Key tips when selling your business
The M&A market in the energy sector has been extremely buoyant over the last 12 months with a significant number of trade buyers and private equity investors looking to grow their existing business or portfolio through acquisition. With attractive prices... Read more
Blog11th Dec 2014
The M&A market in the energy sector has been extremely buoyant over the last 12 months with a significant number of trade buyers and private equity investors looking to grow their existing business or portfolio through acquisition.
With attractive prices being paid for good businesses and the availability of Entrepreneurs Relief (10% capital gains tax rate) for many business owners, now can be a very good time to sell.
If you are considering selling your business, here are some tips to ensure a successful outcome:
- Engage professional advisors − experienced financial and legal advisors should be appointed at the outset to structure the deal and project manage the transaction; allowing the management team to focus on running the business and maintain strong trading performance up to completion.
- Do your diligence on the purchaser − before investing considerable time in meetings with the purchaser, providing subsequent information and negotiating terms, it is important to get comfort on the purchaser’s ability to deliver what they say they will.
- Ensure information provided is accurate − purchasers will use information provided as a basis for their o7er. Any adverse adjustments identified during due diligence will usually lead to the initial offer being revised downwards while any positive adjustments will not necessarily result in an improved offer.
- Don’t get too close to the purchaser − it is important to maintain an arm’s length relationship with the purchaser until the deal has completed. Too often we have seen transactions where the purchaser will look to get very close to the vendor during the process and use this relationship to negotiate directly with the vendor rather than via their advisors.
- Deal with potential issues early − it can be too easy to ignore potential issues and hope that they will go away rather than deal with them as they arise. This can lead to deals collapsing late in the process when issues are finally discussed and neither party can reach an agreement.
- Consider the most efficient tax structure − most purchasers are prepared to be flexible when structuring a deal to ensure that the vendor can take advantage of any tax benefits available. Therefore, it is essential to seek specialist tax advice and structure the deal efficiently to minimise tax and any associated risks.
- Avoid deal fatigue − finally, to ensure the transaction is completed within a reasonable timescale, ask the purchaser to produce a timetable detailing all key stages of the process up to completion and then monitor this closely as many deals collapse due to deal fatigue.
For many business owners, the most valuable asset they own is their business and realising the value of this asset can be a challenging process. For most it will also be a one-time opportunity so following the key tips above will maximise the likelihood of a successful outcome.
The corporate finance team at Anderson Anderson & Brown LLP (AAB) has extensive expertise which can assist clients when selling their business. Contact Brian McMurray, Corporate Finance Senior Manager, email@example.com for more information