Blog

March 2nd 2011

After years of hard work and dedication to build and grow your business, when it comes to retirement or planning your own exit you only get one chance to realise the best value from all your years of effort. It is therefore absolutely imperative that you get it right.

Selling a business is usually a once in a lifetime transaction for most business owners and one which can involve many months of work to plan and achieve. The sale of a business can account for a large, if not the largest part, of a vendor’s retirement funding making it so important that you seek specialist professional advice at an early stage to:

• give yourself the best possible chance to maximise the value of your business on disposal ; and
• to ensure that the sale process is carried out professionally, confidentially and efficiently with little or no disruption to the day to day running of the business.

  There are a bewildering number of firms who market themselves as business sale specialists or business brokers but the unfortunate reality is that the services provided by some of these firms is highly unlikely to culminate in the vendor obtaining the best possible results on the sale of his or her business.

  Obviously the services offered by business brokers and sales agents vary enormously from firm to firm, with some providing a better service than others, but we firmly believe that no broker or sales agent is able to provide a more comprehensive or better quality of service than professionally qualified corporate finance advisers.

  To illustrate the extent, quality and pro-active nature of our service we compare it to the service offered by a typical business broker below.

  Qualifications of the team

  Strategic Corporate Finance

  Every member of the team working on your assignment is professionally qualified with many years’ corporate finance experience.

  Typical business broker

  Often personnel working on your assignment are not professionally qualified.

  Nature of the service

  Strategic Corporate Finance

  We provide a bespoke service which is individually tailored to each individual client and the company being sold in order to get the best results.

  Typical business broker

  The approach is usually exactly the same for all clients irrespective of the characteristics of the company to be sold.

  Appraisal of your company

  Strategic Corporate Finance

  We carry out a full appraisal of new clients at the outset. We identify any issues which may affect a company’s value, sale prospects or timing of the sale. We will advise that the sale be delayed if this is in your best interests.

  Typical business broker

  Full appraisals are rarely carried out, meaning that companies are often marketed at a time when not at their optimum value.

  Valuation

  Strategic Corporate Finance

  We take a pro-active approach to the valuation of a client’s business, advising on its likely value at an early stage and always before any marketing activity has commenced. However the key to obtaining the best deal for a client is attracting offers from those potential purchasers who will pay much more for the business than it is worth on a standalone basis.

  Typical business broker

  We regularly come across brokers who have suggested unrealistically high valuations to vendors, raising their expectations, only to disappoint them later on in the sale process when the offers received fall very short of these values. It is clear that this is a sales technique used by some brokers who have found that potential clients will often appoint the broker or adviser putting the highest value on the company.

  Detailed research to identify purchasers

  Strategic Corporate Finance

  It is vitally important that the adviser you appoint has the tools to do the job and the right approach.

  The tools required are powerful subscription databases. The first database we use contains details (financial and non-financial) of every company in the UK and this allows us to identify every single company in the UK that meets the criteria we have set.

  The second database we use includes a detailed history of previous acquisitions and disposals worldwide. This allows us to identify those companies, wherever in the world they are based, who have a track record of making acquisitions (including international acquisitions).

  We use professionally qualified staff to search the databases and our approach is to devote enough time, effort and skill so as to identify those potential purchasers which appear best placed, both strategically and financially, to buy your business.

  Once we have put together an initial long list of potential purchasers, we spend a substantial amount of time researching each company on the list so as to arrive at a short-list of the best potential buyers.

  This approach means that our efforts and our clients’ efforts are focussed on those companies most likely to deliver the best deals.

  Typical business broker

  A broker will rarely invest a substantial amount of time in researching potential buyers to arrive at a suitable shortlist.

  In addition a broker will usually not subscribe to the expensive databases that we believe are essential to identify the most appropriate purchasers, wherever they are based in the world. Instead, if direct approaches are to be made at all, brokers will often carry out a mass marketing exercise. This approach is not focussed and is unlikely to result in the best offers for the company.

  This approach also increases the risk of the company’s competitors, suppliers or customers finding out that the business is for sale.

  International aspect

  Strategic Corporate Finance

  We will always give consideration to whether international purchasers should be sought for the business we are selling and we have the tools to identify such purchasers.

