How best to prepare your company for sale?
You may have heard of the 5P’s? This critical performance mantra was originally known as the 7 x P’s and the term was first coined by the British Army in their does what it says on the tin adage “Proper Planning and Preparation Prevents Piss Poor Performance”.
Straight to the point, I think you will agree?
The saying holds true for most disciplines – but what is relevant for mergers and acquisitions (M&A) specifically?
40% of executives surveyed by Deloitte’s The State of the Deal: M&A Trends 2019 claim half of their deals over the past two years have failed to generate expected value or ROI. Bearing in mind that you will have spent years of hard work growing your business, you must ensure that you capitalise on all of that blood sweat and tear – so you NEED to be in that coveted 60%.
In a recent article, Birketts law firm, advises business owners to consider carefully their exit plan. They cite actioning a whole string of business sale preparations, such as reviewing contracts and policies (data protection being the obvious hot topic) and resolving any disputes. They recommend tackling the housekeeping that is necessary to present a ‘clean’ business. The potential downsides of not dealing with this in advance are ‘price-chipping’, costly indemnities to the buyer in the sale agreement, excessive amounts held in escrow post-deal or even an aborted sale.
That lines up with our experience too. So why work with a specialist company early on?
We believe that an early and focused approach brings a deep level of familiarisation with the company. This brings numerous advantages, not least the fact that any potential pitfalls can be resolved before the company is taken to market.
So how can we help?
For complex or larger organisations, we provide an exhaustive review specifically aimed at evaluating readiness to ‘go-to-market’:
This is a deep-dive into a company through a critical M&A lens.
This comprehensive review is conducted in parallel to separate legal & tax counsel to evaluate topics such as structural points (shareholding, ownership rights, exercise of power, pre-emption rights etc.), tax issues, organisation (structure, succession, incentivisation), finance (P&L – historic & future, adjusted EBITDA, proforma Balance Sheet (debt-free, cash-free), working capital – ratios & trends, treatment of cash & debt, goodwill), IP & competitive benchmarking. As well as evaluating a valuation-profile, the review aims to provide solid recommendations together with an action plan.
For those company owners with a much longer-term plan, we provide non-executive support centred on developing shareholder value:
We provide a ‘non-exec’ service for a select group of companies wanting to build shareholder value. Not all our clients have an exit in mind – in fact, a few are simply focused on building the value within their business. We provide input on topic such as strategy, development of IP, acquisition & divestment strategies.
Our non-executive assignments are led by our MD, Justin Levine. Engagements are typically delivered over a 1 – 7 year period.
Each service has it’s own particular merits – so if either potentially fit your business need, why not call us to discuss?
If you are thinking about selling a business in the near to mid future the time is right to book a confidential exploratory session with TheNonExec Managing Director, Justin Levine, or call 01202 828266.Tags: 5P's, 7xPs, Acquisitions divestments & carve outs, Adjusted EBITDA, Alliances & technology transfer, balance sheet, BS, company exit, Competitive benchmarking, Deloitte, Development & protection of IP, EBITDA, Financial modelling, Financial optimisation, Goodwill & IP, Inventory & working capital, Justin Levine, M&A, M&A AUDIT, mergers and acquisitions, NON-EXECUTIVE SUPPORT, NonExec Support, Organic growth initiatives, P&L, preparatory due diligence, Proforma BS, ROI, shareholder value, Strategy & execution, TheNonExec, Valuation profile, virtual data room