To sell a business, first set out your aims, expectations and proposed timeline. Then assess the population of potential buyers. Start by preparing lists of competitors, suppliers, customers, new market entrants and foreign competitors. Weed out any that are obviously in financial difficulty or where there are other factors making a deal unlikely.
Prepare a list of the top 10 with the potential to do a deal
Place everyone else on a B list if the A list produces no results
Use your advisers to approach buyers on a no-names basis. The first approach will be to the MD or business owner or indirectly through the buyer’s advisers. Circulate a brief advert that has a few key bullet points without naming the business. it will have just enough detail to whet a buyer’s appetite. Place the advert in business journals, newspapers, in addition to businesses for sale sites. Finding a buyer is a large topic and covered in more detail in a separate post.
The confidentiality agreement (or Non-Disclosure Agreement or NDA)
When interested parties respond, your adviser will issue a confidentiality agreement or non-disclosure agreement (NDA) for any interested parties to sign. This agreement helps prevents leakage of commercially sensitive information to parties other than those the seller chooses.
Presenting the opportunity – the Sale Memorandum
On signing the NDA, send a potential buyer the sales memorandum. It is a summary of financial and other key information, therefore must be factually correct because it is part of the ensuing sale contract. Your adviser will usually write it. It should bring out the positive features and show any potential for improvement. If the view presented is too rosy, it will lack credibility.
Prepare to get some requests for information from tyre kickers or the nosey. There is no legal need to send out a sales memorandum, however, the following may help. Before sending the sales memorandum, ask for some qualifying information to evaluate serious buyers. This could include asking for proof of funding resources and proposed timelines for completion. You may want to sell an option giving exclusivity to a set date.
Weed out the tyre kickers
After asking for offers, draw up a small shortlist of buyers, rejecting those that do not have the funding or other resources to realistically complete a deal.
Meeting buyers will take up time, disrupt the running of your business in addition to needing you to balance maintaining confidentiality, with keeping the sale moving. Doing this without damaging the on-going business can be a difficult balancing act to achieve.
By using an experienced part-time FD with the skills and experience gained form selling many businesses, you can navigate the many pitfalls, assured that you will get the best deal and that your interests will be fully protected. The FD will usually manage the legal team and get you through the process to completion speedily and without damaging the ongoing business, which will still need managing.