Every succession planning indicates the transition of the enterprise propriety together with change in leadership. This is frequently connected to a sale to third parties. The value of the enterprise which was bound till now, will flow to the present owner. In comparison to family internal property transition or to management Buy-out, a sale to a third party will almost always obtain a higher purchase price.
In order to achieve the highest sale price, some basic principles are taken into account.
- Systematic procedure: Enterprise sale is a systematic process. If steps are skipped or left out, then this can cause extremely unfavourably effect.
- Building up broad negotiation basis: To avoid that the sales intention becomes public, many enterprise sellers limit themselves to the contact with prospective buyer. This is wrong. Successful enterprise sellers will rather build up as many as possible options to reach into a comfortable negotiation situation
- Not losing enthusiasm: A M&A process often takes very long and the seller often becomes annoyed by the overhead during Due Diligence. The deal will only be successful if the seller keeps his enthusiasm until the end.
- Choosing negotiation tactics individually: Enterprise Valuation is not an exact science. It is therefore important to master all valuation methods and to put himself in the position of every single possible buyer. A listed company will act completely different than a self made man (woman) who can act according to his/her own discretion.
- Pragmatic lawyers: Some promising transactions were lost because lawyers have taken the swing from the negotiations with further and further protection claims. It needs therefore flexible lawyers, who want to support your sale efficiently.
As a rule, we use the following phase model to this:
Phase 1: Preparatory work (Value Creation)
- Clear initial position (incl. Imbedding management)
- Review of Business plan including numbers
- Enterprise Valuation
- Targets (incl. Price frame and transaction structure)
- Real selling Enterprise documentation
- Systematic inquiry of potential partners
Phase 2: Contacting and first discussion
- Focused, discreet contact with potential Partner*
- Confidential agreement
- Information delivery
- First discussion
- Data Room preparation
Phase 3: Information and offers
- Letter of Intent
- Management presentation
- Obtaining offers
- Data Room Review
- Obtaining "Binding Offers"
- Preparation of the Due Diligence
- Preparation of the completion
Phase 4: Contract closing
- Appraisal of the "Binding" Offers
- Carrying out the Due Diligence
- Finishing contract
- Protection deal risks
- Signing/Closing
Ranford Consulting has a large network in the capital market for national and international businesses. Capital search is a tough work. Only those who are ready to take this extra effort will have success. Ranford Consulting will accompany you all the way.
Interested? Do not wait any longer and contact us right now.
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