The sale of a company is a major event for its owners, management, employees, and other stakeholders. It is an intense, time-consuming process with high stakes, usually spanning several months. Consequently, the seller typically hires an investment bank and its team of trained professionals (“sell-side advisor”) to ensure that key objectives are met and a favorable result is achieved. If you’re thinking about selling your business, you might consider consulting with an expert who can play a vital role in navigating your way through the complicated process. You can benefit greatly from the advice of a seasoned consultant who knows your industry, understands your business, and appreciates your concerns regarding its growth and value. As the process continues, many questions will arise which might be answered by your consultant, for instance: How much longer will the window of opportunity be open? What are my options in structuring a deal? What is my company really worth? How would this deal affect my employees and my customers?
Once the decision to sell has been made, the sell-side advisor seeks to achieve the optimal mix of value maximization, speed of execution, and certainty of completion among other deal-specific considerations for the selling party. Accordingly, it is the sell-side advisor’s responsibility to identify the seller’s priorities from the onset and craft a tailored sale process. The sale process requires a specialized knowledge of valuation, taxation and legal issues. Your advisor should either be well versed in these topics or else closely associated with others who possess expertise in these areas.
The old adage, “timing is everything” certainly holds true in the merger-and-acquisition arena. You never want to sell your business on a whim. You should explore several prospective buyers to determine what each is willing to offer before any agreement is signed. Generally, an auction requires more upfront organization, marketing, process points, and resources than a negotiated sale with a single party. Again, your consultant should be familiar with those strategic cues and be able to act appropriately by providing you with the best leverage for obtaining a premium price for your business. A consultant can help you keep the buyer interested without allowing the deal to fall apart.
From an analytical perspective, the sell-side advisory team must perform a comprehensive valuation of your business. In addition, in order to assess the potential purchase price that specific strategic buyers may be willing to pay for your business, merger consequences analysis is performed with an emphasis on accretion/dilution and balance sheet effects. These valuation analyses are used to frame the selling price expectation, select the final buyer list, set guidelines for the range of acceptable bids, evaluate offers received, and ultimately guide negotiations of the final purchase price. In a sale process an effective sell-side advisor seeks to push the buyer(s) toward, or through, the upper endpoint of the implied valuation range for the target. On a fundamental level, this involves properly positioning the business and tailoring the sale process accordingly to maximize its value.
Finally, the successful sale of a business requires more than just insuring that a decision is financially sound and profitable. There also are emotions involved in finalizing such a transaction. In many cases, your business becomes a major part of your life, both personally and professionally. In conclusion, it’s probably a good idea to consult with someone who is capable of guiding you with strategic planning, financial management, valuation, acquisition prices, and deal structuring, as well as negotiating and closing the transaction.