Selling your business: Prepare early to maximise value
BUSINESS owners looking to sell should start preparing as far in advance as possible, according to Paul Trickett.
Mr Trickett, partner in corporate finance advisory at Deloitte, says the “worst case scenario” presented to advisers is business owners looking to sell immediately with key issues unresolved that could significantly impact on the sales process.
“By early I mean years in advance ideally, if you can, prior to thinking about a sale because there are lots of factors which will result in a good sale,” he says.
“It might be market conditions; have you still got growth left in the business at the time you’re selling because the worst thing you can do is sell a business with no growth; have you thought about succession planning? What are the buyers up to?
“There are lots and lost of things which result in timing being good for a business and you need to prepare for that. If you prepare properly, typically you what you find is that the end process, the actual bit of selling, is actually very smooth.”
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It is a theme echoed by John Hamer, partner and head of the corporate department at Walker Morris.
“A business owner should consider preparing the business for sale a period of years before the intended sale date in order to position the business properly.
“It’s a key to make sure you are position the business correctly for potential buyers, that isn’t something you can do at the last moment, it’s a long term process so you are looking at a period of years rather than period of months in terms of positioning your business to get an optimum result from your exit.”
Richard Burgin is a former commercial director of industrial coatings firm SigmaKalon where he had responsibility for mergers and acquisitions. The company was itself sold by its private equity owners to PPG in 2007.
“I’ve been mostly involved in the buyer side and what I saw was that sellers generally hadn’t prepared sufficiently which enabled the buyer to take advantage,” he says.
“The way the company was presented, basic things like working capital, hadn’t been optimised in a lot of businesses.”
