Selling a business is substantially more difficult than buying one
January 20, 2017
Selling a business isn’t as easy as buying one. Proper preparation can take a long time. Time and again I've seen issues arise during due diligence that proper preparation would have identified and dealt with. The types of issues which are uncovered often take significant time to resolve and the overall deal process gets delayed. I often hear “if only we knew then what we know now…” Complexity around selling is compounded when:
- there isn’t a proven track record of divesting
- the deals are multi-territory/geographically remote
- multiple management teams are involved
- the sale process involves carve-outs/moving transaction perimeters
- resources and time are tight
Core success factors revolve around:
- putting in place a robust disposal framework
- engaging successfully with ‘the business’
- standardising (to the extent possible) a fit-for-purpose deal framework/industrialising processes/reporting where possible
- identifying and dealing with issues and trade-offs.
A structured approach to selling a business pays dividends…… particularly when enabled by a strong deal governance framework
In my experience:
- You can't start too early
- If you have time you can really enhance the value of the business
- Setting up well defined governance and reporting structures will enable trade-offs to be suitably dealt with
- Properly engaging with the business being sold is critical
- Hardwire bidders' needs into everything you do
- Develop a realistic view on the timeframe – know the critical path
- Flush out early the post-deal implications on the remaining business
If you'd like to discuss any of the issues I've raised here in further detail please do get in touch.
