Key Stages in the Business Sale Process – Stage 3 – Going to Market

An article by Peter Watson, Prism Corporate Broking

The first rule in going to market is to be prepared. Going off half-cock is a recipe for failure. At the early stages interest can be fickle and easily lost.

So assuming the preparation has been done and the Information Memorandum prepared (with supporting information), the next hurdle to be overcome surrounds the issue of confidentiality. Clients are naturally concerned that the news of a possible sale doesn’t get out into the market, and yet it is often necessary to kiss a few frogs to find the princes!

Confidentiality must run through the entire process and Non-Disclosure Agreements (NDA) will always be put in place prior to information being disclosed. That said I don’t know of anyone that has sued on the basis on an NDA. You need to be prepared for the question from staff or the possible rumours in the market. In our experience staff are much more likely to become suspicious if the senior management start behaving in strange ways – the more relaxed you appear, the more relaxed they will be too. It is important to identify actual risks of disclosure – which may be less than you imagine.

We review likely targets and how wide we expect to search with each client. Generally speaking the more attractive the business, the tighter the brief, but it pays to start with a long list.
There will be some competitors in the mix, but it is important to identify the less obvious candidates. A well-developed network of other advisors is key – some strategic buyers will simply not be identifiable.

Affordability is also a key factor and needs to be addressed up-front. There is no point going down the road with a possible buyer only to discover that they don’t have the money, or have to heavily structure the deal to meet price expectations.

Finally you will be in the position where a meeting with potential acquirers is the next step. This is absolutely essential and needs to be prepared for. We typically take clients through a dry run – which proves invaluable.