So it’s time to sell or maybe to bring on a strategic partner. There are many issues to consider and more than a few decisions to contemplate. Being prepared for the possibility ahead of time is crucial.
The decision to sell needs to have been considered ahead of time. Having to respond to an unexpected offer or arriving quickly at a decision to sell can be costly in a negotiation. It’s never too early to consider selling. Even a startup should have contemplated that possibility and any company beyond that stage should operate with the knowledge that an opportunity to do so could emerge at any time.
So, how do you think you are placed when addressing the following questions?
1. Is the business ready to sell?
- Do you have financial accounts and tax returns which demonstrate solid financial results or trajectory?
- Are there any overhanging liabilities, financial or legal, which could be resolved?
- Are there plans that could be implemented now to quickly build value?
2. Is this the right time to be selling?
- A business which is declining will not only find its valuation reduced but its saleability compromised.
3. What are market conditions like?
- Most business sectors go through phases when they are hot. If you delay then the appetite for acquisitions in the area can decline and you may struggle to secure a buyer at a valuation close to what had been anticipated.
4. Do you know how buyers will value the business?
- Australian buyers and overseas buyers may have different views on valuation. Being able to present and market a proposition to buyers who see a strategic benefit or are accustomed to a different valuation basis can make all the difference in achieving a desired outcome.
5. Who can I bring onboard to ensure a strong proposition and effective negotiation?
- A sale is a complex process demanding a range of specialised skills. Legal, financial, valuation expertise as well as an experienced advisor to manage the process are key to having the right capabilities to match against the buyer’s team.
6. Can the business cope with a sale process?
- It can be disconcerting and distracting for staff to know that such a process is underway. It can also be disruptive if key customers become aware of it.
- Perhaps the business needs to be sold. Sometimes it’s the only way to ensure the resources, human and financial are available to cope with challenges that may be emerging.
7. Will key management stay on if required?
- An acquirer of service businesses, in particular, will want to ensure that key personnel remain. Will your team be motivated to do so?
8. Is the business’ intellectual property properly secured?
- Are patents and other registrations up-to-date? Are appropriate confidentiality agreements in place with staff? Has IP been properly assigned?
There are a multitude of considerations which if not addressed ahead of time could serve as deal-breakers.
Get in touch if you would like to discuss how we might assist in preparing your business for sale.