuances a deal-maker encounters while delving in to the world of M&A. But even though they may not be M&A experts, they probably know the deal-maker better than most people and can therefore be a good source of opinion about the big issues (such as whether the potential Seller should sell).
Skipping business appraisers
Business appraisers are people who offer the “service” of valuing a business. Sometimes this service is offered as part of another advisor’s product offerings; for example, many investment bankers and business brokers (which I discuss earlier in the chapter) also offer the “service” of appraising a business and determining valuation.
I put “service” in quotation marks for a simple reason. In my humble opinion, business appraisals aren’t helpful. They merely put a valuation number in Seller’s head, and that number quite often doesn’t make any sense because the appraiser’s valuation techniques are mostly guesswork. Sure, the guesswork can have impressive methodology — I’ll be generous and call it an academic exercise — but the only true measure of a company’s worth (what someone else will pay for it) is missing from any and all academic exercises.
Beyond providing a number rooted in no rational basis, the appraisal may raise Seller’s expectations and cause him to reject the market value of his company. Worse, the actual market value of a company may be perfectly suitable to fund Seller’s desired lifestyle, but that high appraisal number may lead him to opt against selling the business.
I have firsthand experience in how business appraisals can be counterproductive, if not downright destructive, to wealth creation. A company I approached for my client, an acquisition-minded Buyer, ultimately had to pass on our offer. The owner was interested in selling, and the offer price was suitable for his needs, but because the company had an employee stock ownership plan (ESOP), it was required by law to have an annual appraisal. The last appraisal valued the company at 15 times EBITDA, which was significantly above our offer price of five times EBITDA. Because the owner had a fiduciary responsibility to his employees (because of the ESOP), he was unable to accept our offer.
As a result of an inflated and ultimately arbitrary appraisal price, the owner was unable to do a deal. The upshot was that an illiquid asset remained illiquid, no taxes were paid as the result of the sale, no fees were earned by the advisors, and the business didn’t receive a new owner who would have invested in the business, possibly creating more opportunities for the existing employees and employees yet to be hired.
What do Buyers think of an appraiser’s valuation? They don’t. The valuation an independent appraiser, someone with no skin in the game other than the fee he’s charging Seller, is of zero value to Buyer. People in the M&A industry may say otherwise, but they’re just being nice. A business appraisal isn’t worth the paper it’s written on.
Bottom line: Sellers should let the market decide the value of their businesses.
Keeping Everyone on the Same Page: Avoiding Communication Breakdowns
To steal Strother Martin, Jr.’s, immortal line from Cool Hand Luke, “What we’ve got here is failure to communicate.” Well, I think Strother drawled it “cahmun’kate,” but you get the idea. Communication breakdowns may make fine fodder for rock ’n’ roll songs, but a failure to communicate can be major problem and even a death knell for the M&A process.
Communication problems typically come in one of three flavors:
Purposely communicating incorrect information: You may know this better as lying. Unfortunately, many people conveniently forget the benefits of honesty, which is why due diligence is a necessary part of the M&A process. (Chapter 14 gives you more info on performing due diligence.)
Not communicating information: This version is lying by omission. Seller has the obligation to divulge any information that may be construed as material (important).
Inadvertently communicating incorrect information: Unintentionally signaling the wrong information can weaken one side’s bargaining strength because the other side may think it has an advantage where it didn’t know it had before. But in some cases, it can prove fatal to a deal because the other side may think something is wrong and bow out of the a deal.
To keep your team of advisors on the same page, here are three tips to avoid communication breakdowns:
Establish a chain of command. One person should be the point-person when dealing with the other side. All requests for data, meetings, follow-up questions, and so on should be routed through that person.
Although this suggestion may sound like creating more busywork and bureaucratic layers, a failure to institute and follow a chain of command results in cross-communication, duplicated steps, and general frustration such that emergency conference calls and meetings become necessary to get the process back on track.
Assign specific roles and tasks to each team member and hold each member accountable for fulfilling that assigned role. Some of the specific tasks the deal-maker needs to determine are
• Who makes the calls to the prospective Buyers or Sellers?
• Who is responsible for structuring the deals and making sure the deal makes economic sense for the company?
• Who is the final authority for green-lighting a deal? In other words, who has the final say-so?
• Who is the point-person with outside advisors?
• Who makes site visits?
• Who leads management meetings with the other side?
Clearly deciding who does what helps ensure your side follows through with its promises, which is important for maintaining credibility with the other side.
Don’t fall into the trap of communicating only by e-mail. E-mail is a wonderful tool and should be utilized, but because it’s a passive form of communication, it may not be the best method to communicate. It’s certainly an easy solution to call reluctance especially when a particularly difficult bit of information needs to be conveyed or when a delicate question needs to be asked, but in those situations, my million-dollar advice is always the same: Pick up the phone and have a conversation.
The problem with e-mail is that it doesn’t pick up on nuance or read the other side and adjust its tone or delivery. E-mail can be abrupt, and the reader may interpret unintended harshness in an otherwise innocuous note. As a result, e-mail can inadvertently derail a process. When negotiations have bogged down and both sides are merely sending e-mails back and forth, it’s time to get on the horn.
Following up a conversation with an e-mail is a perfectly acceptable method to memorialize the conversation. Delicate conversations should be handled in person or by phone, but the nuts and bolts of a deal are often best hammered out through e-mail. This way, you have a record of what the other side said or agreed to.
Getting Your Banker Involved
The decision to sell a business means the owner eventually has to tell his banker of the transaction or pending transaction. The first step is to review the loan covenants for any guidance as to when the bank needs notification. Barring any specific requirements (such as Seller alerting the bank when he hires an intermediary to sell the business), the right time to make the announcement often depends on whether the company in good financial health. If the company is in good shape, the announcement of a possible sale probably won’t trigger any warning signs in the banker’s eyes, so Seller can sensibly wait until he’s accepted an offer from Buyer (usually in the form of a signed letter of intent, or LOI, which I cover in Chapter 13).
The banker’s main concern in a business sale is the loss of the credit; the new owner probably has its own banking relationships. Although such a loss is unfortunate for the banker, that shouldn’t be Seller’s concern. As harsh as it may sound, the guiding principle in this situation is, “Don’t let someone else’s problem become your problem.”
If a company is challenged, the news of a potential sale can cause the banker to get nervous about the company’s prospects, and by proxy, the credit extended to the company. As Seller, you should speak with the banker in a very frank and honest manner. Selling a troubled company actually means the banker has a better chance of being repaid than if the company were to simply shut down. Remind a nervous banker that calling the company’s loan right now will kill the company; giving the company some time to conclude a deal will result in the bank getting its dough.
Don’t panic if a nervous banker calls the loan in the wake of learning about the potential sales transaction. Talk to the banker. Ask for an extension or a waiver, but don’t let the calls from the banker go unanswered.