So, someone has approached you to buy your business. It is unexpected and out of the blue. What should you do? In Step 1, I suggested you meet the acquirer and decide whether his vision suits you and whether you like and can trust him.
In Step 2, I suggested it is time to get close to appoint an experienced Mergers and Acquisitions Adviser who knows your market and your business.
Things are now getting more serious, and the acquirer will be in what I call the “Discovery” phase. Under a Confidentiality Agreement, this is where the acquirer asks you questions which are intended to provide the following answers:
- Is your business worth acquiring i.e. does it really meet the strategic criteria set by the acquirer?
- If so, what is it worth to the acquirer and what sort of deal can be offered
Before you can answer any questions, you need to take a “time out” and go through Steps 3.
Step 3 – Decide what you want to do and what you want to get out of it – the “Strategic and Personal Aspirations Review”
For your part, as the business owner you need to answer the following questions:
- Do I want to sell?
- What do I want to do after I sell?
- Assuming the acquirer wants me to carry on, what role do I want in the combined business?
- If the acquirer insists I carry on to guarantee future revenues or profits, how long am I prepared to stay, how long do they want me to stay and how bullish am I prepared to be about the quantum of future revenues or profits?
- Should I test the market and put the company up for sale to multiple potential acquirers?
- How likely is it that this acquirer will complete a deal with me?
- What other options for creating value do I have?
- If I decide to pass this time round, would my business be worth more in the future if I carry on as I am now?
- This is where a really good M&A Advisor will help you to evaluate all these choices and put them down succinctly into something you can discuss with your wife and family, your Board, your accountant, your business coach or mentor, and possibly your IFA/Wealth Advisor.
- You will have spent some money by now, but it will be money well spent.
More to follow next time. Please feel free to get in touch with me at firstname.lastname@example.org or on 07904 766230, or for more information, please check out my websites at www.klopartners.co.uk and www.peterkroeger.com