COMMON QUESTIONS FOR AN M&A PROCESS
A merger or acquisition is rarely the same as the last one, but if you are thinking of buying or selling a business, there are some things that you need to be aware of.
Some of the most popular questions we get asked are answered here.
When is the best time to sell my business?
Although the decision to sell a business may be motivated by reasons that are not financial per se, business owners who are interested in maximising the price paid for their business should take into account what the business and market factors may have in the sale price.
Because of this, owners, as much as possible, should set the timing of the sale of a business in such a way that it coincides as closely as possible with the business and the most encouraging market factors, regulatory conditions, and tax environment. Aligning a business’s sales process with the founders’ motivations and broader market certainties can greatly improve opportunities to sell a business and secure a better sale.
What is my business worth?
‘a business is only ever worth what someone is willing to pay for it’
A true adage, but If there isn’t a buyer out there willing to pay the price of the business in question, then it simply isn’t worth what you’re asking for it.
You must know from the beginning what your exit strategy is going to be. If you want to sell the business in the end, then build it with selling in mind, regularly assessing its strength and growth by its sale price.
Thus, considering taking your business to market may be the best way of valuing your business.
How do I achieve the best price for my business?
Every buyer is going to be interested in your business for a host of different reasons, which is why it is necessary to ensure that your M&A advisor properly promotes your business to the market and creates a marketing strategy that highlights the strengths that stand out to potential buyers to sell the business.
The more appetite there is for your company the more it will push the value up. Just like Dragon’s Den, once an investor shows interest in an opportunity, the others jump in too and a bidding war starts.
What type of M&A team do I need?
A team of M&A professionals have a thorough understanding of each company they represent. They’ve prepared their client to understand the challenges of selling and managing their expectations. Most importantly, they have committed to working to find the right buyer.
At a minimum, you must ensure the M&A team consists of a competent lawyer and accountant who are proficient in mergers and acquisitions to advise you during the sale process. Hire an industry-specific advisor to represent you and help you through the selling process.
How long will it take to sell my business?
Selling a business has become more difficult and takes longer than it used to. The typical timeline to complete an M&A transaction is from three months to a year or more. Rather than assigning a specific time needed to sell a company, it is best to give an idea of what each M&A process entails and how long it typically takes to complete each one.
How do I make sure my staff are looked after?
Culture fit should be top of mind for employee retention during a sale— Many buyers, especially given the difficulties of recruiting in tough economic climates, would want to hold on to their top talent. Have discussions about employee contracts or you can engage in stock options for your employees.
Venture Corporate Finance is a middle-market M&A advisory firm for clients planning to sell their businesses, raise capital, restructure, or grow with acquisitions. We provide independent advice and bespoke transaction solutions to meet their specific objectives.
For more information on corporate finance and M&A services, contact Venture Corporate Finance.