The more time allocated to pre-sale planning, the greater the impact. Pre-sale planning can increase the price you achieve, save time and cost once the sale process starts and avoid the risk of things going awry. The cleaner the business, the cleaner the sale.
Being on top of your paperwork will give a good impression that your business has been well run, increasing the chances of achieving a higher price. Businesses with messy paperwork tend to have messy problems, which only come to light later on in the process and which often lead to downwards price negotiations.
A review of your business’ accounting records and financial statements is an effective and sensible course of action. Up to date, well presented and easy to access financial information will give a buyer confidence about your financial affairs. A high level legal review is also a way of identifying areas which need tidying up, such as share structure and ownership, commercial contracts, employment contracts, property and historical litigation.
Seeking early tax advice is also vital so that steps can be taken to minimise your tax bill. You should also understand how much you need to sell your business for to fund your future lifestyle.
Once a buyer has shown interest in your business, the focus should be to conclude the deal as quickly as possible. It is rare that a seller will have the opportunity to increase the price materially between the start of negotiations and conclusion of the deal based on improved business performance. It is far more common for something detrimental to happen to your business the longer negotiations continue.
Our objective is to minimise the amount of time it takes to complete the sale of your business and shoulder much of the burden, allowing you to continue running your business. However, you will not be excluded from the decision making process. We proactively manage initial negotiations over price and key terms of the deal and work with your lawyers to ensure that the legal process proceeds quickly and smoothly and that the financial and taxation elements of the sale and purchase agreement are correct. We also manage the buyer’s due diligence process to ensure the minimum disruption to your business.
Selling your business is an intense experience. We are by your side from start to finish, driving the deal towards a timely completion.
Deal structuring involves identifying the primary goals of the parties involved in the transaction and assessing alternatives to achieve these goals. The best deal structure is one which satisfies as many of the primary objectives of the parties as required to reach agreement, subject to an acceptable level of risk.
Primary goals for you as a seller can vary widely: get the highest price possible; maximise up-front cash received; ensure continuity of employment for your workforce; extract property; etc. You may even want to retain a senior management role post sale.
And there may be a number of ways to achieve your objectives: sell assets or shares; receive cash, loan notes or shares in the buyer’s company; cash up front or earn out and deferred payments. Each of these decisions may have important taxation implications and also change the balance of risks in the transaction.
We work with you to identify your primary goals from initial valuation and price expectations through “must haves”, “nice to haves” and potential “deal breakers”. Understanding your goals will help us to identify the right buyers and strengthen your negotiating position.
Buyers generally fall into two groupings: strategic and financial.
Strategic buyers will look at how well your business fits into their own company's long term plans. This could be one of your competitors or a large business that wants to enter a new market or offer a new product. If you have what they want, strategic buyers may well pay you more than other types of buyers.
Financial buyers are more interested in your company's profitability and stability. They could be companies or individuals with money to invest, such as a management buyout team. Some will want a solid, well-managed company that requires little oversight, while others may specialise in turnaround situations and will look to buy a business that they can return to profitability.
Demonstrating how a new owner can grow your business in the future is critical by showcasing how much they can improve on your historic performance through applying their own resources. Our experience of business disposals and global buyer reach enables us to search for the right kind of buyer for your company locally, nationally and internationally.
The last thing you want to do is pay more tax than necessary. Tax in relation to transactions can be complex, depending on what you want to achieve. Key issues include: maximising entrepreneurs relief entitlement and what to do if this is not available; using pension planning to extract surplus cash; maximising substantial shareholding exemption for sales by corporate vendors; restructuring groups to optimise the tax position; demerging property tax effectively.
You may also need advice on what to do with your cash after a sale including tax incentives for reinvestment, inheritance tax planning and setting up family trusts. We involve our highly experienced in-house tax team from the very beginning of your sale process to ensure that your tax position is optimised.