To most business owners,
selling a business is uncharted
territory, and there are many
pitfalls along the way. But,
with his vast experience in
selling – and buying – print
businesses for clients, Paul
Holohan leads you through
this quagmire.
“When selling a business, success is measured by getting the best price” confirms Paul Holohan, chief executive of print and packaging industry mergers and acquisitions specialist Richmond Capital Partners. Here he helps you do just that.
1.Have a plan
Whatever the reason for selling a print business,
meticulously planning the exit is key to achieving
best value.
2.The key to a successful sale
The first step on the way is to choose and appoint
the right specialist adviser – unless you are fully
familiar with, or experienced in selling a business,
going it alone is simply not worth it. There are many
pitfalls awaiting the unwary or inexperienced and
it is all too easy to take your eye off the ball in the
enthusiasm for the sale.
It is very important to keep the business
performing to your business plan throughout the
process, as any fall-off is likely to affect the buyer’s
perception of the company’s worth.
It is also important to maintain confidentiality to
avoid lethargy creeping into the shop floor and avoid
letting competitors take advantage of the company
being for sale.
The best advisors will keep you out of the firing
line until the appropriate time.
3.The knowledge test
When choosing an adviser (note this is greatly
different from a broker who merely lists the
business on his ‘For Sale’ publicity), make sure
they are experienced in the print industry as it has
its own peculiarities and your adviser needs to be
aware of these factors and know precisely how
best to market your company. Indeed, this industry
familiarity may well enable him/her to sell your
company to contacts without wider marketing,
and this is more likely to attain a better financial
outcome.
4.At the check out
Remember, this is probably one of the biggest
business deals of your life and you need to get
it right from the outset, so make sure to take
up references from a potential advisor’s previous
clients. Points to check out are:
– Will he/she do most of the work,
leaving you free to concentrate on the day to day
operating of the company?
– Will they immerse themselves in every
aspect of the sale, including attending meetings
with prospective buyers?
– How are their fees structured?
– Are they professionally qualified to
Chartered status?
5.Be certain what you want
So now let’s have a brief look at the key
issues of the sale process. Firstly, you as the
principal, together with your management
team, will need to fully understand and
review the business you are selling and its
future prospects.
The review should establish the objectives
and timescales of the principal shareholders,
identify potential obstacles and alternative
exit options.
Then, and only then, it is time to propose
an action plan to maximise shareholder value
and to overcome any obstacles or conflicts.
This process can be carried out with
your advisers on board or before actually
appointing them as it will serve to brief them
on your intentions.
6.Take a close look at what you are truly offering
After appointing your adviser, commission a
free evaluation and valuation – the difference
being that the evaluation will be a thorough
assessment of the business, warts and all.
When the team has agreed on the desired
outcome, it is time to let your adviser loose
to do what he/she is paid for – i.e. to bring
in potential buyers, to initially vet them, to
make recommendations to you and then to
guide you through the negotiations and legal
process to a successful sale.
The next set of top tips are items to check
off your to-do list:
7.Grooming considerations
Does the business require ‘grooming’ for sale?
For example, is the company over reliant on one
or two key customers? If so it is worth delaying
marketing the business whilst building up other
existing clients and/or generating new ones to
reduce this reliance. The final asking price will be
much improved if you can show a strong forward
business plan and healthy current performance.
8.Deal with it
Deal with any negative obstacles. Typically these
could be issues such as the presence of asbestos
or any pending legislation as these can be
very expensive and a buyer does not want any
uncertainty regarding future (and possibly deal
breaking) costs.
9.Be a secret squirrel
Maintain confidentiality throughout the whole
process. Set up a special email address for all
communication on the sale and/or have all
correspondence to your home address.
10.Document gathering
Gather together all primary relevant documents
such as leases, contracts, HP agreements, and
create a ‘data room’ where these are readily to
hand to discuss with potential buyers.
11.Keep calm and carry on
Keep focused on the business, letting your
adviser deal with all the sale nitty gritty. It is
important that potential buyers see a healthy,
active company achieving its business plan
objectives. Have a medium term business plan
ready, not just for the current year, as this will
give confidence to potential buyers.
12.Do the paperwork
Check all staff contracts of employment and
make sure they are up to date. These clearly
define the precise terms of each individual’s
employment together with information on
performance and disciplinary actions
If you have contracts or Service Level
Agreements (SLA’s) with clients, check
these for change of ownership clauses.
Client agreements are valuable assets to be
highlighted in negotiations
Evaluate and appreciate
If the property is owned by the company,
obtain an independent professional valuation.
Ensure this includes an asbestos and toxic
substances report. Balance sheet valuations are
often out of date, and therefore understated,
for what is, an appreciating asset, unlike the
machinery.
Prepare youe proofs
Check that machinery servicing is up to date
and has been carried out to a high standard
by accredited engineers as you will be asked to
prove this. Potential buyers will appreciate your
commitment to maintaining well what they are
about to invest in.
