Selling your business: Staying on track
KEEPING the business on track once the sales process has begun is vital to securing the target price, according to Richard Doyle.
The chairman of Connect Yorkshire, who sold Esteem Systems in 2004 to a management buyout, warned that selling a business often takes longer than anticipated.
“Once you have entered into the process and engaged with a potential buyer is to focus on keeping the busienss moving forward. Its very important you donot get distracted and gforget about the day to day running of the business and allow the business to decline in that period because that will affect the value of your business when you come to sell it,” he said.
“In my case I sold to a BIMBO team and of course your management team is completely distracted so I ended up running the business and doing the jobs of three of my directors.”
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Steve Wainwright, chief executive of Profiled.com, led an attempted management buyout of ICM Computers, a quoted company, in competition with Phoenix IT.
“I think managing staff through the process is key,” he says. Unfortunately our sale process was very very public and the staff were as up to speed as I was. All of the drama was played out in public over several months.
“In private companies I would recommend keeping it away from the staff. Confidentiality is hugely important.”
Experience advisors warn that a change of ownership is a situation that needs to be managed externally as well as internally but communication of the deal is often left to the last moment.
Paul Roberts, a director in corporate finance advisory at Deloitte, says: “A change of control of a business can bring uncertainty: to employees, customers, suppliers and other stakeholders, and this should be
sensitively managed.
“In the closing stages of a deal careful thought should be put to the communication strategy and the implementation of this should be carefully coordinated so that key stakeholders receive news at the
same time and have the opportunity to ask questions and allay concerns.”
Debbie Jackson, corporate partner at Walker Morris, adds: “External and internal communications need to be handled carefully. There are legal obligations regarding communications with employees, particularly where
there is a union involved, and these must be followed.
“Sensitivity is the key requirement and this matters more than the way the sale is communicated. Key suppliers and customers may feel aggrieved if they are not informed of an impending sale so may need to be bought into the loop before the sale completes.”
Morris and Deloitte is now available to download here, where you can also this week’s other online features looking at the subject.
