Selling Your Business
In our undertaking of any sale process we pledge to meet your unique objectives as a business owner. Maximizing value is always an objective, however this is often not the sole objective. Your value objective needs to be balanced against risk and other non-monetary considerations. Employees are often like family to entrepreneurs. People are a consideration in the business transition. The successful sale of your business often represents the crowning achievement and tangible recognition of the value you created as well as your family’s legacy.
We work with you to best prepare your business for sale and lead a controlled, competitive process to maximize the monetary value you are offered, as well as choose the counterparty you believe best ensures the continuation of your legacy, while considering your stakeholders. In order to achieve this outcome, we apply three principles:
Preparedness is Essential
Preparedness relates to both objectively assessing your business' saleability and assuring both you and your business are ready prior to soliciting potential buyers. The earlier the preparation starts, the better the results you can expect when you do choose to sell. We often identify operating adjustments our clients can make to surface value in their businesses before they start a sale process.
A sale process does create business disruption and a failed process taints future sale attempts. We believe this is akin to parachuting out of plane: once you jump out, you can’t jump back in. In effect, we make sure your parachute is professionally packed before you jump.
Competitive Tension Maximizes Value
A competitive process maximizes your value and strategic choice. Value is in the eye of the beholder. Often there are one or two Outliers in a competitive process who see far more value in a business than the others do. A controlled, competitive process surfaces these Outliers while creating urgency for them to move quickly to avoid losing out to a competitor. We have executed dozens of these controlled processes and understand that invariably some bidders move faster than others. We orchestrate the horse race to ensure that the horses reach the finish line simultaneously.
Our clients’ instincts are often to engage with a single, apparently sensible bidder and work quickly to close a deal quietly with minimal disruption. Our experience has shown that the reverse is true. Such an uncompetitive process all too often results in a deliberately lengthy due diligence process, confidentiality breaches and eventually an inferior valuation, if the transaction even closes. Achieved values are often significantly below those initially indicated as the acquirer alleges negative due diligence findings and unilaterally grinds terms and conditions.
Transaction Structuring and Negotiation
Have you been offered such a compelling price for your business that is was impossible to ignore? Such an indication is not a binding offer. Most often the offer terms matter more than the headline price. Applying competitive pressure as negotiating leverage and eventually structuring a share or asset transaction is complex and fraught with pitfalls. When acquirers don’t perceive competition, they often attempt to grind down the price advertised at the outset as they uncover issues through their due diligence investigation and impose one-sided terms in their favor. Also, working capital mechanisms can be manipulated to reduce the value you realize. Valitas has seen this many times before and can effectively retort these renegotiation tactics. Retaining experienced M&A legal counsel is also crucial to best formalize the negotiated outcome.