We have a strong track record of maximising a business’ value on sale by preparing it for disposal, developing the key selling proposition, and identifying buyers in the UK & overseas whilst carefully managing a tailored process.

WHEN IS A GOOD TIME TO SELL MY BUSINESS

Timing, of course, is vital. We can help you make an objective assessment of your business, your industry sector, the likely appetite of potential buyers, and the overall economic picture, to assess if and when it is a good time to sell.

There are many reasons for selling – for an owner-manager this may be driven by retirement or the desire to realise value in order to spread risk. It may be that your business has outgrown your management capability or interest – common for entrepreneurs who enjoy the development phase more than they do running a large mature business. It may be for the long term interests of your business and its employees. In a publicly or privately owned group situation it may be that there is a desire to realise cash from the sale of a non-core business for investment elsewhere in the group or it may be underperforming or diverting management time away from more profitable core activities.

We are experienced in undertaking objective business reviews – advising on sector dynamics, likely buyer appetite, market conditions and timing. If we think the timing is wrong, then we will tell you. We have built our reputation on providing realistic, quality advice and not on short-term gain.

We will help in assessing when the business is ready to sell and provide advice on the practical steps that you can take in order to maximise value and ensure that the eventual process runs smoothly. The objective is to ensure that the business is optimally positioned for sale, and that any key issues that could affect value are addressed well in advance

PREPARING FOR SALE

It is important to plan a sale carefully and for this reason, whenever possible, we prefer to work with our clients over a period of time leading up to the sale of their business. By doing this we are able to gain a complete insight into the company’s value drivers and, equally importantly, the risk areas. This allows us to customise the sale strategy, including the identification of strategic buyers that are likely to place the highest value on the business and how key messages are communicated, thus allowing us to leverage competitive tension and maximise value.

Of course not all sale processes involve the marketing of the business. It may be that you receive an approach from a potential acquirer and are considering the merits of dealing with them exclusively, or it may be that, for reasons of confidentiality, you prefer to keep the process amongst a carefully controlled buyer group, or even approach a single buyer where you perceive there to be good strategic fit. We can advise you in all of these circumstances and can help you work out what is right for you and your business.

With adequate preparation, the sale process invariably runs much more smoothly, and the ability to maximise price is greatly enhanced.

CASE STUDIES

Glide
Archive 2000
Palletforce
Viovet
SDI Group

IDENTIFYING BUYERS

It is important to fully understand the various buyer pools and then the population within them at an early stage as this helps shape the preparation that is needed and impacts on the disposal strategy. Identifying UK and international businesses in the same or aligned sectors is only the starting point. It is then important to identify which are likely to have a genuine appetite for the business and put the highest valuation on it based on sound strategic rationale.

 

We carefully assess each potential buyer to understand:

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    Strategic fit – is there a compelling rationale for a business combination that can be pitched to the potential buyer to gain their attention?
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    Financial capacity – does the potential buyer have the ability to conduct a transaction at our target valuation?
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    Appetite – does the potential buyer have the appetite for a deal – what is their track record in M&A, their investment focus and their overall strategy? Have we spoken to them to verify their appetite?
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    Reputation – do they deliver on deals struck and what is their reputation as a buyer?
We do this through a combination of detailed research on a global basis plus our own knowledge of the potential buyers supplemented by direct conversations with decision makers in the organisations, regardless of whether the potential buyer is based in the UK or overseas.

DEVELOPING THE KEY SELLING PROPOSITION

The key element of maximising business valuation is to identify factors that influence its attractiveness to buyers while also understanding any potentially negative factors that work the opposite way. Valuation will normally be by reference to a multiple of profits but first of all an assessment needs to be made of the sustainable profits that a buyer will benefit from. Then consideration is required of the influencers of the valuation multiple which are often specific to the business, its sector and the intentions of the owner and management team post-sale.

The price ultimately achieved will be down to the motivation of the buyer. We spend time not just identifying the likely buyers but in understanding their strategies to that we can best position the business to them. Our ability to identify and then contact strategic buyers extends internationally, something that we do ourselves, not by delegating it to overseas intermediaries who have their own agendas.

The presentation of the business for sale in a high quality information memorandum is, of course, important but it is how buyers are approached and what is said to them that gains attention, not a mailshot. Our team of experienced professionals makes those approaches directly to senior decision makers and remain closely involved, bringing interested parties through the process, liaising on information provision, handling queries and, ultimately, negotiating the terms of the deal on our client’s behalf.

CLOSING THE DEAL

Obtaining offers is one thing but making them stick and translating them through the due diligence process into legal agreements is where our attention to detail makes the difference.

If there is a clearly preferred bidder which we are confident will deliver a deal on the terms proposed then it may be that non-binding heads of agreement are drawn up. It is normal to grant a period of exclusivity at this point during which the purchaser incurs the costs of instructing due diligence and legal advisers. Alternatively, it may be that there is more than one party capable of delivering an acceptable deal and that there is the potential to extract further value through maintaining competitive tension further into the process.

Purchasers may try to renegotiate the price, or other terms, once they are in an exclusive position and it is therefore important to assess the motivations of each buyer and to ensure that they have received the information they require and have confirmed their understanding of it. Of course, if the preparation phase has been handled correctly then there should be few surprises arising from due diligence – any weaknesses or risks will already have been identified and introduced into the process in a controlled manner.

Once the terms of the deal have been agreed, there is work to do in closing the deal. The legal documentation will be drafted and negotiated between respective sets of lawyers. Our role is to ensure that the agreement reflects the commercial understanding of the deal, and that the process is run as efficiently and smoothly as possible.

THE SALE PROCESS

The sale process is long and complex and therefore it is important to use your advisers to run the process, leaving you to focus on running the business.

 

Key ingredients for a successful sale:

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    “Keeping your eye on the ball” during any sale process – purchasers in general react badly to surprises especially any downturn in current trading.
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    Identifying the strategic purchasers is key to achieving optimal value. Its not always the obvious ones who turn out the be the best purchasers for your business and therefore quality research is essential.

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    Maintaining confidentiality by developing a targeted approach based on your business and the sector in which you operate.

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    Merely advertising your business for sale is unlikely to maximise value and can in fact destroy it – make sure you work with someone who can give you advice not just make introductions.
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    “Selling the story” to purchasers is critical to achieving enthusiastic buy in to your business – a meeting held between a willing buyer and seller is important as soon in the process as possible.
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    Drip-feeding information to potential purchasers allows a significant degree of control over the process, whilst protecting the business commercially until you are certain of a purchaser’s intentions.
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    A deliverable offer from a potential purchaser is achieved by disclosing information in such a way that any price chipping is made difficult and unjustifiable.

SALE OF / BY A PUBLIC COMPANY

We are experienced in working with public companies to sell subsidiary and non-core business units. We understand the regulated market requirements and are used to working with existing Nominated Advisers and financial advisers to achieve a successful disposal.

If the company being sold is a public company, whether its shares are traded on a stock market or not, it falls within the rules of the Takeover Code. We fully understand the PLC sale process and are able to act as Rule 3 adviser as required by the Takeover Code and have many examples of successfully advising boards in such circumstances.