By: Jennifer Serridge, associate director, Knight Transaction Services
Selling your business or trying to attract investment are two of the most stressful events a business owner can experience.
It can be hard to remove the personal from the professional, especially when it comes to what you believe your business is worth and the cultural fit of the acquirer or investor. It’s also a time-consuming process, with numerous factors and decisions that you might not have encountered before.
Preparation is key. By making the process as efficient and painless as possible you can minimise the strain on your internal resources. This allows you to focus on the operational activities which add value to your business.
It’s essential to get good advice from the outset. Gathering the right team around you can seem overwhelming though, so it’s important to understand exactly what it is you need to do, when the right time might be to seek assistance and how to select your advisors.
Where to start
If you’re looking to sell all or part of your business, there are a wide range of Vendor Assistance services that you might need. These include undertaking a full dry run of the diligence process to taking a closer look at specific areas of the business that might require more attention before a transaction.
Broadly speaking, Vendor Assistance services are designed to:
- Validate the valuation of your business
- Identify the strengths and opportunities of your business
- Proactively address any potential challenges which may arise in a formal diligence process
- Suggest potential rectifications or mitigations where relevant
- Corroborate the facts, figures and information to be provided in the information memorandum before it is circulated to potential purchasers
- Highlight (and seek to mitigate) any weaknesses or resource constraints in the finance function, and
- Identify any potential other risks to a successful transaction
Answering these questions first will help you to understand the scale of the work you have to do and where you will need to bring in more specialist support.
When to start
Vendor Assistance services are most beneficial before you market your business. That’s not to say that value can’t be added further down the line, but for maximum impact forearmed is forewarned!
To ensure you get the best valuation for your business Vendor Assistance services can help to iron out any potential issues that may erode value or cause delays to the sale process, giving you more control over the transaction.
Working with a Vendor Assistance advisor gives you the confidence that your business is ready for a formal due diligence process. They can also be on hand to provide support and guidance throughout if required, even as other specialist advisors join the process.
Choosing your advisor
It’s important to work with people you can trust at every stage. But this is especially true before you market the business. This is a time for total honesty. It’s where you will get a true indication of the value of your business and what you need to do to achieve that value.
It’s essential that you choose an advisor who understands both your company and your industry. You should also check that they can provide you with the exact services you need, rather than expecting you to stick a rigid, out of the box plan.
A more flexible service will deliver on the areas that are important for your business. For owner managers a one size fits all approach doesn’t feel personal enough, so you should find an advisor that can offer support that’s tailored to you.
Given that you will be working closely together, transparency is key so it’s vital that you trust, respect and work well with your advisor. There’s no doubt this will be an emotional process so find someone you like, respect and can be yourself with.