I’m often asked how long it really takes to be prepared for a sale. Although there is no stock answer I’d say a minimum of 12-18 months is a good guide and the timescale certainly needs to ensure you are prepared for the following:
1. Recruit a good number two at the start of the process
You can’t do it all yourself and they will become your rock throughout. Make sure they are hungry to learn and can pick things up very quickly – they need to be able to answer queries and provide information directly when you are tied up at the backend of the process.
2. Get the best corporate advisors
Check their credentials in your market; what have they recently sold and ask them who they think the buyers are. Take references and make sure they are on an incentive type arrangement rather than a fixed fee.
3. Don’t skimp on the lawyers
Good corporate lawyers are well worth the extra cost so don’t be afraid to appoint a new set to your current one. You will spend a lot of time with them so make sure you are happy to be burning the midnight oil with your appointed lawyer. They will also act as a valued conscience throughout.
4. Liaise with your auditors and tax advisors and make sure everything is up to date
Accounts that are not filed and tax queries which go back a number of years need to be sorted so that you can show a “clean” and well-organised company.
5. Bring the key management team on board early; don’t keep them in the dark
They will invariably help you not only sell the business but also provide additional resource for the dreaded data room (see later). But be careful that you don’t get them so excited that they take their eye off the ball – ongoing trading above budget is critical.
6. The financial forecasts need to be realistic and have full buy in from a management team
Leave some upside for the buyer so he can see you haven’t just maximised the numbers for sale. Show them how they can do better but don’t be afraid to explain the risks – a balanced set of forecasts are more likely to survive due diligence.
7. The data room – you can’t start preparing this early enough
Once your number two is on board this should be the first priority along with the financial forecasts. A good data room answers a lot of questions proactively and will fully assist with any documents that need preparing later (eg prospectus, IM etc).
8. Make sure the management presentation is your presentation
Obviously ask advisors to help and assist but it is your way of telling the buyer about your business – it needs to reflect what makes your company tick so prepare it the way you think this is shown best.
And finally clear the decks, take any unused holidays and be ready for some hard graft ahead, but remember the end result is nearly always worth it and if you can be prepared it will save a lot of heartache later!
Steve Dolton is the CFO of National Accident Helpline and has worked on a total of five exits as CFO