Mentoring to buy and sell businesses

Buying or selling a business is an emotional activity. No matter how hard Managing Directors and their advisers try, the closer the deal gets the more emotional things become

I have in my career bought and sold a number of businesses. The most important thing to do whether you are looking to sell or buy is to become detached and a good way to achieve that is to use a mentor like myself to enable that to happen. Detachment comes from precise and careful planning and most importantly from clarifying clearly what the objectives are for the disposal or acquisition.

And when I say planning I mean planning well in advance. For example if you are looking to sell your business you should be preparing it a good 3-5 years before. Why?

v      Well you can evaluate clearly what it is you are selling

v      Will it be attractive to buyers

v      What are the barriers to vendors buying the business

v      Ensure all partners have a common objective (do all shareholders want to sell – and who do they want to sell to.

v      Even down to getting the administration and finances straight for when the vendor’s accountants and investigating team come in.

On the other side if you are looking to buy then you need to start with the following questions

v      Will it generate significant shareholder value in at least one of the following forms

v      Economies of scale – reduce cost of sale

v      Better distribution – more customers

v      More effective use of resources

v      Additional resources for the business

v      Additional profits for the business

v      New technology

v      To get into a market that might be difficult to get into (geographic, technology)

v      Will it achieve a key business plan objective more economically or speedier than by organic growth

v      Compensate for an identified weakness in the company

v      Reinforcing an identified strength in the company

v      Improve competitiveness – protect existing customers from competition