Focus on what you are looking to achieve from the sale
For private businesses owners this can be a life changing event. The following high level steps are things to consider to make your journey as effective as possible. 1. Preparation
Be clear about what you are looking to achieve, this will keep you focussed as discussions progress. It's also important that you have your financial and business information ready as the due diligence can be a rigorous process and this will save you time later on.
Contact us if you would like help with this. 2. Finding buyers/acquirers Whether you decide to have a broker/advisory company do this for you or you feel comfortable doing this yourself, you should ideally target having a list of at least 20-50 qualified buyers. This will ensure you are getting in front of the right investors and you are able to achieve the best possible valuation.
3. Create an Information Memorandum ("IM") Your IM describes your business and gives an investor a view of your business and what its future projections are. This is key in getting interest from investors and can also be summarised into an anonymised "teaser" which can be shared before a confidentiality agreement is signed. Your IM should include an overview of your business and competitive advantage, the market, key management, historic financials and projections, opportunities and risks at a minimum.
Contact us if you would like help with this. 4. Contact buyers/acquirers Once your documents are ready, start contacting your investor/buyer list. At this point you can decide whether you would like to set a time limit on responses (this will be easier if you get a lot of interest in the sale). Its worth following up your initial contact to make sure the buyers have had time to review your business.
Contact us if you would like help with this. 5. Set up face to face meetings This will be your chance to answer the buyers questions and concerns in more detail. The buyers may ask for more detailed or specific data at this point.
Contact us if you would like help with this. 6. Negotiate Terms You will need to sit down with the buyer to agree "heads of terms" which set out key points such as price, timing, exclusivity period, structure and other terms.
7. Due Diligence
The buyer will go through a detailed review of all the information that has been communicated to him which includes commercial, financial and legal due diligence. As long as there are no red flags raised from this both parties at this point should be ready for the final step.
Contact us if you would like help with this. 7. Close the deal After due diligence process both parties will sign a Sale & Purchase Agreement as well as any other relevant documents (usually at a face to face meeting) and complete the deal.
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