Typically, this process takes six to nine months from start to finish – but can take longer (as shown in the Selling Your Company case study) if shareholder and/or business issues need to be dealt with through a period of corporate grooming prior to commencement of the sale process itself.
The sale process will to some degree be unique depending on your and your company’s particular circumstances; however, will typically comprise the following steps:
· Initial business review To (i) gain a full understanding of products, customers, technologies, market position, business drivers, management and human resource and development and growth potential of the business; (ii) gain a full understanding of the financial strength of the company - its margins, cash flow and balance sheet (including its financial partners be they banks or other sources); (iii) make an assessment of the likely appeal to potential acquirers; and (iv) arrive at a preliminary valuation range.
· Initial shareholder review To gain a full understanding of the ownership structure of the company and the personal objectives, ambitions and timelines of all shareholder groups (as the case may be, shareholder managers, financial investors or sleeping partners) including the details of any existing shareholder agreements.
· Information Memorandum This is the primary marketing document for the sale of your company, setting out the key information on your businesss and the appeal it carries for its target audience of potential buyers.
· Identifying and contacting potential buyers We draw up (with input from you) a list of potential buyers and then filter them, as necessary, through discussion with you. We act as the interface between you and potential buyers from this point onwards.
This filtering process may include the use of a one-page summary profile of your business, without your company’s identity being disclosed at this stage.
Then, subject to strict confidentiality undertakings and your approval, your company is identified and the Information Memorandum is issued to those approved parties.
· Negotiations and Indicative Offers Once dialogue begins with potential buyers following the issue of the Information Memorandum, negotiations have effectively started. It is important during this stage to work to a timetable, so that the pace is dictated by us and potential buyers know that they are in a competitive process. In addition to price, we ask for Indicative Offers to include acquisition rationale, plans for management and employees, due diligence requirements, any other principal conditions, timing, decision-making process and approvals, and funding source.
· Further negotiations, Final Offers and Heads of Terms The next stage is to filter Indicative Offers and continue discussions with selected parties, to provide further confidential information as required and to clarify and negotiate further on Indicative Offers. Final Offers are then invited, the preferred bidder(s) selected and Heads of Terms agreed. Although not a binding agreement, the Heads should cover all of the important commercial points to be addressed, including timetable, before commencement of due diligence and legal contracts.
· Due diligence and legal contracts These two activities are the final, yet critical, stages of the process and there is much work to be done. There is a need to ensure that the overriding commercial points from the Heads together with the myriad of detail are properly dealt with and that the process is kept moving by prompt progress on all sides.
If you wish to progress matters…….. For an initial discussion, contact David Jones or Mike Stackpoole on +44 207 125 0116 or, in the first instance, email firstname.lastname@example.org. All discussions are, of course, entirely confidential.