Ask the Expert with Lee Humble: Do I need external advice when selling my business?
Selling a business is a major event and something which business owners may ponder over for quite some time.
Natural questions can arise such as is a sale possible, who would buy it, how much is it worth, how long will a process take and how much will it cost to sell? Lee Humble, associate partner at MHA Tait Walker offers his advice.
Transaction costs may come as a surprise, with these costs running into the thousands (if not more for the largest deals) and often involving multiple parties. This can often lead to some business owners pursuing a sale without external input – an approach which has obvious cost savings but can lead to difficulties later in the process and may leave the deal open to value erosion or issues with post deal claims.
The role of a Corporate Financier is a simple one – we are there to support you during the process, ensuring you obtain the maximum fair value whilst crucially protecting you against some of the finer detail upon which entire deal structures may hang together. Knowing and interpreting the lingo is just one area where your advisor can greatly assist, not to mention the immense time saving an adviser can provide as they carry a lot of the weight during key negotiation and due diligence phases.
As we emerge through a financial period which will be inevitably skewed by COVID-19, there is an increasing number of ways your adviser can help, whether it be:
- Through the careful presentation of true underlying financial performance the consideration of the viability of offers and structures which are likely to include increased portions of deferred and / or target based payments.
- Assistance with how deferred payments should sit and what security you can seek.
- Guidance through the warranty and disclosure process – often the most important area whereby your focus will need to extend post deal and look toward any future areas of challenge and potential financial penalty / counter claim.
Across the MHA network in the last twelve months, we have been able to execute many transactions, of varying types, sizes and covering all major sectors – with published deal particulars revealing our ability to deliver deal values and structures sitting above market averages.
With an average profit multiple in excess of nine times, often the basis of valuation in SME M&A, and an average day one payment exceeding 80% of overall deal value, our results demonstrate the financial benefit of using a skilled and experienced adviser, alongside the intangible benefits of working with an assured team who can hold the reigns as you continue to manage your business during a process which is likely to span a number of months.