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.
“The sale of a business can be a very complex and time-consuming activity and, as such, 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.
George touches on certain of these considerations:
- 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 – there are various business valuation methods that must be considered when determining the true value of a business. Which is most applicable to your business to result in the highest valuation? It also requires a sound knowledge of the industry, the market positioning of the business, and its future prospects.
- 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, as well as any risks associated with any earnings warranties and/or other guarantees.
- To maximise value the buyer should be a good strategic and cultural fit. In most cases the seller will be required to stay on for a period of time and so needs to align 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 obtaining 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”.
Horizon Capital Corporate Finance is actively looking for businesses for sale across all industry segments. We have built up sound relationships with corporate (listed and unlisted), medium enterprises and private investors who are looking for investment opportunities.
