The answer might seem obvious, but we too often encounter shareholders who unnecessarily sacrifice value by not doing this.
Sometimes we are approached by shareholders with requests for our assistance to manage and negotiate the final stages of a sell-side transaction – this will typically be the first time the shareholders have ever engaged an M&A advisor. Stepping in to assist with negotiations with a buyer is one of our service offerings, however, we recommend engaging us at a much earlier stage of the process if possible. When we get involved at the late stage of a company sale process – when the buyer’s offer has already been provided or sometimes accepted – we too often see shareholders accept valuations and transaction terms that are well below the value they could have obtained from the transaction. (If we catch this before the offer is accepted, we are often able to increase elements of the offer quickly.)
This is why running a competitive process is valuable. A competitive process to find the right buyer will expose your company to buyers who are willing to pay a strategic premium, and we know from experience that competition between buyers can further drive up your company valuation. What is a strategic premium? It is the extra amount a buyer is willing to pay above a company’s standalone or “financial” value because the acquisition delivers specific strategic benefits to that buyer. In other words, it’s the price uplift justified by what the buyer can do with the business, not just what the business earns on its own. Strategically-aligned timing (as in the buyer needs a solution like this now) can also be critical.
Are you contemplating an exit?
If you are considering an exit, now is the right time to get in touch with us, even if you are contemplating that exit in 1-2 years. Our approach focuses on getting to know your business in meticulous detail, then applying that knowledge to seek out the most strategically aligned, highest-paying buyer. This includes considering timing and readiness. We’re tenacious in our search and typically evaluate 100+ targeted potential buyers for every transaction – this expands your options and maximises your potential returns.