Is it time to sell your business?

By Michael Sonego - June 29, 2018

Global deal activity is increasing, with Australia in the sights of many foreign buyers. In fact, in 2017 deal activity in Australia increased 55%, with a further 17% increase reported during Q1 2018.

Read: Contact Magazine Winter 2018

According to recent reports, this trend is expected to continue throughout the year with many Australian businesses expected to receive unsolicited approaches from buyers seeking suitable targets and exclusive processes.

In the event you are approached, your ability to capitalise on the opportunities that realise the best value for your business will be determined by your level of preparation.

Below is a list of things to consider should you be approached to sell your business.

Having your house in order

To maximise the value of your business it’s important to ensure things are in order including an appropriate governance structure, sound financial information and robust arrangements with customers, suppliers and employees. Inattention to these key areas can impact the value of your business, and are common causes of deals falling over.

Is the offer opportunistic?

Buyer groups make discrete approaches with a view to obtaining an exclusive process. While benefits include less disruption to your business and management team, the lack of competitive tension makes it prudent to obtain expert advice that the value and terms are appropriate in the current market.

Assessing your business lifecycle

Do the current financials and forecast reflect the true investment you’ve made in your business? How much support is there for forecast revenue and profits?  Will recent investments yield a return in this year, or are they longer term investments?  Articulating this to a potential buyer early is critical to realising value.

Knowing your sector

Sector consolidation can occur rapidly, resulting in significant disparity in the market place and concentrated competition among players. Timing your approach correctly is critical to ensure you capture the most value and avoid missing the proverbial boat. Understanding your sector and industry, and the factors driving it, enables you to better prepare for change, including both opportunities and threats.

Retaining or relinquishing ownership

Not all transactions involve an outright sale of a business. A prospective buyer may seek to acquire part or all of your business, or may prefer to partner with you. It’s important to understand the implications of each option, including capability, resourcing and potential synergies with the purchaser, as well as impact of the partnering organisation’s reputation – be it positive or negative.

Next steps

If you’ve been approached to sell your business, or are considering your options, Pitcher Partners can provide insight and advice to assist in assessing and driving outcomes that align with your goals.


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