How should you choose the right approach for your business in a sales process?
James Wild: The right approach for a sales process depends on a number of factors including; shareholder objectives, culture, management resource, and also the number and type of bidders in a given market. The options available include a rifle-shot approach where we market the business to a select list of trade buyers or a dual-track approach which also includes private equity investors. These two are more commonly favoured by family businesses. The third approach is a full auction process where we market the business to a multiple bidders at the same time where maximising price is important but maintaining confidentiality less so. This is more commonly favoured by privately equity owned businesses. We work with management teams to decide on the right process that fits your business objectives.
How important is the Information Memorandum (IM) in making your business attractive buyers?
Sukhi Jonal: The information memorandum, referred to [as IM], is the key selling document and most shareholders will have one opportunity to sell their business to unlock that equity value. The information memorandum needs to ensure that it demonstrates the key strengths of the business; what is the strategic direction and what are the key value drivers. The messaging can be quite different for different buyer groups and we can tailor those messages accordingly, because you're expecting the buyers to put their indicative bids on the back of a document that they've received.
Do I need an auction process to create competitive tension and maximise value?
James Wild: Competitive tension is critical to maximising value and maintaining momentum in a transaction, this can be achieved by marketing in the business to multiple buyers one go. That said a full auction process can be off-putting to certain buyers and therefore it may be more preferential in your circumstances to market the business in a private sale and ask for a premium in doing so and we can help you with that decision.
Contact us to discuss your exit strategy.