Finding a Buyer for Your Business

A business disposal is when some or all of the shareholders want to realise the value locked in the business. This can be to different potential acquirers including the management team, trade buyers or private equity houses. 

The best time to sell your business is when you believe that you’re ready to dispose of your shareholding and move onto a new chapter. While there’s no ‘right time’ to sell your company, our advice is to sell once there’s value within the business alongside the potential for additional future growth. 

Your reasons for selling can differ on a case-by-case basis, such as:

• Feeling that you’ve taken the business as far as you can and it requires a fresh approach or additional resources from a bigger company to take it further. 
• You’ve inherited the shares in the business following a death and don’t have an interest in running or working within it.
• You’ve reached a point in life where you want to see the tangible value of the company that you’ve built up over the years. 
• You’ve lost motivation for the business or sector and are ready to move into a new phase of your life. 
• You’ve been approached by a trade buyer.

You can maximise value in your business in a number of different ways, including:

• Ensuring that all key customers are under long-term contracts (if possible) to show a clear orderbook/recurring revenue for future years. 
• Ensuring that all supplier contracts are up to date. 
• Having robust financial information
• Taking advantage of any sector trends in the business as early as possible.
• Ensuring that any and all new regulations are met by the company. 
• Ensuring that there’s a strong management team left in the business post-transaction.
• Working with our legal teams to ensure that market appearance is one of a position of strength.

A business can be valued in a number of different ways. The most common valuation is an EBITDA multiple basis (on a cash free, debt free basis with a working capital adjustment). 

What if I want to prioritise the company and my staff going to the best ‘home’, rather than achieving the highest possible value?  

We’ll work with you early on to clearly understand your objectives and advise you on selecting the right buyer. We’ll undertake a wide-ranging buyer research process on a confidential basis and will never point you towards the biggest offer on the table. We’ll sit down with you to go through the pros and cons of each offer for the business and refer back to your initial objectives.

The earlier that we get involved as a deal advisor, the better. This allows us to gain a greater understanding of the business and address any potential issues that the business may face in a transaction at an early stage to prevent complications further down the line. 

A disposal process will generally take between six and 12 months. This will depend on the level of information available, as well as the current state of the business and market.

General practice is that an element of cash will be deferred to ensure that there are no ‘skeletons in the cupboard’.

There may also be an element of cash that’s held as an earn-out or deferred. An earn-out will be linked to the company hitting an agreed number, which could be a certain level of revenue, gross profit or EBITDA. Deferred consideration that isn’t contingent is just a percentage of the cash held back to be paid over the next one to two years (this will also be agreed prior to completion). This may be done to ease the cashflow burden on the potential acquirer. 

To gain the value of future growth in the business, an earn-out will likely be required. This will usually be linked to the company hitting agreed targets (this will be agreed between both parties). This requires careful negotiation with the buyer and is where we — as deal advisors — can add significant value. 

We understand that this is probably one of the biggest decisions you can make in your lifetime. We have a vast amount of experience, having worked on many different disposals over the years and understand the emotion involved. 

As deal advisors, we’re able to take the emotion out of the deal and keep moving it forward to get the best deal for you. We’d never advise on a bad deal for our clients, so if we don’t think that a disposal is the best thing for you and the company, we’ll advise you around this and any other options that may be available to you.