Market the deal

Selling a business – Part III:

We can mar­ket the deal after pre­pa­ring the busi­ness for sale. We shall bring the oppor­tu­ni­ty to the mar­ket main­tai­ning con­trol of the pro­cess and the dis­tri­bu­ti­on of infor­ma­ti­on, while moti­vat­ing bid­ders along par­al­lel paths on a level play­ing field in case of a broad or restric­ted auc­tion, or even limi­t­ing it to an indi­vi­du­al pro­cess, accord­ing to your requi­re­ments.

Even if fle­xi­bi­li­ty and readi­ness to amend pro­cess and papers is necessa­ry, a disci­pli­ned approach requi­res best pos­si­ble pre­pa­ra­ti­on and exclu­si­ve rep­re­sen­ta­ti­on. Any com­pro­mi­se on such initi­al decisi­ons is a tra­de-off pos­si­b­ly affec­ting the out­co­me for the sel­ler.

The normal procedure to market the deal is to:
  • Con­tact buy­ers with a redu­ced but strong no-name sum­ma­ry focu­sed on stra­te­gic and quan­ti­ta­ti­ve key ele­ments. Spe­cia­li­zed data banks are gai­ning impor­t­an­ce to expand reach and com­pe­ti­ti­on bey­ond the spe­ci­fic rese­ar­ched buy­ers list.
  • Agree con­fi­den­tia­li­ty (also refer­red as NDA, CU, NCND).
  • Deli­ver the detail­ed Offe­ring Memo­ran­dum (also IM, CIM)
  • Fol­low up, com­ple­te infor­ma­ti­on, arran­ge inter­ac­tion with manage­ment. The bet­ter the Offe­ring Memo­ran­dum, the les­ser the manage­ment dis­trac­tions, delays and dif­fe­rence in pro­s­pect buy­ers’ tre­at­ment. At this point the­re might still be many par­ties inte­rested in recei­ving infor­ma­ti­on.
  • Recei­ve non-bin­ding indi­ca­ti­ons of inte­rest. The­se uni­la­te­ral indi­ca­ti­ons which are some­ti­mes refer­red as let­ters of intent (LOI) too, shall con­tain infor­ma­ti­on about the real inte­rest, fit and abi­li­ty to exe­cu­te the tran­sac­tion.

In the mean­ti­me, inputs from buy­ers’ inqui­ries and from indi­ca­ti­ons of inte­rest help com­ple­te the Data Room extent and pre­pa­ring manage­ment pre­sen­ta­ti­ons.

At this point, stron­gly inte­rested par­ties on the short list will be gran­ted access to the Data Room, pro­ceed to face-to-face mee­tings, manage­ment pre­sen­ta­ti­ons, or some­ti­mes even site visits and be invi­ted to sub­mit final bids pos­si­b­ly based on a draft tran­sac­tion struc­tu­re or even a draft sale agree­ment, or a sha­re purcha­se agree­ment (SPA).

Brin­ging to the mar­ket the deal, have assu­med a bid­ding / auc­tion pro­cess while also easier and more con­fi­den­ti­al but less maxi­mi­sing bila­te­ral pro­ces­ses with sin­gle coun­ter­par­ties are com­mon too.

More details about how to sell a com­pa­ny are approa­ched in the next post. If you have ques­ti­ons, con­sult us, we’ll be glad to help.

Preparing for sale

Selling a business – Part II:

Let’s pre­pa­re for sale. In M&A cri­te­ria and time­li­ne we didn’t go into details. And now we won’t tell you here to increa­se the value of your busi­ness befo­re sel­ling it, as we assu­me that you have been doing it up to now as well as you could and plan­ned the exit. If howe­ver, the struc­tu­re is not ade­qua­te to pro­per­ly func­tion wit­hout the owner or pres­ents other issu­es, we should go back one step and do the preli­mi­na­ry home­work. If some­bo­dy else just might do it bet­ter, it opens a chan­ce and con­firms the right time to sell.

