Strong demand for the first round of open business seminars at the Institute of Directors in London has prompted Shield to extend the series.
Selling a Business for a Premium has been the most popular topic for entrepreneurs from across the UK.
Question one to consider if you want to sell your business for a premium is whether it is sellable at all.
Determining whether or not a business is saleable requires expertise and experience. Factors which can affect the outcome of the sale process include:
- whether the timing is right to sell
- whether or not there are enough of the right type of potential buyers
- whether there are risks in the business that make it unsaleable
- whether the shareholders’ value expectations are realistic
- whether or not the business is ready for the rigours of buyer investigation in a sale process.
It is often difficult if not impossible for owner/managers to know the answers to these questions.
You need an experienced advisor whose profession is selling businesses, who feels the pulse of the market, to look objectively at your business and help you to answer these key questions.
Pushing ahead with a sale process without paying due attention to these issues could prove disastrous for your business.
Once you are confident that your business is saleable then it is important to understand that selling a business for a premium depends on the quality of your advisors and the type of process they run.
The keys to sell a business for more are simple to understand, but difficult to deliver. The two key drivers of a business’ value in a sale process are:
- competing potential acquirers
- communication of future potentials in the business
Competition is key because it is the most important negotiating leverage you have in a sale process.
The process of selling a business is ultimately geared towards a negotiation, driving up the price and pushing for favourable contractual terms.
Negotiation relies on you having alternatives. One alternative is not do a deal and trade on as you were, but the other and more powerful alternative you need in a sale process is the option to do a deal with someone else.
Shield’s Chief Executive Dr David Young said: “By running a competitive, confidential auction process you’ll keep your potential buyers guessing.
“The fear of losing your business to one of their competitors will push them from their default position to pay up for your business.”
Communication of the future potentials in your business is also key in a good sale process.
Anyone buying your business will be buying its future potential, not its past. They will be buying future profits, market share, people, synergy benefits and strategic benefits.
When you sell businesses it is well worth articulating all the growth avenues in your business, irrespective of whether or not you intend to pursue them yourself.
Building them into your projections and making your assumptions explicit can have a surprising effect on a buyer’s valuation and get them excited about the potential benefits for them.
Advisory firms such as Shield Corporate Finance are able to achieve peak value for business owners when it comes to selling a business by delivering a range of services well beyond the simple matchmaking role of brokers.
Shield adds significant value to a sale process, compared with other advisors, by:
- understanding what drives value in a business and also what depresses value, so when it comes to discussions with potential buyers the investment thesis you are able to provide for them is both credible and defensible
- preparing your business in advance for the inevitable in-depth investigation by buyers
- quantifying and communicating standalone, synergistic and strategic value, using proprietary techniques
- extensively researching and then engaging potential trade and financial acquirers from around the world
- orchestrating and sustaining confidential competitive auction processes
- providing determined, skilful negotiation to achieve maximum price and optimal contractual terms for you, the seller.
Shield Mergers & Acquisitions was founded by David Young in 2001, with a determination to deliver remarkable results for sellers of businesses, in a world of financial advice increasingly biased in favour of acquirers.
This has taken its Merger & Acquisition team into fertile new territory, working with clients for a year or two prior to sale, in order to achieve best possible outcomes.
In addition to considerable expertise and success in handling business sale execution mandates and the commercial aspects of contract negotiations, Shield delivers unique consultancy services in business improvement and recession-proofing.
Shield will guarantee senior professional attention and total confidence throughout the whole the process. Shield works with companies with operating profits of >£500k, and offers a free indication of value if a business fits this criterion.
For more information and advice on selling a business, contact Shield’s Founder and Chief Executive Dr David Young, +44 (0) 20 7031 8265, www.sellingabusinessformore.co.uk
Download the podcast here www.sellingabusinessformore.co.uk/podcast.html