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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.

Horizon Capital Corporate Finance services include understanding a 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.