At this point one has just to make sure that the value is reco­gni­zed and quan­ti­fia­ble by the buy­er at least as well as it is for you, also con­si­de­ring the past evo­lu­ti­on. What is clear for you might often not be so for a pro­s­pect buy­er.

Prepare for sale

To assu­re the necessa­ry trans­pa­ren­cy, and to under­stand the value per­cei­ved by poten­ti­al buy­ers, we shall start gathe­ring rele­vant infor­ma­ti­on such as:

  • Reviewing busi­ness plans and mar­ket reports, finan­ci­al reports and pro­jec­tions, stra­te­gic and finan­ci­al ana­ly­sis.
  • Con­fi­den­ti­al talks with manage­ment and employees.
  • Ela­bo­ra­te a poten­ti­al buy­ers list with inte­rest ratio­na­le.

This helps to posi­ti­on the busi­ness wit­hin its mar­ket envi­ron­ment, sho­wing clear­ly its com­pe­ti­ti­ve advan­ta­ges, strengths and the quan­ti­ta­ti­ve ele­ments for its valua­ti­on.

Valua­ti­on will start from a com­pa­ri­son of finan­ci­al per­for­mance with com­pa­ra­ble busi­nes­ses for which mar­ket pri­ces are avail­ab­le from tra­ding or recent tran­sac­tions which allow to imply mul­ti­ples of such as EBITDA, reve­nues and other rele­vant indi­ca­tors. A more accu­ra­te pri­ce vali­da­ti­on would inclu­de a detail­ed pro­jec­tion of cash flows as is or with assump­ti­ons such as of chan­ges of use of assets, syn­er­gies with acqui­rers, or wha­te­ver ratio­na­le can add value to the tran­sac­tion, con­si­de­ring chan­ging sce­n­a­ri­os, and sen­si­ti­vi­ty ana­ly­sis during the expec­ted time to con­clu­de the tran­sac­tion. Such num­ber crun­ching sup­ports nego­tia­ti­on points and can also the be the basis for an LBO (Lever­aged Buy­out).

A key of the M&A pro­cess is the pre­pa­ra­ti­on of a pre­ci­se and pro­fes­sio­nal Con­fi­den­ti­al Infor­ma­ti­on Memo­ran­dum or Offe­ring Memo­ran­dum which inclu­des all an inte­rested buy­er needs to vali­da­te his invest­ment hypo­the­sis and reach a rea­listic valua­ti­on, not to be con­fu­t­ed by later detail­ed due dili­gence. It resem­bles a tho­rough busi­ness plan with its sum­ma­ry and invest­ment con­si­de­ra­ti­ons, descrip­ti­on of the com­pa­ny, its struc­tu­re, mar­ket ana­ly­sis, trends, oppor­tu­nities, com­pe­ti­ti­on, finan­ci­al infor­ma­ti­on, etc. and out­lines the bid­ding pro­ce­du­res.

Con­struc­ted on this con­tent a blind teaser with a descrip­ti­on of the main cha­rac­te­ris­tics of the com­pa­ny, the rea­son for the tran­sac­tion, the main finan­ci­al infor­ma­ti­on from the last and the pro­jec­tions for the next years will attract the inves­tor to the advan­ta­ges of the offer.

Who wants to buy shall come and see!” is the oppo­si­te approach, which sel­dom works out well. Why should poten­ti­al buy­ers put con­si­dera­ble effort in stu­dy­ing and ima­gi­ning the vir­tu­es of an unknown tar­get? You bet­ter take your time and some resour­ces to pre­pa­re for sale to be more suc­cess­ful later. 

