20 common issues which can alter your business sale timetable

Article

20 common issues which can alter your business sale timetable

Dave Rebbettes

December 2018

10 tips to speed up your deal

Hire an experienced corporate finance advisor to do the heavy lifting, from finding potential buyers to negotiating and follow-ups
Use an experienced M&A lawyer ensures emerging legal issues are resolved or accommodated
Organise your data before sale. Get all your company paperwork, contracts, trademarks saved in a digital format so you can supply these more quickly when required
Commit time to the process. Cut back on holidays to ensure you are around during key periods in your business sale. There's still time to get away during quieter phases
Trading well and hitting performance targets. An obvious one, but a strong financial performance is a great confidence boost to the buy-side team
Call people if things go quiet. Maintain momentum with regular progress calls, and share good news such as new contract wins, new hires or market movements
Clean financials. Buyers want to see year-on-year financials, so don't confuse everyone by changing your accounting year end when you're about to sell, or make other unnecessary radical changes to how you report your numbers.
Consider a management buyout (MBO) if you want out quickly. These transactions tend to complete quicker as both parties already know each other
Answer buyer queries quickly. As with anything, good communication oils the wheels
Ensure everyone's on board. Silent shareholders and key staff will need to be brought into the loop at some stage to avoid unexpected reactions

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10 things that can slow down a deal

Financial performance significantly below forecast can lead buyers to get cold feet, or at the very least provide an opportunity to chip away at the agreed price
Preferred buyer pulls out and no one else is interested. A sudden change of leadership or strategy from an acquirer can lead to advanced deal negotiations to be delayed or cancelled.
A lack of pressure from the sell-side. Without a controlled timetable and updates for all parties, appetite for a deal can die and it may look like you don’t really want to sell
Regulatory clearance required (eg national security interest or antitrust concern)
Market upheaval such as a major new policy or key customer going bust. Surprise announcements from politicians, regulators or major corporates in your sector create uncertainty, putting many investment decisions including acquisitions on hold
Competing priorities. Trying to run a business while selling is never easy, and crucial deal phases can clash with your busiest time of year at work. Similarly, going on a five-week cruise in the middle of a deal is likely to stall progress, ruin your holiday, or both
Poor record-keeping can cause issues and delays at due diligence stage – even seemingly banal documents can hold everything else up
Competing bids is usually a welcome delay, as you work through the interested parties to see who’s offering the best price and terms. However, this does add a few weeks to the timeline
Some clients insist on using their ‘family’ lawyer, who may not be familiar with M&A work. Inexperienced solicitors can come unstuck during due diligence, causing a self-inflicted delay as you replace them with an experienced firm.
Disclosing too much or too little. Refusing to share sensitive information or giving it all up front can result in wrong assumptions from an acquirer, which then takes time to unpick later.