The Process To Think Through When Selling Your Business
The Process Of Selling Your BusinessSelling a business is time consuming, emotive and can be costly if not executed correctly. As we emerge from the rollercoaster of lockdowns over the last eighteen months, our economy is starting to roar back into life, and as a result, there is an increased interest in SME's across all sectors from both trade and private equity buyers. This, coupled with the availability of both debt and equity funding, makes it an opportune time to consider an exit strategy. In this article, we explore a range of considerations when selling a business.
PreparationPreparation is key to achieving the best value. The preparatory phase is when you should engage with your adviser and thoroughly review the business and its value drivers. Ask, 'why would someone want to buy my business" and then focus on this. Prospective purchasers will demand transparency, so dealing with potential red flags and 'deal breakers' in advance of the buyer due diligence process will help protect value. Telling your businesses story is essential and understanding how to present its financial information, both historical and forecast, is a crucial element of the process. What is the succession plan? With many owner-managed businesses, the owner is the business. A potential buyer will attribute little value to a company where its driving force (the owner) will be exiting or retiring in a short period after the sale. Early tax planning protects value. The shareholders should consider the tax implications in advance of the process as time is of the essence where restructuring is required to effect a tax plan. Early key questions to be answered;
- Is there an opportunity for family members (children and siblings) to be involved in utilising tax reliefs such as business asset relief for capital acquisitions tax purposes?
- Is there an option to claim retirement relief or entrepreneur relief for capital gains tax purposes?
- Is there an option to review the group structure as a holding company can be beneficial when selling all or part of a business?
Identify Prospective PurchasersUnderstanding and researching the potential buyers for your business is an essential part of the process. Every business owner can name several potential buyers, be that a management team or a key competitor. However, other potential buyers may not appear on a list, may have different strategic reasons for buying and may pay a premium for the business, i.e. new market entrant, acquiring IP, or gaining access to resources (e.g. people). Keeping the process confidential during these early stages is vital as it may 'spook' potential customers or suppliers or unsettle critical employees. Having an adviser on board will help maintain confidentiality.
Negotiating The DealOnce potential purchasers are identified, they may enter a period of limited due diligence. Much valuable insight can be gained during this period for the vendor, regarding how the due diligence has conducted the type of queries and questions raised. Having this insight early on will help in the price negotiation phase. It's not advised to name your price, solicit offers for potential acquirers setting strict deadlines for offers. The seller must maintain control of the process at this stage. A second round of offers may be required until a preferred bidder is selected, after which they may enter a period of exclusivity to carry out a more detailed assessment of the company. This selection criteria should not be based on price alone, and factors such as, ability to execute the deal and sources of funding should also be considered.
Closing The DealNegotiating the transaction documents is the final part of the process and also very important for both buyer and seller protection. Considerations will need to be given to the deal structure. Will part of the consideration be based on an 'earn out' from future profits? Will the owner-manager be required to remain with the business for a period post-sale to help with the handover of relationships and integration? The sale process is a time consuming and very involved process for the business owner, and often management teams are distracted by the process taking their' eye off the ball' to the detriment of the business. Getting your advisers involved early in the process will help avoid many of the common pitfalls and ultimately protect the value that in many cases has been built up in the business over many decades. At Roberts Nathan, we have worked on many buy-side, sell-side and management buy-outs in the recent past, and we have a wealth of experience advising owner-managers through the transaction process. Please get in touch with us if you would like to understand more, my details are in the link below: https://www.robertsnathan.com/member/derek-dervan/
Bidding On The Right Contracts
Our aim at Roberts Nathan is always to add value to your business and to support you as it grows. To do this effectively we listen and we understand. Only then do we offer expert financial and business performance advice to allow you make better decisions for you and your business. When it comes to our business advisory services, one specific challenge we help our clients overcome is around the correct process for bidding on new contracts. Making a bid is a time-consuming process that requires a lot of effort for any business. Hence, it's imperative that you carefully choose the projects you want to pursue. While you can see a lot of potentially lucrative contracts in your industry, there are some that won't be as suitable for your business. This is why it is really important you have a system and methodology to perform a comprehensive contract bidding analysis that is in accordance with your long-term plan and fulfils your company's objectives. Factors to consider to ensure bidding on the right contracts Here are a few variables you should evaluate before bidding on a contract to ensure that you are making a decision based on an agreeable logic.
- Long-term planning
How can we help?From comprehensive business advisory to making bids, we provide you with the assistance for each of these business aspects. When you choose us for your bidding solutions, we'll simplify the process and show you how to create winning bids that will incur the highest profits for your business. In addition, we'll assist you with identifying allocation bases and dividing pools of expenses, compiling indirect costs, and calculating fair and attractive rates for contract proposals. By working with the Roberts Nathan team, you can rest assured that all your contract bids will be made after comprehensive, thorough analysis of your resources which will guarantee to deliver your business the best possible returns. Please reach out to me on firstname.lastname@example.org or feel free to give me a call on +353 (021) 494 3977 if you have any questions in relation to any part of the contract bidding process.
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The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit at the end of December. However, this does not change the fact that the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country.The first real trading weeks since the UK departure have highlighted the very real issue for a number of clients and new contacts we are assisting on VAT matters. From understanding how VAT now applies on point of entry on the movement of goods and whether to remain as the ‘Importer of Record’ to the UK for Irish businesses. We have been advising Irish and UK based clients from a wide range of sectors around VAT treatments on trading from ladies dresses to skincare products and from IT services to live horses all in the last few weeks as trade items start to move between the UK and Ireland. Including assisting with potential registration for UK VAT with HMRC by Irish traders. If your business needs advice in these areas for B2B or B2C transactions between the UK and Ireland please contact us at email@example.com or firstname.lastname@example.org and we can assist.