The Exit Advisor - Selling your business

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The Exit Advisor - Selling your business

Thinking of selling your business?

A business sale starts with an understanding of what your goals are. Is it to realise the value in your business? leave a legacy for your team? Whatever it is, its important to quantify this early on as it will define the narrative of your sale. Let's explore further below..

If you are ready to sell and want a FREE business valuation, click the link below to arrange a 30 min valuation call

 

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Selling your business is a significant milestone. Whether it’s valued at £1m or £10m, preparation determines whether you achieve your ideal outcome or a result that falls short of your goals.. Most owners underestimate how much groundwork is required to sell smoothly, maximise valuation, and avoid last-minute deal failures. Luckily, with us on your side we can help you avoid the pitfalls and ensure the transaction runs smoothly. 

Once we have established your goal the next part is to spend time getting to understand your business so we can generate an IM (investment memoradum). Think of this as a succint story of your business with the key financial information peppered throughout. This document is part of the tools we use to find the right buyer. Although The Exit Advisor isn't a business broker, we have contacts across multiple industries and are plugged into a network of M&A contacts so can often introduce you to a specialist broker, or trade buyer. 

It's really really important to recognise that not all buyers are the same, and just because someone agrees to pay a price you are happy with does not mean they will be a strategic fit for you. Doing DD on the buyer and ensuring their goals align with yours and they have the funding to complete the deal are vital to a successful outcome. 

We can help vet buyers and draft HOT's with them before the due dilgence process begins to ensure your specific objectives are being looked after. 

Ultimately, selling your business should reward your years of effort. Preparation, with the right guidance, is what ensures it does. We're here to help you. You're probably wondering what a business sale actually looks like. 

Key milestones of a corporate transaction

Heads of Terms

Heads of Terms - After a provisional deal has been agreed, you draft these as the broad terms that outline the general framework of the sale.

Usually they will include sale price, a target completion date, exactly what is included in the sale (eg assets, staff contracts, the condition of the business, supplier relationships) as well as  any warranties or guarantees that a vendor needs to provide.

These are often quite broad terms with a view that the specifics of each point will be negotiated further in the SPA process. 

Due Diligence

Due Diligence, or DD is an indepth assessment of a target company. The idea here is that a buyer/buyers agent will look at every aspect of the operation to verify its as being reported.

Expect for the following to be scrutinised:

* Financial accounts ,  * Employment contracts,  * Customer sales data, * SOPs (standard operating procedures) and business operations.

The buyer will be looking for comfort with the condition of the business. This part of the transaction is likely to take the bulk of the time, so preparing as much as you can to your business before  a sale will result in a smoother and probably shorter timeline. 

S.P.A

Share Purchase Agreement - If you are selling the shares of your business (as opposed to simply an asset sale) you will need a legal contract between buyer & seller outlining the specific terms of the sale. 

Although this is drafted by each parties lawyers, you will probably have a lot to do with the details of each section and be made aware of your responsibilites to the vendor once sale is completed. 

This is the part of the deal that occurs when 'deal fatigue' is usually at its peak, but stay calm and concentrate on the end goal. We're here to help you during this process 

So why work with us?

Experience

Having gone through the transaction process multiple times we have a solid background and can navigate you through the pitfalls

Understanding

We've been in your position. Stepping into the unknown can be scary sometimes, but we take time to understand what's important to you to achieve your goals from the transaction. 

Process driven

Success in the deal comes from the details. We take time to ensure little things aren't overlooked and each process is followed in turn to achieve the desired outcome

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Our Services 

We can help you throughout the entire process, our services to sellers are listed below. 

Preparing for sale

Getting the business to a marketable position 

  • Checking the financial health of the business and suggesting improvements to PNL/Balance sheet
  • SOP review and business operations health check 
  • Legal compliance check - HR, Property Lease, litigation assesment 
  • Owner dependency / SLT preparation 
  • Drafting the Investment Memorandum to present to brokers/buyers
  • Discussing your options; share sale vs asset sale, MBO, Asset disposal 

Heads of Terms & S.P.A negotiations

Once a buyer has been found, helping to progress the deal through to the next stage

  • Finding and appointing legal representation for you in the transaction
  • Negotiating with the other side based on your goals & objectives
  • Keeping the lawyers on track and ensuring progress throughout the drafting, DD and SPA stages. 
  • Helping you navigate through the process which can be daunting and overwhelming at times 
  • Ensuring you are made aware of any responsibilites you will have as drafted in the SPA

Due Diligence support

Helping you through the very thorough DD process 

  • Setting up the Dataroom for document sharing 
  • Ensuring you are aware of what needs to be shared whilst protecting key information 
  • Helping you/your team collate the required data
  • Helping communcation between both sides to stay transparent and effective
  • Helping to spot potential issues that arise from DD and suggest solutions
  • Keeping you from getting the dreaded deal fatigue! 