Fur­ther pre­pa­ra­ti­on is dedi­ca­ted to com­ple­te the pro­s­pect buy­ers list based on com­ple­men­ta­ry views based on the com­pa­ny expe­ri­ence and the advi­sers rese­arch. Such a list is ana­ly­sed on pre­su­med inte­rest, stra­te­gic fit and poten­ti­al syn­er­gies, finan­cing and abi­li­ty to exe­cu­te as well as com­pe­ti­ti­on con­si­de­ra­ti­ons.

More details about how to sell a com­pa­ny in the next post. If you have ques­ti­ons, con­sult us, we’ll be glad to help.

Alternative lending and services

Alternative financial services compensate banks retreat. What can you do?

  • What alter­na­ti­ves finan­ci­al ser­vices exist to arran­ge finan­cing, grow and pro­tect wealth, invest in or sell a com­pa­ny, or save on other ser­vices?
  • What can you do now to get your business financed?

  • You can make sure that your busi­ness is among tho­se inves­tors and len­ders judge worthwhile. And you can approach alter­na­ti­ve sources.
  • You can do more yours­elf or hire some­bo­dy to do it for you. Doing it yours­elf is what lar­ge cor­po­ra­ti­ons and fami­ly offices gene­ral­ly do and keeps you in full con­trol.
  • Pre­sent your case the best way. If your case is fit­ting in len­ders wis­hes, your good CFO and trea­su­ry might get bet­ter terms than in the past.
  • Howe­ver, if you do not need such capa­bi­li­ties on a recur­rent basis, you might not haven such full-time func­tions in-house, but you can talk to us.
  • How can you have your assets and liabilities correctly managed?

  • Pay an advi­ser for the ser­vices you were used to recei­ve from the bank. It might save you money and pro­vi­de you a not con­flic­ted result. You pro­bab­ly have been pay­ing for bank advice any­way through expen­si­ve pro­duc­ts, cus­to­dy fees, exchan­ge rates, etc. We are con­fi­dent that we will find poten­ti­al with alter­na­ti­ve finan­ci­al ser­vices.
  • Plan for the lon­ger term than the time hori­zon of banks sale­speop­le. Think about and your suc­ces­si­on, wealth pre­ser­va­ti­on wit­hin the fami­ly, invest­ments or sale of the com­pa­ny or spe­ci­fic major assets and pro­per­ties. Such events should be pre­pa­red for long ahead.
  • How can you take advantage of rising opportunities

  • Crowd­fun­ding, peer-to peer len­ding, tra­di­tio­nal and alter­na­ti­ve debt pro­vi­ders, pay­ment ser­vices, bro­kers and all kind of Fin­tech plat­forms are gro­wing alter­na­ti­ve finan­ci­al ser­vices.
  • Howe­ver, if you are not only buy­ing ser­vices but asking for money, make yours­elf and your case attrac­tive for the coun­ter­part, make your finan­ci­als under­stand­a­ble and watch your rating.
  • You can easi­ly save money on smal­ler oppor­tu­nities such as for­eign exchan­ge or stock bro­king. As an examp­le: a dif­fe­rence bet­ween bid and ask of bank cur­ren­cy exchan­ge rates 1-7%, depen­ding from amounts and cur­ren­cy pairs, means 0.5 – 3.5% mar­gin on inter-bank rates. You, or we for sure can defi­ni­te­ly get bet­ter than that.
  • Mer­gers and Acqui­si­ti­on are beco­m­ing more dyna­mic also in the lower seg­ment. Rise and con­so­li­da­ti­on of plat­forms allow an ever fas­ter and broa­der reach to Inves­tors. Talk to us if you want to get rea­dy for such tran­sac­tions.

Less lending and service from Banks?

Less lending and service from banks?

Banks reduce SMEs lending services. What is happening?

  • Len­ding to non-finan­ci­al cor­po­ra­ti­ons in Euro­pe is decli­ning sin­ce years while much funds are idle and cen­tral banks’ inte­rests low. Banks redu­ce SMEs len­ding ser­vices espe­ci­al­ly in the stres­sed Euro peri­phe­ry with con­se­quen­ces.