Selling Your Business – Who Does What

So you have decided to sell your business, and you have to hire a whole bunch of professionals to help you do that.

So let me take you through who they are and what they do.

However, before you hire professionals to execute the transaction, you need to make sure your business is in the best possible shape to sell, partly because the professionals will charge you a monthly fee, and if you’re not in the best possible shape, you’ll be clocking up fees unnecessarily, whilst you sort yourself out.

There’s lots of people out there who can help you get into shape, me included.

When you are ready, the first people to hire are the corporate finance guys.

These are the people who have to get an auction going, to get you the best possible price.

First of all, they’ll sit down with you and discuss your objectives, and because they know the marketplace extremely well (and they should – but not all do), they’ll be able to take you through the various types of buyers there are: buy and build; strategic; international; various types of private equity; and so on.

And they will work out from that discussion which buyers they think are best suited to you.

They will also know whether the buyers are in the right place to do a deal. A particular buy and build company, for example, might still be busy digesting its last transaction. A particular private equity firm may be in the middle of another deal, and so have no bandwidth to consider you, and so on.

Then, their job is to prepare a teaser document, which is anonymous and gives the bare bones outline of your firm and what you are looking for, and they circulate that to the right parties, to generate interest.

They will assess and discuss the responses with you, and then put together the Information Memorandum, for serious buyers. This is a “brochure” that goes into much more detail on your firm, and should be enough to enable potential buyers to put in outline offers.

The IM for my company was 45 pages long. Not everybody does an IM of that length, but basically it’s a serious piece of work.

They’ll arrange various meetings with shortlisted buyers, which will be whittled down to one, and they will conduct the initial negotiation on their outline offer, negotiate adjustments to your P&L, balance sheet, things of that nature.

Accountants come next.

These are not bookkeepers. You may have used an external firm to keep your books and send returns to Companies’ House, and other administrative tasks. But these firms are not the people to use for a sale.

You need to go for a firm of chartered accountants, and the reason for that is they’ll almost certainly have to do an audit at some point, and they’ll have to do various tax calculations.

They will have to negotiate with HMRC on all manner of tax related issues, and they may have to do working capital analyses, and other pieces of technical accounting; we had to have a Monte-Carlo simulation done at one point, to estimate the P&L impact of share options. Bookkeepers can’t do this stuff.

Then come lawyers, and let me tell you, these folks are indispensable.

Their main job is to put together the Sale & Purchase Agreement – the “Bible” for the deal –  and there’s a whole raft of other documentation as well. We had 683 pages of legals in total, and I don’t think that’s unusual.

They’ll also keep you safe, with warranties and disclosure letters, and look out for your interests throughout.

They’re tremendously important. And because much of the drafting will take place long into the evening and under some pressure, you have to hire lawyers who are not just proficient; you have to be able to get on with them, too.

It’s a mistake to hire any of these professionals, if they don’t have specific and extensive experience in the sector. There’s no end of (presumably good) people out there who do deals all the time. But the intricacies of the media sector (PR, advertising, design, etc) means generalists can’t cut it, in my opinion.

I’ve worked with the following firms and people in this space, and think they are very good. They are shown in alphabetical order, and have different strengths and weaknesses, so it’s horses for courses:

Corporate Finance – Peter Hemington, Mark Madsen, Moore Kingston Smith, SI Global.

Accountants: HW Fisher, Moore Kingston Smith.

Lawyers: Lewis Silkin

As always, there’s much to do and time is short, so good luck and get cracking.

 

If you would like to see a <3 minute video that covers this, head over to YouTube by clicking here.