Buy and sell them

“When selling a business, success is measured by getting the best price” confirms Paul Holohan, chief executive of print and packaging industry mergers and acquisitions specialist Richmond Capital Partners. Here he helps you do just that.

1.Have a plan

Whatever the reason for selling a print business, meticulously planning the exit is key to achieving best value.

2.The key to a successful sale

The first step on the way is to choose and appoint the right specialist adviser - unless you are fully familiar with, or experienced in selling a business, going it alone is simply not worth it. There are many pitfalls awaiting the unwary or inexperienced and it is all too easy to take your eye off the ball in the enthusiasm for the sale.

It is very important to keep the business performing to your business plan throughout the process, as any fall-off is likely to affect the buyer’s perception of the company’s worth.

It is also important to maintain confidentiality to avoid lethargy creeping into the shop floor and avoid letting competitors take advantage of the company being for sale.

The best advisors will keep you out of the firing line until the appropriate time.

3.The knowledge test

When choosing an adviser (note this is greatly different from a broker who merely lists the business on his ‘For Sale’ publicity), make sure they are experienced in the print industry as it has its own peculiarities and your adviser needs to be aware of these factors and know precisely how best to market your company. Indeed, this industry familiarity may well enable him/her to sell your company to contacts without wider marketing, and this is more likely to attain a better financial outcome.

4.At the check out

Remember, this is probably one of the biggest business deals of your life and you need to get it right from the outset, so make sure to take up references from a potential advisor’s previous clients. Points to check out are:

- Will he/she do most of the work, leaving you free to concentrate on the day to day operating of the company?
- Will they immerse themselves in every aspect of the sale, including attending meetings with prospective buyers?
- How are their fees structured?
- Are they professionally qualified to Chartered status?

5.Be certain what you want

So now let’s have a brief look at the key issues of the sale process. Firstly, you as the principal, together with your management team, will need to fully understand and review the business you are selling and its future prospects.

The review should establish the objectives and timescales of the principal shareholders, identify potential obstacles and alternative exit options.

Then, and only then, it is time to propose an action plan to maximise shareholder value and to overcome any obstacles or conflicts.

This process can be carried out with your advisers on board or before actually appointing them as it will serve to brief them on your intentions.

6.Take a close look at what you are truly offering

After appointing your adviser, commission a free evaluation and valuation - the difference being that the evaluation will be a thorough assessment of the business, warts and all. When the team has agreed on the desired outcome, it is time to let your adviser loose to do what he/she is paid for - i.e. to bring in potential buyers, to initially vet them, to make recommendations to you and then to guide you through the negotiations and legal process to a successful sale.

The next set of top tips are items to check off your to-do list:

7.Grooming considerations

Does the business require ‘grooming’ for sale? For example, is the company over reliant on one or two key customers? If so it is worth delaying marketing the business whilst building up other existing clients and/or generating new ones to reduce this reliance. The final asking price will be much improved if you can show a strong forward business plan and healthy current performance.

8.Deal with it

Deal with any negative obstacles. Typically these could be issues such as the presence of asbestos or any pending legislation as these can be very expensive and a buyer does not want any uncertainty regarding future (and possibly deal breaking) costs.

9.Be a secret squirrel

Maintain confidentiality throughout the whole process. Set up a special email address for all communication on the sale and/or have all correspondence to your home address.

10.Document gathering

Gather together all primary relevant documents such as leases, contracts, HP agreements, and create a ‘data room’ where these are readily to hand to discuss with potential buyers.

11.Keep calm and carry on

Keep focused on the business, letting your adviser deal with all the sale nitty gritty. It is important that potential buyers see a healthy, active company achieving its business plan objectives. Have a medium term business plan ready, not just for the current year, as this will give confidence to potential buyers.

12.Do the paperwork

Check all staff contracts of employment and make sure they are up to date. These clearly define the precise terms of each individual’s employment together with information on performance and disciplinary actions If you have contracts or Service Level Agreements (SLA’s) with clients, check these for change of ownership clauses. Client agreements are valuable assets to be highlighted in negotiations

Evaluate and appreciate

If the property is owned by the company, obtain an independent professional valuation. Ensure this includes an asbestos and toxic substances report. Balance sheet valuations are often out of date, and therefore understated, for what is, an appreciating asset, unlike the machinery.

Prepare youe proofs

Check that machinery servicing is up to date and has been carried out to a high standard by accredited engineers as you will be asked to prove this. Potential buyers will appreciate your commitment to maintaining well what they are about to invest in.