The process of selling a company is critical in the professional life of every entrepreneur. The main objective is to maximise the compensation for all the effort of a professional life by obtaining the best price and ensuring the continuity of the company and its team.
The sale of a company is a complex and high-impact process. At Baker Tilly Global Deal Advisory our M&A team improves its capabilities with each transaction to make selling a company easier and easier. Our work is based on the following pillars:
First, a methodology designed in 10 well-defined stages where we gather all the experience accumulated by our professionals and best practices:
Financial Information and Valuation
Identifying potential investors
Contacting potential counterparties
Negotiate, negotiate, negotiate
Second, a multidisciplinary team led by a senior professional specialised in negotiating the sale of companies.
Third, a knowledge base that grows with each transaction in the form of templates, databases, frameworks, best practice sheets, etc.
The process of selling a company in 10 stages
1. Strategy: where the success of any company's sales process lies
The success of any process is a good preparation. To this end:
Am I clear about the main objective of selling my company?
What other alternatives should I consider?
What minimum price should I set in order to close the deal?
How and when do I involve the management team in the process?
How long can the process take?
Good planning is key to obtain a good valuation and to reduce the time of the process.
Be prepared in advance for any possible questions from the potential buyer. Typical questions are:
Who is the key team?
What is the company's level of engagement or retention plan?
What are the main competitors?
How does our company differentiate itself?
Why does the customer buy from you?
How do you protect the intellectual property of the products?
3. Financial Information and Valuation
Consistent and easy to understand financial information reflects professionalism and builds buyer confidence. Aspects to take into account include, among others:
Should I make adjustments to official information?
Should I capitalise on internal product development costs?
How does my financial data compare with my competitors?
Are the projections credible?
Should I be optimistic or cautious in my projections?
Does the investor look more to the past or the future?
Be careful because the price may include a variable part that is often linked to the projections presented to the investor.
4. Identifying potential investors
What type of investor might be interested in my company?
What is the difference between a financial investor and a strategic investor?
Which one might be willing to pay a better price?
How can I understand the synergies they can gain from the acquisition?
Who should I approach?
These are the questions you need to answer before any contact with an investor.
5. Contacting potential counterparts
Contact the decision-maker and generate interest with a personalised message:
What should the message be like for each potential?
How do we manage confidentiality?
Will there be other people influencing the decision?
What is their decision process like?
Extracting as much information as possible from the investor will provide you with tools for the next negotiation.
6. Investor qualification
The efficiency of the process depends mainly on negotiating with those investors who are genuinely interested in the acquisition.
What is your interest in the purchase?
What other transactions have you made?
What is your financial capacity?
What is your preferred type of operating structure?
What is your integration process?
7. Negotiate, negotiate, negotiate
The secret is in the details.
Which of the candidates should be negotiated with?
Should an open, limited or bilateral auction be opened?
Who should make the first offer?
Who controls and drafts the LOI?
What should the LOI include?
Should exclusivity be accepted in the LOI?
Who coordinates all parties involved: lawyers, financiers, advisors, etc.?
This is the most important and complex phase; we put the process at stake in every detail.
Do I have to provide information on everything I am asked for?
Does it have to be validated by a third party consultant or auditor?
How does it relate to the final contract?
Good preparation from the beginning of the process avoids last-minute surprises.
9. Legal Closing
The structure of the transaction is sometimes even more important than the price itself.
What are the terms of collection of the price?
Does the price contain a variable part?
Are there other forms of payment than cash?
What guarantees must the seller give to the buyer?
Do deposits or guarantees have to be provided?
The aim is to minimise post-closure problems.
What is the first 100 days plan?
How do you calculate the synergies achieved?
How is reporting to the new owner implemented?
What team will be in charge of the integration?
How do we retain the key team?
How do I manage cultural differences?
A multi-disciplinary team led by a senior professional
In the process of selling a company, negotiation skills make all the difference. Therefore, the team in charge of the process must be led by a senior professional with extensive experience and whose daily responsibility is the sale and purchase of companies.
In order for this professional to be able to focus on the negotiation, defining the most appropriate strategy and being available to deal with potential investors, he or she must be supported by a team specialising in the following areas:
Financial analyst: provides the ability to present financial information, both historical and projected, in a precise and easy-to-understand manner.
Research: provides the ability to enrich the analysis with information throughout the process. For example, providing competitive analysis of the company, information on potential investors in order to qualify them, etc.
Legal: provides the capacity to execute the agreements signed in the process: LOI, SPA, SHA, etc.
Communication & presentation: provides design and message adaptation capabilities in order to obtain the best impact on potential investors.
A knowledge base with more than 50 manuals and guides
We have a systematic approach to driving operational improvement in business sales processes using strategy manuals, best practice guides, databases and solid, proprietary expertise.
The development of this knowledge base has been led by Baker Tilly Global Deal Advisory with input from across Baker Tilly International.
Baker Tilly Global Deal Advisory trading as Baker Tilly Global Deal Advisory is an independent member of Baker Tilly International. Baker Tilly International Limited is an English company. Baker Tilly International provides no professional services to clients. Each member firm is a separate and independent legal entity, and each describes itself as such. Baker Tilly Global Deal Advisory is not Baker Tilly International’s agent and does not have the authority to bind Baker Tilly International or act on Baker Tilly International’s behalf. None of Baker Tilly International, Baker Tilly Global Deal Advisory, nor any of the other member firms of Baker Tilly International has any liability for each other’s acts or omissions. The name Baker Tilly and its associated logo is used under license from Baker Tilly International Limited.
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