Selling a Business

Selling a Business Overview

When business owners decide to exit the business and sell out, CMG Consulta help owners prepare the business for sale and even seek the purchasers.  Selling a business is not as simple as placing a classified advert since there needs to be a process of defining what is for sale, what the required investor profile is and what the real value is to that investor profile.  This definition and targeting the right investor are key to maintaining a fair price for the business and for ensuring that the business will have the smoothest of transitions with the introduction of the new investors.

When a business approaches CMG Consulta with the intention of selling, it is important that the motives and reasons for this move are clearly understood and agreed, and that the business situation is assessed.  There have may instance where CMG Consulta has recommended not to sell immediately but to first create a plan that increases the visible company value or brand before the business is taken to market.  Each situation is unique and needs to be assessed on its own merits.

Once the way forward is agreed with the owners, CMG Consulta carry out an analysis of the business and work with the owners’ accountants to draw up a clear picture of what is for sale as well as all the associated value elements that the investor will be buying into.  This documentation can then be used to target and approach prospective buyers to gauge their appetite for investment while keeping the business name under wraps.  This protects the business from having unnecessary panic arising in its employees and clients.  Once tangible interest is in place, the prospective investors and the owners are introduced under the proper legal paperwork.

CMG Consulta supports the owners throughout the whole process and will even be available to attend meetings with the parties, if necessary, and to assist in the negotiations.

Process of Delivery – Selling a Business

When Planning for Sale, each business would require small differences to the process depending on their situation and requirements.  Broadly speaking, the general process of delivery is outlined below for guidance:

1. Define the Reason for Sale

Meetings with the owners are held to clearly define why the business is to be sold.  It is important that these reasons are agreed between all the owners.  Part of these discussions also involve exploration of the various Exit Strategies available to the owners as an alternative to Sale.

2. Business Assessment

Many times, a lot of the business value is intangible and not clearly reflected in the financial statements, yet it is very important to identify, define and document this value so that it can be highlighted to potential investors.  Discussions with the owners and management are held in order to give a good overall picture of the state of the business and the potential value to investors.  In addition to the intangible value, discussions need to be held with the accountants to analyse the value that can be demonstrated through the financial statements.

3. Agree way Forward

Based on the analysis carried out so far, a frank discussion is held with the owners where the options for a way forward are discussed, and a way forward agreed.  It might not always be the right time to sell the business and a period of increasing company value could be beneficial.  Alternatively, the owners might need to sell urgently for personal reasons, and this would need to also be considered and discussed.

4. Agree Way Forward

Based on the analysis carried out so far, a frank discussion is held with the owners where the options for a way forward are discussed, and a way forward agreed.  It might not always be the right time to sell the business and a period of increasing company value could be beneficial.  Alternatively, the owners might need to sell urgently for personal reasons, and this would need to also be considered and discussed.

5. Plan of Action

Based on the decisions taken, CMG Consulta work with the owners to prepare for the way forward either in terms of how to increase company value or in terms of seeking buyers.  As part of this plan, CMG Consulta frequently identify and target potential buyers and directly approach them with a proposition eventually only introducing tangible interested parties to the owners.  During this approach, each potential buyer is targeted with the specific benefits that the transaction will have to their business depending on the different value elements identified.

Planning for Sale - Typical Clients

Typical clients who would be interested in this service are business owners who are seeking to exit the business for some reason or another.

Benefits of Selling a Business Service

Being Prepared Before Engaging in Discussions

The Selling a Business Service ensures that owners are fully aware of the value of their business not to them but to the potential investors.  This preparation is key to ensure that discussions can be entered into with the owner being in as strong a negotiating position as possible.

Shaping a Business for Sale

Many businesses have specific dependencies on the owners or on key staff for them to operate.  This is a large risk for any buyer, and it would need to be ideally resolved before any discussions take place.  In addition, there are frequently successful businesses whose intangible value is not visible to external parties and whose brand might need to be strengthened before discussions can take place.  The reason here is that if the intangible value is clear up front, the negotiating power of the owner is much greater.

Directly Target Potential Interested Parties

CMG Consulta assist in creating an investor profile that will allow direct targeting of parties who stand to gain from the purchase. This puts the owner in front of parties who would be interested in the transaction by default even before discussions commence.

FAQs – Selling a Business

As a practitioner in your industry, you are more expert than CMG Consulta in the technical aspects of your business. CMG Consulta are expert in planning, shaping, structuring, and running businesses. For this reason, we are not restricted to industries since our expertise can be applied across the board and used to supplement your professional knowledge.
Once the planning aspects of the Selling a Business Service are complete and the plans are all laid out, owners and managers are free to proceed to identify and approach potential investors themselves without the involvement of CMG Consulta. Having said this, CMG Consulta are always available to support the owners and management, should this be required.
The client is free to proceed or not with selling the business. The process itself draws up a lot of information on the business and on the potential in terms of sale or investment. It is normal that, if the owners’ perception does not match the information found during the process, the owners can take a decision to either maintain the status quo or even embark on a business re-structuring to take on a different exit strategy.
Accounting practices provide formulae that deal with valuing businesses and these are based on annual profit, turnover and other accounting measures. In addition to these, a business also carries tangible assets (like property, machinery, vehicles etc…) as well as intangible assets (like intellectual property, goodwill, brand…) that all need to be factored into the valuation. Having said all this, the right purchaser is the one who perceives the highest value in the business being sold. For this reason, CMG Consulta focus very much on identifying and highlighting the positive aspects of the business and considering strong synergies when identifying potential buyers.

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