For most business owners, the focus is always on running and growing the company, however
there are a number of complexities to consider when the time comes to sell.
To successfully navigate the sale of your company, it is critical that the appropriate planning and preparation has been conducted and any uncertainties have been resolved prior to the commencement of the process.
Provided below are some key points that should be considered in order to get your business ready to transact with a potential purchaser:
1. Be clear on your goals for the transaction
Before starting a sale process, you must first consider your goals for the transaction. Are you wanting to walk away from the business with the cash or are you willing to continue working at the business to assist with a gradual hand-over of key relationships.
There are a number of different structures available to sell a business, but if none align to your post-sale aspirations or financial needs, it may be a waste of time. It is important to understand your options before commencing the process.
2. Understand your financials and key drivers of performance
Nothing provides buyers with confidence more than a clean set of financial statements, demonstrating steady growth, control over costs and clear forecasts for the future.
While we understand that this ideal is not apparent for most businesses, it is essential that a vendor has an in-depth understanding of the key drivers of financial performance (internal and external) and can provide an explanation when the questions arise during due diligence.
Before committing to the transaction, a buyer will want to conduct significant due diligence to understand the business they are buying and the associated obligations, litigation risk or any problematic contracts. Collation of information and responses to buyer queries is going to require devoted resources to satisfy a buyer’s investigations.
3. Business Improvement Initiatives
It is expected that a business owner is continually trying to improve their business, and buyers want to see it.
Whether it be retrospective examples of performance initiatives and the corresponding improvements in financial results, or process enhancements providing operational efficiencies, a business able to implement positive changes will attract a premium pricetag.
Further, ongoing or planned initiatives in the pipeline will assist buyers to understand the opportunities available in the business, providing further upside.
4. Resolution of Outstanding Issues
We know that from time to time businesses do come under the spotlight for various compliance and regulatory reviews.
Any outstanding review or litigation can cast unnecessary complexity to a deal.
Complexity spells risk to potential buyers and can result in downward price adjustments if issues are not resolved or appropriately ring-fenced prior to commencement of a sale process.
Once a sale process is underway, timing becomes crucial, and any changes inside the business (such as key staff resignations) or outside (regulatory changes or market shifts) can be enough to put a sale process at risk.
5. Know your buyer
Who is the most likely purchaser of your business?
Understanding the differences between private equity and commercial buyers may alter the way you market your business. On one hand, private equity buyers may be looking at growth opportunities and expansion to new markets whereas a commercial buyer will be looking at increasing market share, unlocking synergies and whether it is a strong strategic fit.
6. Have a team of trusted advisors
If you are considering the option of selling your business, it is crucial to have a team of trusted advisors to support along the way.
Whether it’s laying out your options to support decision making, collating your financial data, implementing business improvement initiatives or negotiating with interested parties, Greenmount hold the vital skills to support you from start to finish, working with your management team while they focus on ensuring the business continues to perform.
The GreenMount difference is in the people who support you, the long-term view that we take and the willingness to adapt our support as you decide what you need and when you need it.
Here’s what you can expect when you work with us:
- Flexible and Innovative – we tailor what we do to match your desired outcomes – and we invest the time to help you identify what outcomes are truly right for you and your portfolio business – no boiler plate solutions.
- Authentic – we take a stand, and we are not afraid to suggest a course of action. We form opinions, give guidance and make practical recommendations, are confident in our abilities and do not simply present a series of options and ask you to choose.
- Responsive – we do not delegate or filter matters through many hands. We are agile and work to understand your deadlines. The GreenMount leader “goes the journey” with you.
- Proactive – we care, and we work together in partnership with you and your existing advisors over an extended period to ensure your goals are reached.
- Valuable – we take pride in going above and beyond to achieve your investment/loan objectives. We work in harmony with you to create opportunities and value.
- Cost effective – we apply flexible fee structures to every role we take, depending on your needs and preferences, and avoid being “paid by the hour” in virtually all work that we do. We do not force you to fit our model but adapt ours to yours and are prepared to align the way we are paid to the long-term success of the strategies and action plans we help to devise.
Your Operating Partners:
Paul Billingham
Cath Holland
Doug Robinson
