LeaderFest 2013 panelist Jackie Lee shares her view of the process of selling a business.
These are her suggested steps (this is not exhaustive and only based on her personal experience of her own deal):
1. Identify M&A professionals/Corporate Finance Houses of a suitable size to be interested in your business (very prestigious firms will only look at very prestigious deals!) and sound them out on how they would go about the task and what they would charge, what the timeline would be/how much work they have going through at present. Ask for names of recent clients from whom you can obtain references (by phone/meeting).
2. Speak to the referees and get their recommendations/tips on the Corporate Finance House, solicitors, accountants etc. fees charged, structure of the deal, things they would avoid next time etc. The solicitor will be the most important advisor.
3. Advise your accountants/auditors of the situation and get tax advice.
4. Confirm the purchaser list with the M&A/Corporate Finance House. If you have hot prospects, ensure that they are contacted as a priority and by someone who outlines the opportunity appropriately to the decision maker and can answer questions effectively. (Principal to principal is best.)
5. Prepare the teaser document (flier) and the information memorandum (IM) (more detailed document of the opportunity). The M&A professional will have an opinion on how this should be set out but make sure your USP doesn’t get lost in accountant-speak.
6. The M&A people send out the teaser, follow up with phone calls, get an NDA from anyone interested and send the IM and follow up appropriately in a timely manner, hopefully getting at least three interested, qualified parties into negotiations.
7. Ensure (insist) that you get timely feedback and that the process does not lose priority/momentum.
8. The legal agreement is drafted (by the purchaser’s legal team) and revised as necessary by both sides.
9. The seller prepares all the due diligence documentation, in a way it can be easily referenced to the legal agreement, i.e. under the same numbers/headings. This will all need printing off either by you or your solicitor. (If your records are disorganised, start tidying up immediately!).
10. You also need to keep an on-going record of what needs to be included in the disclosure letter. The recommendation is to disclose everything to avoid claims later.
11. Keep a record of arrangements/resources needed to transfer the suppliers and customers to the new business.
12. The sale process is likely to take 6+ months