Colin Strevens, corporate finance director at specialist business advisory firm FRP Advisory LLP, discusses what business owners can do in order to maximise value when selling their business.
Timing is everything
At FRP Advisory, we get to know a business and its owners before going out to the market. In our experience, collaborating closely with owners from the offset of a process means we’re able to get under the skin of the business and better understand the objectives of all stakeholders in order to determine the right time to target a sale. In some cases, this can mean holding off until certain key milestones are achieved. Whether this means securing and proving out a specific new contract win, recruiting in key areas to make owners more dispensable or investing in operational processes – these are all things that help position a business in the best possible light.
The likelihood of securing a deal that works for all parties is also more achievable when there is a healthy timeframe to consider all options. Planning in advance will allow a business advisor to really understand a business, so that risks can be mitigated, and desirable traits emphasised, to a clearly defined, researched and potentially pre-screened prospective buyer.
In addition, many business owners want to see their business passed on to new owners who will respect the history and culture of the firm and look after their employees. Not only is this reputationally important, as part of an outgoing owner’s legacy, but some owners will continue to hold financial interest in the company post sale. As such, having time to find the right buyer is key to ensure that employees, suppliers and customers are bought into the ‘new world’ so that a smooth transition can take place.
Finally, ensuring that there is an appropriate tax structure in place will enable the best possible financial outcome for the seller. Tax structuring can take time to take effect, so the sooner an owner plans this, the better.
Finding a trusted adviser
Having a trusted business advisor in place to handle the details and complexities of a sale will take some of the pressure off a business owner, enabling them to maintain focus on the day-to-day operations during what can be a stressful time. Against the upheaval of the deal, it can be easy for owners to become distracted from what they do best – running their business. In addition, having a third-party advisor representing a firm can help to take the heat out of negotiations during what can be emotional, once in a lifetime event for an owner.
At FRP Advisory, we give a thorough upfront assessment on how best a business owner can achieve the objectives of a deal. Having worked on numerous such deals, we know where value can be won and lost, and do our utmost to preserve this as a buyer works through their acquisition processes. Ultimately, a transaction can be a complex and stressful process that can be eased by having the right advisor on board.
Our BQ Bulletin emails will land in your inbox at 7.30am, Monday to Friday, with a mix of the latest local business news, national news, and features to inspire you. Sign up here!
Click here to read our privacy statement