Wendy Hart, corporate finance partner at Grant Thornton
Thames Valley, on how businesses can maximise their value before a sale.
Despite uncertainties around Brexit the deals market in the Thames Valley is continuing to thrive at an encouraging rate. Buoyed by the healthy concentration of high-growth tech businesses, our region is particularly fertile ground for mergers and acquisitions.
Selling your business is rarely an easy decision, nor something that’s decided overnight. It’s a journey that is embarked upon often many years earlier where a clear strategy is put in place to make the business as attractive as possible for sale. This is about value optimisation, not just a straight-forward transaction and it’s important to consider what factors an acquirer attaches value to. This could include the business’ scalability and resilience if the landscape changed quickly.
As we saw very recently, when advising on the multimillion pound sale of Reading-based Magal Engineering Limited to Arlington Industries, the sale of a business almost always has its complexities.
If you are considering selling your business, to ensure you get the best value it is important that you follow these six golden rules:
1. Plan ahead
Rarely is a business sale ready without any prior planning. The earlier this is considered the better. I would suggest that you should start planning at least two years in advance, giving you the opportunity to address any issues a buyer may have and implement any tax planning measures that ultimately may improve your net proceeds.
2. Get advice
Ensure you appoint professional advisers that are experienced in transactions with companies similar to yours in terms of size and sector. The earlier you do this the more value they will be able to add.
3. Put your house in order
Preparation is everything, if you can’t answer questions or provide important information to potential buyers, it can create uncertainty in their eyes and, at best, results in a difficult sale process and, at worst, break the potential sale.
4. Be transparent
There is little point trying to hide issues, the later these are disclosed the more damage they can do. Be open from the outset but only after you have worked with your advisers to address these issues or put a plan in place to mitigate their impact.
5. Plan for succession
Having a strong management team capable of running the business in your absence will be highly attractive to prospective buyers and gives you alternative options in the event a sale is not concluded.
In order to get the best value for your business, it is essential to understand you’re your value drivers are throughout your business journey, by working with an external provider who can help both support and challenge you in your decision making.
At Grant Thornton
, we use tools such as our CEO room – a dedicated space for a one-to-one discussion where business leaders can speak to us about their issues and ambitions – to provide in-depth, bespoke consultancy to the businesses that we work with, advising them on how they can add real value to their business.
We’re lucky enough to work with some of the Thames Valley’s most dynamic, fast growth businesses. Sometimes, they’re dynamic and ambitious by their nature and that’s why they know we can help them. Other times, we challenge and help clients to become more dynamic in their approach, realising where the value can best be maximised and the path to get there.
Preparing a business for sale is an incredibly rewarding job and I’ve been proud to help so many owners on their journey.