How can I make a discreet exit?
I run a manufacturing business which I inherited from my father. The business has grown nicely – turnover is about £11m a year and profit is around £1m. We also have some good contracts and own our premises. But the business is no longer my passion and I wish to move on. However, I want to maximise value in the business and I am nervous about letting people know I am looking to sell – I don’t want to alarm staff or inform competitors. How do I get the most out of this deal and keep my plans under wraps while making deals?
A. Colin Mills of the FD Centre writes:
First of all, the decision to sell up and move on sounds like the right one if you have lost that passion. Getting the best value for your business is best achieved by careful preparation for the sale and by controlling the exit process. And when preparing to sell, the more time you give yourself, the better. In a nutshell, you don’t want there to be anything hanging around that a buyer (or their advisers) can make a fuss over and use to chip away at the price. A solid-looking, professionally run business will add real value.
For preparation, consider these:
… Financials Are your historical financial records and reporting in good shape? Buyers will want comfort before completion. Do your current projections demonstrate the upside potential of the business and have they been prepared professionally? What are future maintainable earnings?
… Management Have you got a management team in place that can run the business without you? If you are absolutely critical to the day-to-day running you may fi nd yourself locked into the company post-sale. Ownership of key customer relationships is important. Ideally, they need to be with your management team to allow you to move on. Buyers will check this through customer referencing.
… Future strategy Get real clarity about the company’s future strategy. If you can sell strategy and growth opportunities, the sales price will rise.
… Legals Buyers will view you favourably if things like employment contracts, customer contracts, health and safety policies and insurance records are all in place.
… Personal and Corporate Tax Tidying up any loose tax issues is important and, again, will add value at sale time.
… Timing Think about the best time to sell – the commencement/renewal of key customer contracts is important here.
Your other concern was over confidentiality, which is best achieved by using professional advisers. The main accounting fi rms have specialisist corporate fi nance departments or finance boutiques.
Alternatively, an experienced part-time finance director can manage the entire process – including all preparation. Oldhands at buying and selling firms, these guys can relieve the pressure on you by project-managing the process and engaging professional advisers if necessary – and securing the very best deals if so. Using the right combination will ensure the confidentiality you require. Good luck!
Colin Mills is the founder and managing director of the FD Centre, the leading provider of part-time finance directors, available to growing businesses. www.thefdcentre.co.uk