  Typical business broker

  A broker is unlikely to consider international purchasers. As international purchasers often pay the best price, this aspect of the sales process should not be ignored.

  Online marketing

  Strategic Corporate Finance

  Whilst our primary approach is through the targeted research already discussed above, in appropriate cases we will also market the acquisition opportunity much more widely, through one or both of the following methods.

  We can include anonymous details of the business for sale in our weekly email that goes to over 6,000 contacts.

  We can also include details of the business for sale in two groups we have established on Linked In, the M&A Opportunities (UK) group and the M&A Opportunities (Worldwide) group. These groups together have over 2,500 members.

  The online marketing approach is likely to be used when selling a fairly small business that may be of interest to hundreds of different purchasers, such as a small engineering business. For larger niche businesses we will rarely use any form of online marketing, preferring solely to use the targeted approach, where we are approaching pre-vetted companies that appear to have a strategic reason to buy.

  Typical business broker

  Sometimes brokers advertise companies for sale on their websites or elsewhere on the internet.

  Reliance on this passive approach will not bring it to the attention of companies who are not actively looking for acquisition opportunities but would be interested in the company if they knew about it.

  Specific financial and commercial issues

  Strategic Corporate Finance

  Every company and every deal is different. We make sure that clients are advised appropriately in connection with specific financial and commercial issues arising during the sale. We are mindful of these issues when talking to interested parties and make sure that they are dealt with appropriately.

  Typical business broker

  A broker led service will rarely involve consideration of or investment of time in dealing with specific financial or commercial issues.

  Such issues rarely go away on their own so unfortunately the vendor can be left to handle these without much support from their broker.

  Managing interested parties

  Strategic Corporate Finance

  We handle most communications with prospective purchasers leaving clients to mainly focus on running their businesses.

  Typical business broker

  A broker will sometimes offer to manage communications with interested parties but this is often not the case.

  Creating a competitive bidding situation

  Strategic Corporate Finance

  We always seek to create a competitive bidding situation wherever possible to obtain the best offers for our clients.

  We also negotiate with potential purchasers with the aim of improving initial offers and dealing with areas of concern in the offers.

  Typical business broker

  Some brokers will seek to do the same, some won’t. The level of service here can vary considerably from firm to firm.

  Preparation of detailed information memorandum

  Strategic Corporate Finance

  We take time to find out about your business in order to prepare a high quality comprehensive information memorandum to send to prospective interested parties who have signed a confidentiality agreement.

  The information memorandum is an important marketing tool which must present the company in the best possible light as it underlies each prospective purchaser’s first impression of the company.

  Typical business broker

  Often a very brief paper about a company is prepared to send to prospective purchasers along with copies of company accounts. The information is often lacking in terms of content and depth, providing a flavour of the business rather than a fuller picture.

  Heads of terms

  Strategic Corporate Finance

  Once an offer has been accepted we lead negotiations with the preferred purchaser to arrive at detailed heads of terms (the key commercial terms for the transaction) which we are also happy to draft.

  Typical business broker

  Business brokers and sales agents rarely negotiate the detailed terms of a deal on behalf of their clients and seldom get involved in drafting or advising on heads of terms.

  Advising at the legal stage

  Strategic Corporate Finance

  We are not lawyers, but we are commercially minded corporate finance professionals who review and advise our clients on the commercial aspects of sale and purchase agreements.

  We are good at giving sound commercial advice and working with clients’ solicitors to offer solutions to issues which arise during the legal stages of a transaction. Our involvement helps prevent stale mate scenarios to persist between parties and keeps the deal moving along towards legal completion.

  Typical business broker

  Brokers virtually never get involved at this stage of a transaction despite their clients still being very much in need of support and commercial advice.

  Project management

  Strategic Corporate Finance

  We project manage a deal from the pre-deal stage right through to legal completion. This can and usually does involve an enormous amount of work.

  We liaise with all other parties involved with a transaction during its progress and lead the deal through every stage, finding solutions to problems where they emerge, dealing with difficult issues and making the deal happen.

  Typical business broker

  Brokers and sales agents do not offer a project management service, leaving vendors to carry out their own deal management and find solutions to any problems as they arise.

  This can be stressful and time consuming for vendors when they are also trying to run their business as usual and especially when they do not have specialist deal expertise.

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