Strategic Company Sales guide our clients through each stage of the sale transaction process, ensuring that personnel are included and collaborate at all relevant points. This keeps delays, uncertainties and costs minimised.

Strategic Company Sales have a proven project management methodology for scheduling critical activities. Generally it can be broken down as follows:

Company-Sale-Full-14-Steps

1. Justify need for & goal of business sale

Transaction Stage

Consider reasons for exit, alternate exit methods, timescale & alignment with owners’ financial and tax position

Action

  • Review timing & financial implications of sale with advisors.
  • Consider taxes & personal financial situation- family financial goals, income and capital gains tax issues.
  • Weigh up sale alternatives: partial vs total sale, management buy out, family succession etc.
  • Set realistic timing goal for completion of sale, considering also a commitment to stay on post-sale.

2. Brief internal & external divestment team

Transaction Stage

Ensure legal, financial and M&A advisors are competent and motivated

Action

  • Establish key performance indicators.
  • Look for additional value enhancements – Closing sales, expense control, inventory control, appearance of premises / website, tightening stakeholder contracts, improving systems & technologies.
  • Understand key business risks post-sale and their mitigation.
  • Seek to proactively increase gross margins, profitability and growth opportunities.
  • Remove dependency on owner.

3. Justify need for & goal of business sale

Transaction Stage

Consider reasons for exit, alternate exit methods, timescale & alignment with owners’ financial and tax position

Action

  • Decide which management (if any) can be told about the possible sale.
  • Appoint (or advise existing) competent external advisors – M&A, accounting / finance, legal, personal coach etc – to drive the impending sale.
  • Be advised about the likely selling price of the company. (valuation, appraisal)

4. Create safeguards to ensure operation continuity

Transaction Stage

Ensure that focus on existing operations is not sacrifice while sale process is undertaken.

Action

  • Ensure that company focus does not shift from operational continuity and improvement.

5. Develop listing strategy

Transaction Stage

Agree on target price, terms, listing strategy, marketing and confidentiality issues.

Action

  • Consider issues such as: acceptable sale price, appropriate timescale, preferred buyers, current owners preferred contractual relationship with new owner post sale, appropriate marketing strategy, appropriate confidentiality or notification of stakeholders, strategy for maintaining key employees, approaches to competitors.
  • Create sale documentation such as Information Memorandum, basing the materials on the profile of a target buyer.

6. Market and solicit interest

Transaction Stage

Weigh up direct approaches or via third party. Consider confidentiality requirements & content of initial conversations.

Action

  • Determine which potential buyers have the capacity to pay cash, versus having to raise debt or equity.
  • List company on Australian and international sale databases if appropriate to strategy.
  • Contact prospective buyers ensuring that NDA’s are signed.
  • Building a sales pipeline ensuring that appropriate buyers are nurtured.
  • Ensuring that market feedback – including why prospects aren’t interested – is provided to the client.

7. Initial meetings with potential buyers

Transaction Stage

Meet with buyers and understand “buyers viewpoint” when considering your offering.

Action

  • Focus on establishing and relationship and rapport with buyers.
  • Listen carefully to prospective buyers’ reaction to the offering.
  • Ensure responsiveness to prospective buyer interest and that enquiries are followed up promptly and efficiently

8. Qualify buyers & provide limited documentation

Transaction Stage

Provide documents on current performance and future opportunities.

Action

  • Undertake preliminary due diligence on buyers – their potential interest, access to finance etc.
  • Weigh up prospective buyers need for additional information vs confidentiality concerns.

9. Follow up buyer meetings

Transaction Stage

Prepare for intimate questions on the operation and future plans. Understand buyers’ objectives.

Action

  • Derive a deeper understanding of buyer perspectives:  how they see they can add value to your company, how the acquisition can add value to their own operations? Understanding how they view the return on investment.
  • Ensure that new information such as EOM performance is provided to serious prospective purchasers.

10. Agree sell decision with stakeholders

Transaction Stage

Obtain agreement and enthusiasm from shareholders and key personnel.

Action

  • Ensure that key internal stakeholders are clearly briefed and understand the direction.
  • Review with confidants, the appropriateness of a particular buyer.
  • Consider whether all shareholders are in agreement with the sale of their shares.

11. Design & acceptance of sale terms & structure

Transaction Stage

Parties to agree on key terms of transaction.

Action

  • Agree on binding / non-binding heads of agreement, and other associated documents that could retard sale progress at a later stage e.g. non competes, IP licencing, earnout clauses.

12. Mutual due diligence

Transaction Stage

Review of key legal, operational and financial documentation provided by seller that conforms with undertakings provided.

Action

  • Provide appropriate materials for buyer verification. Due diligence categories include:
  • Financial (financial statements, tax receipts, working capital, commitments to current lenders, debtors and creditors)
  • Ownership (brands & IP, business registrations)
  • Employees (organisation chart, contracts, key employees & their pay structures & reviews)
  • Customers (client & prospect records, work in progress)
  • Sales & Marketing (sales funnel, lead generation efficiency, marketing tools)
  • Plant & equipment (ownership, functionality)
  • Other (leases, risk management, compliance)

13. Negotiation & acceptance of agreements

Transaction Stage

Communication with buyers’ key stakeholders and ensuring transfer of personnel, documents and locations.

Action

  • Final agreement including contract exchange and settlement of transaction

14. Smooth & risk free owner transition

Transaction Stage

Assist to ensure that the company’s operations – employees, customers, suppliers etc. aren’t adversely affected.

Action

  • All employees to be fully briefed and motivated.
  • Ensure seller visibility throughout the transition stage as reassurance.
  • Assistance with selling the rationale to major suppliers and customers if necessary.