PREPARING FOR SALE
Once your preferred exit strategy and timeline has been determined, we highly recommend the timely implementation of the identified action items so that your business can be optimally prepared for your exit or sale.
We like to work closely with business owners in the months or years prior to a planned sale event so that we can work to "de-risk" the business, make the business more attractive to prospective acquirers and put in place measures that will significantly increase the net outcome following the sale event.
All businesses are different, as are their individual owners exit objectives. Consequently, no single exit strategy suits all businesses. There are literally thousands of actions, projects or considerations that may assist in preparing the business for sale. We will help you to prioritise those that will bring you the highest impact and work closely with you to ensure that they are appropriately implemented. The outcome is a well presented business that is optimally prepared for sale.
Our "Prepare for Sale" program focuses on the following objectives.
Mitigate the risks
Risk mitigation in the lead up to the sale is critical as the perceived level of risks from the buyers perspective directly influences the value of the business. The high the risk the lower the capitalisation rate. (i.e. the buyer is prepared to wait less time for a return of the purchase amount) and consequently they will offer less for the business.
The greatest risk to buyers is the risk that the business fails to continue to generate profits or cash flows after completion of the acquisition. Preparing to sell strategies and related activities should keep this concept at front of mind.
Increase the attractiveness
There are many attributes of an attractive business, positive and reliable cash flows, minimal capex requirements, strong growth potential, a compelling value proposition, a unique business model, a strategic market position, etc, etc.
What makes your business attractive to a particular buyer will be dependent upon their reason for acquiring your business. By understanding who your strategic buyers are, we can then help you to define the strategies and actions which will make your business more attractive to this type of buyer.
Increase the valuation
Buyers like sellers are particularly concerned with the value of the business and the ultimately the price paid to complete the transaction.
The key drivers of business value are 1. Capitalisation rate (which is a derivative of "risk" and "growth potential") and 2. Earnings ("profits") of the business.
As a consequence buyers (and their advisors) will look at the trading history of the business over the last few years and seek to understand the stability and level of profits of the business. Higher valuations at the sale date are therefore more easily justified when they can be evidenced historically in the Financial Statements (i.e. it is highly advantageous to work on value improvement activities sooner rather than latter).