Selling a business can require a lot of resilience, patience, and initiative, not to mention an enormous amount of research. Before the negotiations with a prospective buyer begin and the actual transaction is complete, hours upon hours are spent preparing your business for sale to ensure it’s portrayed in the best possible light for potential buyers.
Sam Bland shares the initial steps (before we go live) of selling a business: a day in the workplace of a Project Assistant.
Step 1 – Preparing & Creating the Information Memorandum (the “sales document”)
First things first, we need to know all about your business. The first step in doing this is providing the client with a standard Fact-Finding document, which they fill out as thoroughly as possible. The Fact-Find is divided into sections- examples include financial information, products and services, future prospects and unique selling points. This is the opportunity for the client to showcase what really makes their company stand out, and so we also prompt them to include impressive industry awards and accolades that display how accomplished the business is. For instance, while we gather information from other sources such as the company website, LinkedIn, and social media channels, we always encourage extensive, detailed and honest answers within the Fact-Find to understand the company's inner workings better. After all, who knows the company better than the owners themselves?
Once we are happy with the status of the Fact-Find, we then begin to collate the information into an Information Memorandum (known as an IM). An IM draws upon the information in the Fact-Find and formats it into clear and professional language. As experienced corporate financiers, we are experts at honing in on the relevant information required to place the client’s business in its best possible light. After every completed IM draft, we share the work with the client to ensure that we are on the correct path and that all the information is accurate. This step in the process is collaborative and highlights the importance of keeping the client up to speed. There are usually a few iterations of the IM until we reach the final draft, containing all the important information that a potential buyer will be interested in (excluding any items that would be included in due diligence). Once the client is happy, we move on to the designed version of the IM, which draws upon the company’s branding, style, and visuals to make the IM distinctive to the business. This is the version of the IM that potential buyers will receive.
Step 2 – Preparing the Target List of Potential Acquirers
Often running simultaneously when preparing the IM, the target list will be researched and constructed, where we discover the most appropriate acquirers to approach.
It is not uncommon for companies to have had some unsolicited approaches, but we do not advise a ‘one-horse race’ process; rather, it is a full market exercise to not limit opportunities. As such, a target list is assembled, which could contain anything from 50-100 companies that we (and the client) deem would be a suitable home for the company. When creating a target list, we investigate similar businesses in the sector and identify complementary ones that would enhance or expand the buyer’s business. It is never just about finding identical companies; synergistic buyers often identify a target as an opportunity to grow their own presence within the industry.
This whole process is hugely time-consuming for our committed project assistants, who play a huge part in ensuring that this part of the project is given the required resources and attention.
Step 3 – Preparing a Teaser to Issue to Interested Parties
After steps 1 and 2 are completed, and before going to market, we create a Teaser document to send to targets to garner their interest in the opportunity.
The Teaser is anonymised and contains just enough information to pique interest without exposing the company's identity. Once it is signed off, it is time to go to market.
As the bulk of research is done, it is now time to concentrate on building rapport with potential buyers to find the right home for the company. If the Teaser interests the target, they will sign an NDA (confidentiality agreement), and following approval, we will release the Information Memorandum to them accordingly.
As demonstrated, a considerable amount goes on behind the scenes in selling a business, which is no simple feat. However, this is what makes it most rewarding when the transaction is successful and the client is happy with the new home for the business.
If you are interested in selling your business or learning more about your succession planning options, please do not hesitate to contact us or call 01924 376 784 for a confidential discussion.
