By running a competitive, confidential auction precess you'll keep your potential buyers guessing.
(PRWEB) October 12, 2010
Strong demand for the first round of open business seminars at the Institute of Directors in London has prompted Shield to extend the series.
Selling a Business for a Premium has been the most popular topic for entrepreneurs from across the UK.
Question one for business owners to consider when selling a business for a premium is whether it is sellable at all.
Determining whether or not a business is saleable requires expertise and experience. Factors which can affect the outcome of the sale process include:
- whether the timing is right to sell
- whether or not there are enough of the right type of potential buyers
- whether there are risks in the business that make it unsaleable
- whether the shareholders’ value expectations are realistic
- whether or not the business is ready for the rigours of buyer investigation in a sale process.
It is often difficult – if not impossible – for owner/managers to know the answers to these questions.
Business owners need an experienced advisor whose profession is selling businesses, who feels the pulse of the market, to look objectively at businesses and help answer these key questions.
Pushing ahead with a sale process without paying due attention to these issues could prove disastrous for businesses.
Once business owners are confident that the business is saleable then it is important to understand that selling a business for a premium depends on the quality of the advisors and the type of process they run.
The keys to sell a business for more are simple to understand, but difficult to deliver. The two key drivers of a business’ value in a sale process are:
- competing potential acquirers
- communication of future potentials in the business.
Competition is key because it is the most important negotiating leverage in a sale process.
The process of selling a business is ultimately geared towards a negotiation, driving up the price and pushing for favourable contractual terms.
Negotiation relies on having alternatives. One alternative is not do a deal and trade on as the business was, but the other and more powerful alternative in a sale process is the option to do a deal with someone else.
Shield’s Chief Executive Dr David Young said: “By running a competitive, confidential auction process you’ll keep your potential buyers guessing.
“The fear of losing your business to one of their competitors will push them from their default position to pay up for your business.”
Communication of the future potentials in businesses is also key in a good sale process.
Anyone buying a business will be buying its future potential, not its past. They will be buying future profits, market share, people, synergy benefits and strategic benefits.
When owners sell businesses it is well worth articulating all the growth avenues in the business, irrespective of whether or not the business owner intends to pursue them.
Building them into projections and making assumptions explicit can have a surprising effect on a buyer’s valuation and get them excited about the potential benefits for them.
Advisory firms such as Shield Corporate Finance are able to achieve peak value for business owners when it comes to selling a business by delivering a range of services well beyond the simple matchmaking role of brokers.
Shield adds significant value to a sale process, compared with other advisors, by:
- understanding what drives value in a business and also what depresses value, so when it comes to discussions with potential buyers the investment thesis the business is able to provide for them is both credible and defensible
- preparing a business in advance for the inevitable in-depth investigation by buyers
- quantifying and communicating standalone, synergistic and strategic value, using proprietary techniques
- extensively researching and then engaging potential trade and financial acquirers from around the world
- orchestrating and sustaining confidential competitive auction processes
- providing determined, skilful negotiation to achieve maximum price and optimal contractual terms for the seller.
Shield Mergers & Acquisitions was founded by David Young in 2001, with a determination to deliver remarkable results for sellers of businesses, in a world of financial advice increasingly biased in favour of acquirers.
This has taken its Merger & Acquisition team into fertile new territory, working with clients for a year or two prior to sale, in order to achieve best possible outcomes.
In addition to considerable expertise and success in handling business sale execution mandates and the commercial aspects of contract negotiations, Shield delivers unique consultancy services in business improvement and recession-proofing.
Shield will guarantee senior professional attention and total confidence throughout the whole the process. Shield works with companies with operating profits of >£500k, and offers a free indication of value if a business fits this criterion.
For more information and advice on selling a business, contact Shield’s Founder and Chief Executive Dr David Young.
Download the podcast here http://www.sellingabusinessformore.co.uk/podcast.html
Information for Editors:
UK - London
Shield Mergers & Acquisitions
25 Floral Street, Covent Garden
London, WC2E 9DS
Tel: +44 (0)20 7031 8265
Fax: +44 (0)20 7031 8268
UK - Poole
Shield Mergers & Acquisitions
Sunseeker House, West Quay Road
Poole, BH15 1JF
Tel: +44 (0)1202 330200
Fax: +44 (0)1202 649346
31 Howard Street, Suite 402
New York NY 10013
Shield Corporate Finance is a firm of independent specialists in growing and selling businesses around the world. Shield offers merger and acquisitions services including preparing businesses for selling, business sale market testing, selling businesses, business valuation, management buyout, acquisitions, commercial negotiation assistance and M&A training.
Shield also offer a business improvement service which includes growing a business, see its Business Improvement Programme and free online business health check.
Shield Corporate Finance was founded by Dr David Young in 2001 and now operates internationally, with offices in London, Poole and New York, representatives in Beijing, San Diego and Johannesburg and an alliance with Soft Bank in Japan.
The team works in English, German, French, Italian and Mandarin Chinese.
Shield’s industry sector coverage includes:
- Healthcare sector
- TMT Sector (Telecommunications, Media & Technology)
- Business Services sector (recruitment, estate agencies, marketing, accountancy firms, insurance brokerage, office supplies and training)
- Financial Services sector
- Travel & Leisure sector
- Industrials Sector (includes manufacturing, light to heavy industry and chemicals)
- Property and Construction sector