Is your business exit ready? | Deloitte UK has been saved
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Geraint McGrath and Richard Bevan-Williams, from our South & Wales Advisory Corporate Finance team, look at why early-stage planning is essential to realising the true value of a business and how the appointment of advisers can help businesses make informed decisions for a smoother transaction.
There’s no question that exiting a business is complex, and whether you are just starting to think about an exit, or almost ready to go to market, one thing stands out above all else: preparation really is key. The appointment of advisers will help drive the process from the outset, ensure the business strategy will stand up to investor scrutiny, and deliver the ambitions and expectations of shareholders.
The best advice we can give to shareholders looking to exit a business is to plan ahead. In our experience, it typically takes six to nine months to sell a business and it could take well over a year to fully prepare for an exit that will realise the true value of the business and meet shareholder expectations.
In reality, few businesses are able to prepare that far in advance, but if you have a strong, well-prepared business and clear exit strategy, then it is more likely the transaction will meet shareholder expectations.
As part of the process, the business will need to stand up to the scrutiny of due diligence. There are multiple forms of diligence that may be needed – the exact requirement will vary depending on the business, the buyer and the sector – however, financial, commercial and legal due diligence are likely to play a central role. Preparing for these workstreams before launching a process is vital.
Whilst every business is different, building a compelling equity story is really important to show your business in the best possible light.
Investors are looking for businesses that have a secure past, strong foundations and a clear path to sustainable growth. At Deloitte, we work closely with our clients to build a story which showcases the business’s successes, competitive advantages, unique selling points, future growth plans, operations and management (including succession planning if relevant). We then tailor this information to appeal to different investors and buyers.
Don’t overlook ESG – environmental, social and governance – as it’s becoming an increasingly important part of this, with strategic buyers and financial investors seeking businesses that are truly invested in this area with a clear net zero strategy.
It is equally important to look outward – understanding the market, competitor activity and investor appetite for your business sector will inform the optimum timing and approach.
At Deloitte, our global network can provide in-depth insight into the UK and international markets and industry sectors to bring the right investors to the table at the right time.
We understand that exiting a business can put incredible pressure on those within the business who are involved in the process. That’s why selecting an adviser who not only has the experience, but also the track record of “rolling up their sleeves” can be the difference between success and failure.
At Deloitte, we pride ourselves on getting involved in the heavy lifting so that management can – as far as possible – continue to oversee the day-to-day running of their business.
Whilst you may be working towards a specific exit timeframe, be prepared for setbacks. Poor trading, management changes, customer issues, IT projects, resource capacity, regulatory changes, audits or even seasonal holidays could all impact proceedings. Speed bumps are almost inevitable, but good preparation, remaining flexible, keeping your options open and getting good advice can mitigate the risks.
Whether you are thinking ahead to a potential transaction, or almost ready to go to market, we would be happy to talk you through your options.
Geraint is a director in our South & Wales M&A team. He leads the six members of the team based in Wales. Geraint advises corporates, shareholders and management teams on transactions including acquisitions, company sales, MBOs and capital raisings. Throughout his career, Geraint has worked on some of the most high-profile deals in the region, covering a range of sectors including building products, construction, manufacturing, business services, healthcare and life sciences. Geraint won the Young Dealmaker of the Year award at the 2015 Insider Deal Awards. Prior to joining Deloitte, Geraint spent two years working in industry. He holds a master’s degree in Mechanical Engineering.
Richard is an assistant director in Deloitte’s South & Wales Advisory Corporate Finance team, specialising in management advisory. Deloitte’s Management Advisory team are experts in delivering independent advice to management teams during M&A transactions, particularly those involving private equity.