Commonly asked questions about the process

If this is your first time selling a business you will likely have a lot of unanswered questions. Below are a few common ones.  

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How long does a sale take?

As you can imagine, each sale is unique, with its own set of challenges. We aim to get a transaction completed within 90 days, but that all depends on the quality of information that we are able to provide the buyer. Its important that the business is ready to sell before heads of terms are signed and DD starts. This gives us the best chance at completing the transaction in a relatively short space of time. Sales are often delayed due to poor quality information being provided to the other side, resulting in questions on validity of information. It's best to give us a call to discuss how we can help you avoid the pitfalls during the process. 

What are 'Heads of Terms'?

Heads of terms (HOT's) are the broad strokes terms that are agreed between the buyer and seller of a business. They include things like the price, the expected completion date and any specific conditions of the sale. For example, the buyer might specify that the business is generating a specifc amount of revenue, or the Fixed Asset Register (FAR) has a certain Net Asset Value. The HOT;s provide a frame work for the lawyers to build the SPA from, so agreeing to very clear, concise and more importantly achievable terms are the best way to start. 

Heads will also give the buyer a period of exclusivity whilst they perform due dligence (usually 3 months but can be longer if both parties agree). This restricts the seller from considering other offers and gives the buyer comfort they have ample time to assess the target business. 

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What is an SPA?

An SPA, or Share Purchase Agreement is a legally binding contract that both parties sign right at the end of the transaction. The key points are derived from the HOT's drafted at the start of the process but will have much more detail about the responsibilites of both parties. They will include exactly what the buyer is buying as well as things called warranties and gurantees that are provided by the buyer and give a commitment from the seller as to the condition of the business. This is arguably the most imporant document in a business sale and as such needs to be treated with  thoroughness and attention to detail to ensure you as the vendor are aware of your commitments. 

What is Due Diligence?

Due Diligence or DD is an exhaustive process that is designed to lift the lid on a company exposing its true position. This includes every aspect of the operation from financials to HR, operations, legal including property leases, Fixed assets: you name it, its probably included here. Although its essentially the business being laid bare, don't panic. Quite often you can make the buyer aware of any shortcomings you know about and have constructive conversations about the best solution. The important thing is to be 100% transparent with the information you provide as you will likely be providing warranties for it, meaning you will be legally verfiying the information you provide. 

This part of the sales process is the one that can really affect the timeline. If you provide quality, accurate and up to date information then you give yourself the best chance of reducing friction to a buyers team. Conversely, poor quality data normally results in delays to the sale. 

Will I need to stay on after the sale?

This is one of the most common questions we get from business owners looking to exit and is totally dependent on the buyer and the shape of your business. If your business functions very well without you in it, the buyer is unlikely to ask you to stay on, unless they see a medium term value in you staying. For example, you have a close relationship with a key client, or you simply share their long term vision and both decide you should stay on to help the business grow. Deciding to stay in the business is a big decision and one that will need to be thought about on both sides as it will likely feature in the HOT's at the beginning of the process. 

What can The Exit Advisor do for me?

We are a full service advisory in that we can help you right from the start of the process. We check your business is fit for sale based on our previous experience. We are also able to help find a broker, appoint a competent lawyer (probably the most underated aspect of a business transaction from experience!), negotiate heads, help with DD and of course advise on the SPA draft. Selling a business can be an incredibly stressful and worrying time, but it doesn't need to be with the right help in your corner. 

Click the link below for a full list of our services

The Exit Advisor - Selling your business

Selling a business can be daunting, you don't have to do it alone. 

You might be feeling overwhelmed at this point. You've worked so hard to build a business and you want to make sure the exit is smooth and your desired outcomes acheived. We have done this process before and are aware of the risks associated with it. Let us guide you through it to help you reach your goals. Give us a call today for a discreet, no nonsense conversation.

What our clients think

"I wanted to sell my small business due to approaching retirement age and truthfully had no idea where to start. Thankfully I found Andy. He helped me prepare my business for sale initially, explaining what a buyer would likely look for. Andy guided me through and did a lot of the heavy lifting allowing me to run the business and make sure the numbers stayed on track."

David Webster - Supasuds

Get in touch

Whatever stage you're at in your selling or acquistion journey, we can help. Fill in your details to send us a message or book am meeting using the link below for a no obligation, exploratory chat. There's no fee and an NDA can be signed so you can be sure of discretion. Lets get the journey started. 

Click here to book your exploratory chat.

Or give us a call for a no obligation chat

07553 748032

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