Divesting a business is a major decision, requiring careful planning and implementation to ensure you exit at the right time, in the right manner and most importantly; realising the potential of the wealth you have created.
From our extensive experience in this area, we have become increasingly aware of the need for a business exit/succession plan to enable business owners to achieve the return they deserve when selling their business.
Exiting your business can be complex and at times a daunting experience if not planned properly. Many complex issues need to be resolved and frequently business owners fail to maximise the value of their business by not planning an exit strategy.
For information about selling your business outright, read below.
For information about a managed (or staged) exit click here.
Selling an SME
Like many business owners you may have a considerable portion of your total wealth tied up in your business. If the divestment is not handled correctly and by experienced senior brokers it could have serious consequences.
While there is the obvious risk of failing to realise market value, there is also the risk of unnecessary exposure and potential future litigation caused by misrepresentation or unprofessional presentation.
Potential complications can arise from:
- Not maintaining confidentiality
- Incorrectly valuing the business
- Not pre-qualifying potential acquirers
- Identifying the integrity of the acquirer
- Incorrectly prepared sale & purchase agreement
- Not managing the due diligence process robustly
LINK Corporatehas a proven track record. The combined experience of our team of senior brokers is second to none in this market and their knowledge and experience gives you the confidence in knowing that we have the credentials necessary to guide you through the various stages of exiting your business in a professional and ethical manner. The following gives you an outline of the approach we recommend you take.
The first step is to contact us for a no obligation initial consultation; naturally this will be treated with total confidentiality. A senior specialist broker with experience in your industry will meet with you to discuss your goals, timeframes and reasons for exiting so we understand the issues that are important to you.
After gaining a general understanding of your business, we will discuss with you in detail the process and the various options available to you.
Irrespective of your exit time-frame we would sooner spend time planning with you well in advance as we will be able to suggest steps you need to take in preparing your business for sale. A well planned and implemented exit strategy contributes significant additional value to business owners when our plan is followed, thereby maximising their wealth when exiting.
Once you have decided to proceed with divesting of the business, we prepare a comprehensive “Marketing Appraisal” document detailing every aspect of the sale process, including a financial summary of past years’ performance and financial calculations to establish pricing and strategies that will be used to find the right buyer so you are fully informed.
When the advance planning is completed we then require a mandate for a specified period of time from you, authorising us to proceed.
We then begin compiling specific information required by potential purchasers to include in the information memorandum. This document summarises the various aspects of the business. When completed this will be submitted to you for your approval, ensuring all the information accurately represents the various aspects of your business. The Information Memorandum (or business profile) is an extremely important document in the divestment process.
We will consult with you on how the business will be marketed. In many cases buyers are found from our database of qualified buyers which can result in a sale being concluded expeditiously. We have many potential buyers entering our database each week and when your business is mandated with us we firstly look for potential matches in our database.
Should we mutually decide to market the business, advertising conducted will not identify your business and interested parties are pre-qualified and required to sign a confidentially and indemnity agreement before receiving any information. Maintaining confidentially is of paramount importance and no information is given out until the interested party has been qualified.
Part of this qualification process is to identify the integrity of the buyer, not only must they be able to finance the acquisition but they must also be suitable candidates for the acquisition. We spend considerable time qualifying buyers as it is important that only buyers who can complete the transaction are given the details on your business. Once again this is the advantage of using an experienced company with knowledge gained from many prior transactions and a large information database to protect you from potential risks.
Throughout the process we control the information potential buyers are given -commercially sensitive information will be withheld until a written offer has been presented thereby restricting disclosure of certain information until the prospective purchaser has indicated they wish to proceed with a purchase.
At this point a “Sale and Purchase Agreement” is required detailing their offer along with the conditions to be fulfilled prior to the agreement becoming unconditional.
The preparation of the sale and purchase agreement is one of the most important aspects of the sale process. After negotiating and concluding many mergers and acquisitions of SME’s we have considerable experience in this process and will recommend to you various situations to be aware of and to ensure these are incorporated into the agreement. We will work with your legal advisors in preparing an agreement to minimise your legal exposure.
Once negotiations have been completed the purchaser will, under due diligence, require verification of information supplied, this gives them a specified period of time for themselves or their financial adviser to inspect certain records and documentation. In preparing your business for sale we will identify with you what records will be inspected so you can ensure these are ready at the appropriate time.
Throughout the due diligence process we liaise between both parties to ensure the conditions of the agreement are satisfied.
We trust this overview gives you a better understanding of the process and potential complications that can occur unless managed by professional and experienced senior acquisition and divestment specialists.
Should you wish to discuss implementing an exit strategy or exiting from your business please contact us for a confidential no obligation initial consultation.