Selling your business: Thinking creatively pays dividends

CREATIVE thinking is the key to securing the best price for your business, according to John Hamer.

The partner and head of the corporate department at law firm Walker Morris urged business owners to consider market conditions and trends in the economy to help identify potential buyers beyond the obvious candidates.

Expert advice from Walker Morris and Deloitte features in a new comprehensive 16-page guide to selling your business, compiled by TheBusinessDesk.com, which is available to download today here.

“In order to get the best price and in order to be dealing with someone who is going to deliver on the transaction, you need to think about what is going to add value to that potential purchaser,” says Mr Hamer.

“So it’s not just looking about who the obvious people are its about trying to think, if I put two and two together can I make five?

“Sometimes an alternative buyer can be identified who may see the target as presenting a strategic opportunity to enter a new sector of the market or a new geographic market.”

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Mr Hamer’s advice that business owners think carefully about which exit route will secure the best outcome is backed by Paul Roberts, a director in corporate finance advisory at Deloitte.

“A management buyout is possible if the business has the dynamics which would make it attractive to private equity funders and there is a sufficiently credible, backable management team in place to lead the business’s future development.

“Management buy-ins are a little less common as an exit route due to the increased risk from a funder’s point of view of introducing new management who do not have the knowledge and experience of the business.

“There is a fine balance to be drawn in selecting the most appropriate route, taking account of such factors as the owner’s proceeds
requirements and desired continued involvement, management succession, growth prospects and forecasts, the breadth and nature of the population of buyers, and impact of the proposed deal on all other stakeholders.”

The uncertain economy has left many business owners wondering whether they can secure the value they want in the current marketplace.

But Chris Clegg, managing director at private equity house Endless, is clear that there will be strong demand for well run firms.

“The ‘premier league’  is where all the activity is going to be, those businesses with key strategic assets and strong management teams and there will be very big multiples paid for that because there is vast amounts of money waiting to be invested, particularly in private equity.”

Mr Clegg says there is a “price for deliverability” in any deal and suggests some businesses might benefit by approaching just three potential buyers and demonstrating a commitment to sell rather than entering a “highest bidder wins” process.

The new supplement, ‘Selling Your Business’, looks at how businesses should be prepared for sale, the state of the market and the best way to ensure a handshake is turned into a completed deal.

It features insight from financiers, advisers and business people with experience of buying and selling companies who took part in a round table discussion hosted by TheBusinessDesk.com with Walker Morris and Deloitte.

TheBusinessDesk.com will also be considering the subject in a series of online features all this week.

Read more about selling your business, and download the guide, here.