How do you know the buyer will do justice to the hard work you have put in, and how do you know the offer on the table is on to accept? Stephan reveals more.
What are the first things one ought to consider when considering selling their company or business?
Are you prepared? Business owners and management teams often underestimate the time and energy required to sell a business and how taxing the process can be on all those involved. Selling a business can be equated, in some sense, to selling a home. If you have been involved in selling a home you know that what has worked for you for 25 years, may not be satisfactory to the buyer. The old paint, loose railing, or the doorknob that needs to be turned a certain way before opening all need to be fixed. The same goes for selling a business.
If conversations and negotiations are strictly financial, it’s likely not a fit.
What is a reliable method of sourcing potential buyers? How do you advise clients when undergoing this process?
We caution clients from taking the first unsolicited offer. With so much capital floating around looking for a home, finding buyers in today’s environment is not too difficult. However, finding the right buyer is still a challenge. In our experience, the right buyer is often one that is aligned with the seller’s values, strategic fit, and vision for the business.
From this, how do you determine who will be the perfect buyer?
If conversations and negotiations are strictly financial, it’s likely not a fit. The focus should be on what can the buyer and seller do together to create a better outcome for the employees, the future of the company, and the shareholders. The perfect buyer is one that listens and understands that the process is more than just a financial transaction.
Business owners and management teams often under estimate the time and energy required to sell a business and how taxing the process can be on all those involved. Selling a business can be equated, in some sense, to selling a home.
What complications can arise for sellers, and what is best to work around this?
A typical transaction includes a lot of professionals such as corporate lawyers, accountants, tax specialist (legal and accounting), environment consultants, etc. and add a cross-border transaction to the equation, suddenly, you can find yourself with “too many cooks to spoil the broth”. This group of professionals left unmanaged can cause a lot of friction and at times lead to deal fatigue. A good adviser will help manage the process to ensure that it is coordinated and that everyone is working towards getting a deal completed that is fair and reasonable to both sides.
How can companies maximise their value during the transition process?
In most transactions, the target buyer may need to convince their board of directors, shareholders, bankers, etc., in its pursuit to get a transaction done. Therefore, a company can maximise its value by removing as much uncertainty as possible for the buyer.
Stephan May, MBA
Managing Director, Partner
WelchGroup Consulting
123 Slater St. 3rd floor, Ottawa, Ontario, K1P 5H2
T: 613-236-9191 ext: 250, C: 613-724-9787, F: 613-236-8258
www.group.com
Stephan May, MBA, is the Managing Director of WelchGroup Consulting where he helps entrepreneurs build and capture value by providing advisory services in mergers and acquisitions, due diligence, valuations, business strategy, and contract CFO services. He brings years of experience in M&A, debt capital, private equity, advisory and restructuring services. Prior to WelchGroup, Stephan held Senior Corporate Development roles.
Our clients value our seamless and integrated approach – leveraging our global network of professionals who are skilled in multiple disciplines – to help them make informed decisions, improve operational performance, and maximise company value.
