It is only common sense to expect that anyone hoping to sell a used car would be sure to see that it was looking its best. Valeting and a minor service could ensure a quick sale and a good price. Because selling a company is a markedly more complex procedure, ensuring that everything is in order before approaching buyers is even more necessary. If you are a company owner and contemplating retirement or trying something new, you must find the right buyer. However, before you start looking, ask yourself one question: “is my business ready to sell
The question might appear simple, but the answer seldom is. Firstly, selling up is a decision you should not make on impulse. Your best chance of negotiating a favourable deal is to begin planning well before your desired completion date. When doing so, be aware that up to twelve months or more of your lead time could be necessary to find and negotiate with potential buyers. Furthermore, you would be wise to retain some professional help with the preparation and marketing to be certain your business is ready to sell.
You will need to pay attention to those features that will make it attractive to a qualified purchaser or investor. On closer inspection, you might even find that a part sale could offer you a more favourable exit strategy than an outright sale. In practice, selling to an overseas operation could be the way to experience that “something new” you were considering. Alternatively, the terms of an overseas acquisition could include a managerial position in a new country. Either way, such favourable outcomes will be most unlikely until you have made sure your business is ready to sell.
Although you might have a reasonably large customer base and show a profit, you shouldn’t assume that’s enough to secure a sale. Nobody who buys a ready-made business wants to spend time fixing things they’ve noticed, but you have overlooked. For example, a well-trained team can be a strong selling point. Does any of your employees need further training? It’s also a good idea to settle any outstanding liabilities and debt and chase up your debtors. Pricing your business can be tricky. While there are formulae to help you, the buyer will ultimately decide its value. Ensuring your business is ready to sell can only help to boost a buyer’s perception of its worth.
During this preparative phase, employing an accountant to prepare your balance sheets and assist with other aspects of the due diligence procedure will benefit you. Advertising in the press is unlikely to arouse much interest. You will also need to hire someone with the knowledge and contacts to market your business professionally. When you find the right buyer and your business is ready to sell, you will need an attorney to draw up the sales contract.
Yes, the process is complex and requires specialised knowledge and skills that most business owners lack. Fortunately, there is a far easier solution. Discuss your needs with a mergers and acquisition expert who will conduct the entire procedure on your behalf. Deal Leaders International is an M&A advisor that prioritises sellers’ interests. They will ensure your business is ready to sell and negotiate a deal that will fully satisfy all your stated needs.
Successful Business Exit Solutions Require Careful Planning
Understandably, the decision to sell all or part of a company can often be a difficult one. However, implementing that decision could be even more challenging unless the seller has planned each step of the process in detail. The biggest mistake that most first-time sellers make is to assume that the exercise is much the same as selling a house – simply assign the job to an agent and wait for the offers to roll in. Unfortunately, planning and implementing successful business exit solutions is a far more complex task and completing it is likely to take much longer than most owners expect.
Making a sale entails more than merely obtaining some signatures on a contract and paying a nominal purchase price into the seller’s bank account. Any reasonably competent estate agent or business broker might be able to achieve that much if given sufficient time. In practice, the success of a deal will be determined by the value and risk that underpins the purchaser’s valuation, along with the terms and conditions governing the signed contract. Let’s examine the various steps involved in preparing and executing an effective business exit solution.
Firstly, when selling a house, one would generally begin by deciding on an asking price, knowing that it will probably be necessary to compromise to finalise the deal. When setting that price, an agent bases the figure on recent sales of similar homes in the same area. However, when determining the value of a privately-owned business, there are no market standard valuations to guide the seller. The actual value of a company is whatever it appears to be from a potential purchaser’s perspective. Ensuring that valuation will meet or, where possible, exceed the seller’s needs is among the main objectives of planned business exit solutions. Experience has shown that allocating that responsibility to a mergers and acquisitions (M&A) advisor is invariably the best way to guarantee a favourable outcome.
Finding the right buyer is critical to a successful deal. The most effective strategy will be to identify several parties that could benefit from the purchase to encourage competition. The task is primarily a marketing exercise. Therefore, it’s best handled by a company with proven skills in this area and access to clients with a known interest in acquiring or investing in a going concern. A mutually beneficial business exit solution will depend on identifying the buyer or investor who has the most to gain from the transaction.
There are several reasons why someone might want to acquire an existing business, with the most important being growth. For example, the buyer might wish to access new markets. Many overseas companies have expressed strong interest in exploiting the growing demand for their goods or services in South Africa and other parts of the continent. Given the lack of local interest in mergers and acquisitions, most opportunities to negotiate lucrative business exit solutions currently depend on convincing overseas buyers of the benefits they stand to gain.
Surprisingly, one advisory service in South Africa has developed a uniquely effective strategy that often sees buyers making an offer even before reviewing due diligence. Deal Leaders International is one such M&A advisor with extensive acquirer and investor networks both locally and abroad. The company has earned an enviable reputation for negotiating practical and mutually profitable business exit solutions.