As the economy re-emerges from the impact of COVID-19, we are witnessing a surge in M&A activity within the Irish SME sector. Fuelled by unprecedented levels of liquidity in the market and a vibrant private equity presence, the volume of transactions suggests now is an ideal time for those who are ready to realise value from their business.
Selling your business requires forward planning and a structured, well-thought-out process. You need to be in control of each stage of the sale from start to finish. Crowe’s expert corporate finance and tax teams can safely guide you through the sales process to ensure you maximise your return. Through an integrated approach built around specific needs, we help clients make smart decisions that create lasting value.
If you are considering the sale of your business, your next move is a call to Crowe.
Crowe’s top 5 tips for selling your business
1. Planning your exit
To achieve a successful outcome, you need to prepare for your exit. There are complex legal, financial and tax implications that need to be considered and planned for. Buyers want as much transparency as possible and will perform detailed due diligence. Spending time to properly evaluate and present your company’s financial and business history and future projections is a crucial element in the sale process. As a seller you can avoid red flags by working with your adviser to ensure that everything is in order and that the right information is provided at the right time to facilitate a smooth sale process.
2. Maintain momentum
The importance of maintaining momentum cannot be underestimated. To successfully conclude a transaction, you must be committed to the process and have the resources to move efficiently through the stages of the transaction. It is vital to pre-empt buyers’ concerns and be in a position to respond to their queries promptly. This will ensure that you are always on the front foot and in control of the process. Spend the time prior to going to the market to refine and prepare for the process to come.
3. Create competitive tension
By creating a competitive environment to buy your business, you can drive up price, achieve better terms and a quicker transaction timeframe. You can create competitive tension through a carefully managed and well-executed sale process which attracts multiple competing acquirers. Even if you are dealing with one party, you can maintain a strong negotiating position by being clear that if they don’t put their best offer forward, they won’t get the deal.
Using an experienced adviser to lead the transaction should ensure that you create the right environment to get the best outcome.
4. Protect your business
To sell your business you may need to provide sensitive data to interested parties regarding revenue analysis, key contracts, employees and operating structures. In most cases, the interested parties will include some of your competitors who are eager to expand their own business. To protect the inherent value of the business, ensure that information is only shared with qualified parties who have signed a non-disclosure agreement (NDA). You should withhold commercially sensitive data until late in the sales process, when it is more probable that the transaction will complete.
5. Compare offers
When selecting a preferred buyer, price will be a key criterion. However, it is important that you critically compare all aspects of competing offers to ensure that they are assessed on a like-for-like basis. Offers may include earn-out provisions and contingent consideration. Equally there can be working capital or cash-free / debt-free adjustments. How robust is the buyer and how are they going to finance the acquisition? These are all relevant factors when weighing up competing offers.
Given the stakes, it is vital that you are well informed regarding the specific terms of each offer and that you have all the necessary support and expertise to enable you to make a clear and objective decision.