10 August preparation tips for a Business sale and what makes a business sell.

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For many businesses, July and August can be slower months, but a good time to reflect on where to take your business next and for buyers to assess their autumn business acquisitions.

We sell 70-80% of business we take on, we do this by some of the following :

• Identifying and highlighting the businesses unique selling point’s

Not just the IP or profit levels on a particular part of the business, but drilling down on the longevity of the customer base, the pipeline visibility, customer profile highlighting the future stability or the sectors growth rate, and we make these our lead ‘headlines’ on the business marketing.

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Business Sale Information

• If you ensure business is in the best shape for a sale, we can maximise the price you achieve. We will confirm if we believe your business is not ready for a sale and what you can do to improve it.

E.g. from how dependant the business is on you, the business owner, to maximising your multiple of net profit

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Business Sale Preparation

• Know who the buyers could be

We like a lot of brokers will place generic adverts on business sale websites and send to lists of interested investors but in addition we will build a target list of typically 500 businesses who would be an ideal suitor and where the purchaser has some clear added value from the synergies of your own business to theirs.

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How we work

• Target marketing campaign

On one recent sale it was after 8 attempts to contact the Canadian CEO that we managed to arrange a meeting with the UK MD of an £80m business. We then have highlighted ‘ our USP’s , in this case the average life of a customer relationship was over 20 years with a good spread of corporate clients. We would compile a campaign with your approval, which whilst doesn’t’ guarantee success will vastly increase the chances of a good buyer introduction.

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Business Sales

• The right buyer

From what we call a close targeted campaign, we would look to attract a ‘sophisticated buyer’, that is one who is typically over 4 times the size of your own company, where the purchase price won’t ‘stretch them’ and won’t reduce your price at the 11th hour. The ‘right’ buyer will have some clear integrated or related diversification benefits and equally won’t want to waste anyone’s time in protracted negotiations

• Finance

As a finance broker we have the benefit of doing some pre due diligence that not only unpins the structure of the businesses by an independent 3rd party , but gives the buyer a more detailed overview of the business to answer some of the ‘stage 2’ questions and with a ‘sophisticated’ buyer to speed up the business sale process.

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Finance Opportunities

• It’s a marathon not a sprint!

It is important not to rush the process, a buyer may have to get board or parent company approval, it is a big consideration for any size organisation, not just the cost but the ethos, it is our job to understand these along with the synergies, USP’s and specific benefits on a case by case basis. Most importantly for yourselves a gradual sales process will maximise the price you achieve not only with the specific buyer but ensures you have received complete market exposure with a dedicated CTC campaign with normally 10 attempts to ensure the message has been delivered.
(this includes subtle changes of information, highlighting different benefits through all the different mediums and often culminated in linked-in direct messaging)

• ‘House in order’

From first impressions, a tidy presentable premises to tidy presentable books, getting the accounts up to date, normalised net profit figure, up to date MI, all sound very basic but are a first port of call. Equally a buyer visit will often be 3-4 months away from the initial sale engagement.

• Your expectations

Your expectations are another starting point and we have to begin with a realistic figure that is potentially achievable, all too often we follow on from ‘brokers’ that have promised the earth price-wise, take on the business sale engagement, do the initial ‘web site’ advertising and then not a lot else happens. We will only take on an engagement where we know we can find buyers that will meet your expectations, so from both sides these have to be realistic; and equally we just ‘bat away’ what one business owner called ‘the chancers’ which in fairness come from some of the ’unsophisticated web site enquiries’.

• Finally, the team.

Most businesses are dependant on their people but our advice would be not to share this process until a deal is completed. In the first instance we ensure they are not capable of a management buyout and ascertain whether there is a suitable future leader/management team within the company.

In the event of a sale the team will generally all buy into a company purchase from ‘a larger organisation’. That will offer increased training, promotion opportunities at home and abroad. They may generally have stronger more well established footing simply due to their size.

Whilst this is a generalisation this has been very true in many of our business sales by finding the ‘right buyer’, the whole ‘management of change’ process can be made easier.

We hope this helps a little and is thought provoking if nothing else and when you are ready for a sale we would be happy to assist you in the process.

If you would like to speak to us about your business, please email us at: nigele@thebusinessboard.co.uk or call our office number on 01183 381 818.

We look forward to speaking with you.

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