IBA Approach
To sell a business for its true value, the price it achieves must recognise its future growth potential under new leadership as well as its current worth. In most cases, we know that another company will not want to acquire your business for your company as it is now.
Sell Your Business Today:
Our Approach To Selling A Business
To sell a business for its true value, the price it achieves must recognise its future growth potential under new leadership as well as its current worth. In most cases, we know that another company will not want to acquire your business for your company as it is now.
They want to acquire you because they believe that their method of doing business backed by your infrastructure, customer database, supply contacts, and more will take your company to even higher levels of turnover and profitability.
Buyers And Sellers Bigger Picture
Once you have engaged IBA Corporate to represent you, we look for the positives and the negatives about your business.
Many business owners contact us and they are genuinely concerned that what they perceive as problems within their company are obstacles which prevent them offering it for sale to others. That’s actually the wrong way around.
The positives are your current workforce, the customers you serve, the value of your assets including your website, your cash flows, your profit margin, and the degree to which day-to-day activities are handled by your managers and not by you. The positives are also this year’s profit, last year’s profit, and the profit you made the year before. The value of your positives are known and quantifiable.
It’s important to know that, for you the seller, the maximization of return is not just about the price at which you sell your company, vitally important though that it. It’s about whether the price you achieve allows you to take the next step you want to take in life. When you work with IBA Corporate, one of our first responsibilities is getting to know you and what you want after the sale has taken place.
What’s next for many of our sellers is stepping down from their current position of responsibility into semi-retirement or full retirement. For some, what’s next might be that they want to use the proceeds from the sale to invest in other businesses either as a hands-on owner or in a role similar to a business angel.
The question is whether now is the right time to go to the market or do you need to hang on for another 12 months or more? When working with IBA Corporate, we’ll tell you in no uncertain terms whether the sale price you have in your mind is achievable – we’ll let you know precisely what we think it’s worth. You’ll know then whether it’s going to be enough to fund your post-sale goals.
If now’s not the right time, we’ll tell you and we’ll share our guidance on the steps you need to take to be able to sell the business for a price which gives you the money you need for the future life you desire.
Any potential acquirer will view the company you’ve built as a platform to create something greater.
In most cases, acquirers of other businesses will have a much larger and substantial portfolio of business interests than the seller. Most acquirers already own a family of businesses of which your company will be the newest member.
You have something that they want. It could be your customer database. It could be your intellectual property. It could be that you serve a geographical area in which they have little or no presence.
It’s likely to be a handful of different and compelling reasons and, prior to taking you to market, we need to be sure of what those reasons are.
The Answers Buyers Look For
It’s the negatives which gets buyers excited and which add a substantial premium to the sale price of your company. It’s the website you never had time to improve. It’s putting in a system which more effectively chases up repeat orders from existing customers. It’s sticking with the same supplier for many years when there might be cheaper ones available.
These negatives are actually all opportunities to make more sales and greater profit. The negatives hold the key to some of the potential future value they want to unlock.
Other questions an acquirer will ask when looking to unlock future value are:
- What if I was running the company with the contacts I have in the industry?
- How much additional profit would we make if we cross-sold our other products and services to the customers of this company
- How much would the profit per sale increase with our buying power
- How much would we save by integrating this company’s systems with the group’s wider systems?
- Could we increase profitability further by reducing staff numbers at this company because of role duplication?
The answers to these questions are, to an acquirer, opportunities for them to add further value. Please understand that the negatives in your mind about your own company are actually positives to an enquirer. In an acquirer’s mind, they’re buying an expanded, leaner, more efficient, and more profitable version of your company in three years’ times at a discount. The job of a business broker is to make sure you share some of those gains in value reflected in a higher sale price.
Prepare Your Business Now
Identifying The Buyer
A business broker must identify clearly what it is about the business you’ve built which, in an acquirer’s mind, makes it an essential addition to their current portfolio. Why is buying your company so important? How will buying your company help your acquirer achieve their own personal and professional financial goals in the future?
Your acquirer could be a competitor. It could be a company where there is cross-over between what they sell and what you sell. It could be a private investor who sees the promise in your sector but who does not want to build up a business from scratch.
In our discovery process prior to the launch of the marketing campaign, we identify the decision makers most likely to see the value in your company and be willing to pay a premium for it.
How We Present Your Business For Sale
Now that we have a deep understanding of your business and the opportunities it offers to acquirers, IBA Corporate’s marketing department starts work.
The opportunity summary is the initial presentation material we use to showcase your business to the acquirers we contact. How do we find acquirers? We purchase specialist databases from around the world containing the details of companies and investors likely to see the potential in your company and likely to have access to the required funds needed to purchase your business.
We phone them, we email them, we send postal mail to them. We make meaningful contact with these decision makers and investors sharing with them the information they need to know about the opportunity your business presents to them – all while respecting your need for confidentiality.
We have an international partner network of solicitors, accountants, investment houses, business angels, venture capitalists, and management consultants all of whom receive your opportunity summary to pass on to their clientele.We also advertise your business internationally across a select network of broker platforms for maximum visibility.
When we have received an indication from a potential acquirer that they wish to find out more, we send them an information memorandum following their signing of a binding non-disclosure agreement. Usually between 15 and 20 pages long, the information memorandum is written by a professional copywriter who has not only sold his own businesses but who regularly advices entrepreneurs on acquisition targets. He has been on both sides of the fence and he is the right person to explain the positives about your business and present the negatives as opportunities.
It will not only address acquirers’ need to know as much about your business as possible. It also directly addresses the pain points – the four factors which prevent deals from progressing the most, the overriding one of which is cash flows following the completion day.
Our marketing and sales campaigns are carefully co-ordinated so that, in most cases, we can create a time-constrained competition between potential acquirers. Nothing increases value more than scarcity – especially for an acquirer determined not to let your company be sold to a competitor.
To do this, we set acquirers deadlines, we control the momentum of the process, and we press home to acquirers that they are not the only ones who have expressed a strong interest in taking over your company.
Receiving An Offer
Following negotiation, the agreement of a price, and a handshake, your accountant and solicitor and your acquirer’s accountant and solicitor take over.
Between you, the acquirer, and both of your sets of professional representatives, you will:
- Map out the process with a Heads of Terms agreement
- start drawing up a sale and purchase agreement based on the Heads of Terms
- Enter the due diligence process
It’s during this process that many deals collapse. Often, the goodwill between the acquirer and the seller can be soured by the aggressive behaviour of both parties’ solicitors trying to get the best deal of their client.
You may find at many points during the process that you and the acquirer meet or speak to get things back on track. Both of you may need to fire warning shots across your solicitors’ bows when this happens.
IBA Corporate’s service includes access to our deal progression team. We understand how long and complex the process can be between agreement and completion. We keep in touch with all parties concerned to make sure that the deal remains on track and that all sides communicate with each other successfully.