Shrewd acquirers often buy companies in a flat market so they can snap up bargains and that puts added pressure on those selling a business, warns specialist M&A advisor Shield Corporate Finance.
Any directors planning to sell a business should always invest their time wisely in skilled and diligent preparations. It can dramatically boost the final sale price.
That is true at any point in the economic cycle but never more so than in times of perceived economic uncertainty, warns Shield.
With buyers looking for added confidence in future growth preparing businesses for sale and negotiating good terms is now more important than ever.
Entrepreneurs looking to sell a business can all too easily be caught out by complex pitfalls that can have a significant impact on shareholder value.
Running a sale process for a business that has not been properly prepared can be disastrous.
Often overlooked, efficient preparation allows business owners to vet the objectives, motivation and factors behind selling the business and most importantly decide whether it is the right time to sell.
A full assessment of the business helps to determine its real value and demonstrate to prospective buyers the growth potential of the company.
Preparation is a crucial part of exit strategies. The planning and groundwork is important as the sale itself. It is often carried out one to two years in advance.
Without proper preparations, the final price achieved will fall far short of what could have been achieved with the correct exit strategy planning and preparations.
Worse still, lack of planning could result in a failure to sell the business destroying shareholder value because the market will then be aware that it has failed to sell.
Shield’s expert M&A advisors help the directors to resolve potential problems within the business, maximising its potential value and countering any threat which could undermine the final sale price.
This meticulous focus on due diligence when selling a business not only adds value, it makes the sale process a lot smoother and helps to prepare for the rigours of buyer scrutiny in today’s marketplace.
Shield Founder and Chief Executive Dr David Young said: “These are, without doubt, the toughest conditions for potential sellers of businesses we have witnessed in 25 years in the M&A market.
“Testing the market is vital when selling your business. Using a tool such as Shield’s business sale market testing process helps you to learn what potential buyers do and don't appreciate when purchasing companies.
“You can then put those insights to work to help maximise shareholder value,” he added.
This level of pre-sale due diligence allows directors selling a business to maximise the value of assets, minimise liabilities and improve profitability.
Thus the quality level and attractiveness of the business is improved, giving potential buyers confidence for its future.
The right advisor can have a significant impact on the success of the business sale and the terms negotiated.
Selling a business is a very time consuming process. A specialist M&A advisor can manage the whole sale from valuing a business and strategic groundwork through to helping with negotiations.
That frees up time for the business owners to continue running the business.
For more information and advice on selling a business, contact Shield’s Founder and Chief Executive Dr David Young +44 (0) 20 7031 8265.