The decision to sell your business could well be the most important decision a business owner will make. While there is plenty of information available on starting a business venture there is little advice and guidance on when and how to exit a business.
So if you are considering selling your business how do you maximise the return on your ‘sweat and tears’ and financial investment over the years? “There are very important decisions a business owner must make and it is vital that a qualified and experienced professional be appointed to advise on the transaction” says George New of Horizon Capital Corporate Finance, a Cape Town based, ‘boutique’ corporate finance house, specialising in the sale and acquisition of medium sized enterprises. Selling a business can be a very complex and time-consuming proposition with many issues to address, and many ‘pit-falls’ to avoid! George touches on certain of these issues below:
- Timing the sale of your business in terms of your personal objectives is critical. Considerations are retirement, part-retirement, personal asset diversification, a new venture, or merely a lifestyle change. From the business perspective one must also consider the stage of the business in its life cycle, industry activity, as well as its capital requirements for further growth.
- Value maximisation – Determination of the market value of a business – a business can be valued by price/earnings multiples, Net Asset Value and/or by means of a Discounted Cash Flow – which is most applicable to your business and will result in the best valuation?
- Compliance and deal structure – A business can be sold under different types of sale agreements each having very different tax, risk, legal and accounting implications.
- Business sellers must fully understand the deal structure and its implications, as well as any earnings warranties or other guarantees.
- The buyer should be a good strategic and cultural fit to ensure synergies are maximised. In most cases the seller will be required to stay on for a period of time and so needs to get along with the new owners in terms of goals, objectives, ethics and values.
George New adds “Horizon Capital Corporate Finance provides a full turnkey solution for the seller from the initial preparation of the business for sale to the facilitation of the purchase payment. The service commences with Horizon Capital Corporate Finance attaining an understanding of your business as well as the owners personal objectives; it assists in preparing the business for sale, wholly or partially; undertakes a valuation of the business; prepares a comprehensive Information Memorandum; approaches potential buyers in a discreet and selective manner; identifies the optimal deal structure and negotiates a ‘fair’ price. Thereafter it oversees the preparation of the Sale Agreement and supporting documentation as well as facilitating the payment”.
All discussions with potential buyers are governed by confidentiality agreements to protect the interests of the parties.
Horizon Capital Corporate Finance is actively looking for businesses for sale across all industry segments. We have corporate (listed and unlisted), medium enterprises and private investors looking for investment opportunities.
- Call us for a confidential chat – George New: 083 452 5872