Mergers and Acquisitions - a sellers’ guide for SMEs
Mergers and Acquisitions - a sellers’ guide for SMEs
The other key factor to consider is what you want to do post-sale. If you want or are happy to stay in the business after it is sold, you will have a greater range of options available to you. In some cases, such as a floatation, you will almost certainly be required to stay for a period of time. If the deal does involve you in staying with the business for a while, you will probably be required to accept an earn-out, where part of the sale consideration is held back and paid to you over time against the achievement of agreed targets and milestones. Earn outs can be risky and are a whole topic in their own right – just be careful not accept too much commitment.
Finding a buyer
If your chosen method is floatation, you will need to employ the professionals who will plan and organise the process for you – you have no choice. In this case, the buyer is all those people and institutional investors who believe in your company and want to buy a part of it.
In all other examples mentioned above, finding a buyer is about knowing where to look. For the MBO, it is easy, it is your current staff. In the case of a trade sale or MBI, the buyer is often known to you in the business community where you operate. In fact, they may approach you, rather than you having to look for them. The disadvantage with this apparent convenient and comfortable situation is that you are looking at a very limited list of options and as a result may not be getting the best deal. My advice would be to employ a professional M&A company who know your sector and who will be able to offer you a range of buyers. By creating a competitive situation, you will ensure you get the best price and overall deal.
In Summary:
* Many of the sell and buy issues will be mirror images of one another, so it may be worth reviewing last month’s buyers’ guide.
* A decision to sell should not be a knee jerk reaction to a tactical matter – if it is you will probably get only a fraction of the real value of the business.
* The essence of any deal is the word “fair”. There cannot be a deal without a willing seller and a willing buyer.
* They will want to do due diligence – make sure your business is clean and ready for this.
* Know what you want from the deal; money, shares, a job, to leave immediately after the sale, and ensure you get what you want.
* Following on from the previous point, think carefully about accepting any earn out.
Copyright © Performative plc 2001-2006. All rights reserved.
Mergers and Acquisitions a sellers guide for SMEs - To learn more about this author, visit Phil Shipperlee's Website.
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It could well be that a trade sale or MBI would be the best option as it would give you a fair price while protecting the employees by ensuring they remain in jobs in a business that will continue to be run well. Also, if you receive the price you want, you could share some of your gain with the key staff who helped you to build the company. By the way, preparing in advance to share your gain through, for example, the creation of a share option scheme would be a sensible move to make.
The other key factor to consider is what you want to do post-sale. If you want or are happy to stay in the business after it is sold, you will have a greater range of options available to you. In some cases, such as a floatation, you will almost certainly be required to stay for a period of time. If the deal does involve you in staying with the business for a while, you will probably be required to accept an earn-out, where part of the sale consideration is held back and paid to you over time against the achievement of agreed targets and milestones. Earn outs can be risky and are a whole topic in their own right – just be careful not accept too much commitment.
Finding a buyer
If your chosen method is floatation, you will need to employ the professionals who will plan and organise the process for you – you have no choice. In this case, the buyer is all those people and institutional investors who believe in your company and want to buy a part of it.
In all other examples mentioned above, finding a buyer is about knowing where to look. For the MBO, it is easy, it is your current staff. In the case of a trade sale or MBI, the buyer is often known to you in the business community where you operate. In fact, they may approach you, rather than you having to look for them. The disadvantage with this apparent convenient and comfortable situation is that you are looking at a very limited list of options and as a result may not be getting the best deal. My advice would be to employ a professional M&A company who know your sector and who will be able to offer you a range of buyers. By creating a competitive situation, you will ensure you get the best price and overall deal.
In Summary:
* Many of the sell and buy issues will be mirror images of one another, so it may be worth reviewing last month’s buyers’ guide.
* A decision to sell should not be a knee jerk reaction to a tactical matter – if it is you will probably get only a fraction of the real value of the business.
* The essence of any deal is the word “fair”. There cannot be a deal without a willing seller and a willing buyer.
* They will want to do due diligence – make sure your business is clean and ready for this.
* Know what you want from the deal; money, shares, a job, to leave immediately after the sale, and ensure you get what you want.
* Following on from the previous point, think carefully about accepting any earn out.
Copyright © Performative plc 2001-2006. All rights reserved.
Mergers and Acquisitions a sellers guide for SMEs - To learn more about this author, visit Phil Shipperlee's Website.
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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