Frequently Asked Questions
FAQs: genuine M&A questions from business owners
The only way you’re going to know for sure is to run a competitive sale process, generating multiple offers from multiple parties. First you’ll need to understand how your buyer...
The typical corporate finance approach to this question deploys a wide range of methods to attempt to value a business. A multiple of your EBITDA (Earnings Before Interest, Tax, Depreciation...
The answer to this question is heavily influenced by the importance of those same individuals to the day-to-day operations of the business. If the shareholders/management team (or both) are still...
There are almost as many types of Private Equity (PE) investors as there are types of business, so almost certainly the answer is yes. However, the most active – and...
Typically, the overall time required to sell a business is between 9-12 months. As you might expect, this can vary depending on the business being sold or the type of...
While most business sellers and M&A advisors would typically favour an all-cash-on-completion transaction, this is not always possible.
The costs of appointing a specialist sell-side corporate finance advisor are usually split into two components.
Selling a business is a complex exercise, and only a small percentage of entrepreneurs are ultimately successful in starting, building and selling their companies. Preparation is critical, so you do...
In a recession, M&A activity in the lower mid-market is typically resilient, especially if your business continues to perform well within a niche market.
The Heads of Terms (HoT) is the ‘roadmap’ document for a transaction, agreed between buyer and seller. It typically runs to 8-10 pages, depending on the complexity of the transaction.
Naturally, this needs to be considered in considerable detail on a case-by-case basis. The short ‘high-level’ answer is you will need to consider the further initiatives to propel near-term growth....
If your senior management team is effectively running the business for you, or has allowed you to take a step back from the business over time, then those individuals will...
As selling shareholders, you likely have no intention of setting up a similar business to the one you have just sold. Your buyer will nevertheless be keen to ensure that...
A high-quality, pragmatic corporate lawyer is a critical component of your sell side advisory team. Your corporate finance advisor’s job is to maximise transaction value on the best possible terms,...
In our experience of selling hundreds of companies, it is very rarely the most obvious candidate – a direct domestic competitor, for example – who represents the ideal buyer for...
There are a number of factors which contribute to the value of a business. Listed here are the ones considered to be the most important.
At a basic level, you could consider DD as similar in some ways to having a survey carried out when you buy or sell a house. However, due to the...
Every business is different, however there are some common elements to a business sale. You need to have a willing seller and buyer. Both need to agree the main terms...
While Vendor Due Diligence reports (often encompassing Commercial Due Diligence and Financial Due Diligence) are not critical to a sale process, they can help drive value and create considerable momentum...
It is critical that any discussions that occur in relation to a business sale take place under the protection of a Non-Disclosure Agreement (NDA) and limited to parties approved by...
A direct competitor may appear to be an obvious place to start when looking to identify a buyer for your business, but it is seldom the case that they will...
Business owners who have time to shape their business with a sale in mind should think through how they can enhance the value of their business and minimise the risk...
The level of information required by a buyer will increase over the course of the business sale process. Initially, potentially interested buyers will be provided with very little by way...
Sweet Equity is commonly a feature of Private Equity (PE) transactions. It is a useful tool to ‘lock in’ key staff members post transaction, as it helps to ensure senior...
While a buyer will spend a significant amount of time evaluating the past performance of the target business, they are ultimately buying the future of that business. Future performance can...
When a buyer prepares an initial offer within a sale process, they will initially assess the Enterprise Value (EV) of the business, which can be derived from a number of...
In simple terms, think of the value in a business as being directly linked to inherited or perceived risk – the lower the risk, the higher the value. Therefore any...
Short answer – yes! You should consider all options when in your planning phase. There are a wide range of options that deviate from the typical “sell to another trading...
A sell-side M&A advisor is there to support you throughout the entire process of selling your business.
There are several steps you can take to maintain confidentiality during a sale process. These include the following:
These decisions have to be taken on a case-by-case basis. However, unless your business has a contractual commitment to seek approval from a customer under a ‘change of control’ clause...
Every buyer will have different criteria when assessing a target acquisition. These criteria range from specific financial parameters (for example minimum revenue or EBITDA levels) to strategic synergies (for example,...
Effective preparation is critical in ensuring your business is primed for the challenging sale process, and that a deal completes on the terms agreed, with minimal disruption. There are a...