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Sunday Business Post Online PR
 

Sunday Business Post Online PR

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    Sunday Business Post Online PR Sunday Business Post Online PR Document Transcript

    • THE SUNDAY BUSINESS POST n24 NOVEMBER 13 2011OUT ON YOUR OWNBuying someone’s business ny’s culture and the potentialBuying a business can give for hidden problems. ‘‘Y may inherit certain is- ou What tobudding entrepreneurs a sues such as potential claims or an undesirable staff culture,’’ look for he said. ‘‘Small businesses tend to be identified with their origi-head-start, but the risks nal owner and the purchaser may struggle to rebrand or re- Cormac Mohan offers his advice on finding andare as big as the rewards tain customer loyalty. You could also face the possibility of future competition from the assessing the right company for you. previous owner, their family or When you are in control of the process, buying anF or those lucky en- current staff.’’ ough to have the established business can be a cash to invest, ac- satisfying experience. quiring an estab- Due diligence Market factors are such that lished venture The due diligence process some businesses are now can be a valuable Elaine should give you a realistic pic- available to buy at veryroute to future revenues. O’Regan ture of how the business is per- reasonable values. ‘‘It puts you well ahead of forming and what its future One way to reduce yourthe game, since the start-up prospects are. risk is to buy an existingphase is the most common vestment than in a start-up ‘‘There are traditionally business that has alreadytime for a business to fail,’’ said scenario, but right now there is three types of due diligence demonstrated an ability toCormac Mohan, head of the a very depressed level of activ- you should do and you might successfully operate. LookBusiness Advisory and Corpo- ity largely arising from the need different advisers for for a business with a goodrate Recovery Team at FM availability of finance,’’ said each,’’ said Mohan. ‘‘Legal due track record, sustainableAuditors,Tax & Business Advi- Kieran. diligence is part of a sales and business model and a teamsers. ‘‘The majority of deals are purchase contract. This is with the capability you will By buying a business, Mo- distressed sales with larger where the solicitors check that need to expand the venture.han said, entrepreneurs could companies, in particular, look- the business has legal title to Future potential is aavoid some of the pitfalls and ing for value among their smal- sell, ownership of all the assets critical factor as there maydifficulties associated with get- ler competitors.’’ and that regulatory and litiga- be an opportunity to cross-ting an all-new venture off the tion issues are fully addressed. sell other products orground. ‘‘Financial due diligence in- services to existing ‘‘For a start-up, ‘time to Profitable volves checking the numbers customers. Financialprofitability’ ^ either months history and making sure there are no records, although essential asor years ^ is unpredictable,’’ he Kieran advised purchasers to black holes or hidden financial the first indication ofsaid. ‘‘It is largely not under the look for ventures with a solid issues. ‘‘Commercial due dili- business health, may notcontrol of the business owner, history of profitability, sustain- gence is about finding out the reflect reality or tell thebut rather under the control of able cashflow, an established business’s place in the market, whole story.the potential customers. Dur- reputation and growth poten- Barry Kieran, managing partner of Amatino Partners: ‘look at the company’s top ten customers and suppliers and checking competitors and the A quick check of theing this period, the owner is tial. regulatory environment. Final- financial ratios will give you be wary of over-reliance’ WWW.ZANNI.IEnot well compensated, if at all, ‘‘Purchasing a distressed ly, you should review the busi- metrics for assessing howand the business operates un- business can offer value, but ness plan and track it against well the company is beingder a high level of stress.’’ only if you have the expertise or not this will give you a suffi- vironment, legal or regulatory the company’s latest audited fi- managed, but you are going Barry Kieran, managing and the means to make it cient return on your invest- issues and potential changes. nancial results.’’ to need much more topartner of Amatino Partners, work,’’ he said. ‘‘Firstly, you ment.’’ Also review competitors, as establish true and fairsaid that established ventures must understand why the busi- To find out about available this will give a good initial indi- market value.could offer new owners several ness is currently in trouble. businesses, research relevant cation of the stability of the Handover Off-balance sheet itemsbenefits, including an estab- ‘‘Typical problems may in- websites, newspapers and trade business prior to entering into As part of the deal, you should should be explored, as theselished customer base, a proven clude strategic misdirection, publications. full due diligence.’’ agree a handover period with hidden items may causeproduct or service and the poor management or lack of ‘‘Buyers can advertise their the outgoing owner during severe problems in thegoodwill created by the pre- capital.Y must then consider ou intent to purchase as many which they can introduce you future.vious owner. your ability to solve the pro- businesses will not advertise Warning signs to existing staff, customers Likewise, look out for ‘‘Such a purchase gives more blem. Assuming the underly- the fact they are considering a Before you sign on the dotted and suppliers and deal with unaccounted losses, decliningcertainty in terms of repay- ing product or service is good, sale,’’ said Kieran. ‘‘You can line, carry out a thorough fi- any historical issues that may revenue, increasing ratiosment capacity or return on in- you must think about whether also use your trade or market nancial review to assess the arise. regarding inventories or contacts, professional advisers company’s commercial viabili- ‘‘The most successful busi- receivables or changes to the and business networks. We ty. ness owners have an innate un- target market. These may would recommend a combina- ‘‘Warning signs that some- derstanding of risk and how to signal that the business is less Should you buy? tion of trade contacts and ad- thing may be amiss will in- manage it,’’ Mohan said. ‘‘En- viable than it appears. All important contracts ver tisi ng th roug h you r clude unexplained trends in sure there is an agreed exit professional advisers.’’ the financial performance, strategy with a transition phase need to be reviewed Your first step should be to attention to detail that which may be contrary to mar- so the business can be trans- carefully. Look for the ket trends, or erratic financial ferred in an orderly manner. absence of contracts needed determine if you are truly a motivated buyer, writes most businesses demand? & Can you deal with Valuing the performance,’’ said Kieran. ‘‘The seller may require ^ for your business to succeed. Cormac Mohan. uncertainty without losing business ‘‘Look out for over-reliance under the purchase agreement Check for clauses regarding Ask yourself: sleep? Businesses are generally va- on a single ^ or small numbers ^ to remain in the business for a change of ownership. & Do you know what kind & Are you a good ‘people lued at a multiple of relevant of ^ customers, contracts or period of time. This will facili- Spend time carrying out of business you want to person’ who can handle earnings plus, if applicable, a suppliers, issues with Revenue, tate the learning curve for the the necessary due diligence at buy? customers and employees? sum for the business assets over-reliance on short-term fi- new buyer. the outset to determine if the & Are you experienced & Can you accept the purchased as part of the trans- nance or debt judgments regis- ‘‘The purchase price can potential business meets your enough to run the financial shortfall that may action. tered against the business in also be conditional upon the requirements. business? result from investing in a ‘‘Relevant earnings are nor- the past.’’ performance of the business During the due diligence & Do you have the business? mally calculated as an average Limited companies with a for a period of time after the stage, look out for: cashflow over the last three poor history of filing with the sale. These are factors which & debt-reduction Cormac Mohan, head of the Business Advisory and programmes, such as asset years with adjustments for Corporate Recovery Team at FM Auditors, Tax & CRO should also be avoided, can be agreed at negotiation items such as expenses directly and Kieran also advised pur- and when finalising the trans- sales Business Advisers & cost-reduction tactics, attributable to the previous chasers to assess the compa- action.’’ owner,’’ Kieran said. ‘‘The including layoffs multiplier used will be deter- the strength of customer base,’’ & changes in senior mined by the results of the due said Kieran. management diligence and the return on in- It is crucial that you do your A good deal & changes to the customer profile, extraordinary sales vestment required.’’ research before committing to Price determinants include an acquisition. At the very and customer refunds the company’s profitability or least, Kieran recommended a Barry Kieran has these tips these. of the price is deferred and & strained relationships repayment capacity and the thorough analysis of the com- for buyers on negotiating & Understand the taxation subject to performance with auditors, suppliers and certainty of income or cash- pany’s management accounts the best possible deal: implications and the targets post-purchase. lenders, and flows. and a review of financial state- various options available & Enter into a non- & pending regulatory ‘‘Other determinants in- ments going back three years. & Carry out a thorough when structuring the compete agreement with matters that could trigger clude the growth or cost-saving ‘‘Look at the company’s top and professional due purchase. the previous owner. legal action related to sales, potential for the new owner, ten customers and suppliers diligence. & Obtain comprehensive & Ensure key staff are on trading practices or the degree to which the busi- and be wary of over-reliance,’’ & Gain a full legal warranties from the board and under contract. employee issues. ness is reliant on the current he said. ‘‘Look at the strengths understanding of the previous owner. owner for its financial perfor- and weaknesses of the current business drivers and & Have an earn-out period For more on Amatino, see For more on FM Auditors, Tax mance, ownership of patents management team and re- structure the deal to protect whereby the payment part www.amatino.ie & Business Advisers, see or proprietary knowledge and search the market, trading en- www.fmaccountants.ie Social media for start-ups In the seventh part of our series on using allowing a company to directly 5. Blog search engines, eg Pitching stories engage with individuals interested Technorati, Blogpulse, Google in their brand or product blog search The most important online PR social media, industry expert Conor 3. Provides a platform to 6. Social Media databases resource you can have is a talented communicate information and/or PR pro that can research story Lynch explains how online PR can help company insights to target Creative concepts opportunities and make a audiences persuasive pitch to online your business 4. Positions a company as an authoritative voice in its industry At the core of an engaging online PR strategy is creativity. It must journalists and bloggers accordingly. 5. Increases traffic to a website be a new idea and be sufficiently The big difference between Online PR sits squarely between 6. Contributes to search engine interesting for someone to want to online and offline PR is in the PR and online marketing as a optimisation by generating links take their own personal time to pitching. discipline. Online PR involves back to a website as well as talk about it. For example, before pitching a activities geared towards enhancing website authority & It must be relevant and simple – print journalist, the publication’s influencing media, communities key messaging must come through editorial calendar is researched to and audiences that exist solely on instantly see if there are any planned story the internet using online channels. Research your & Make it easy to find, as online opportunities. Offline PR deals with the same audience influencers are extremely time- The subsequent pitch is specific things except through print, radio, poor to the upcoming story. Keep in TV, conferences or events and It is vital that you research your & Grab attention. Try humour mind your key messages, key other ‘real life’ avenues. target audience. You can do this and innovation and be prepared to media and key timings. Online PR requires a mix of using: be risque/ if it works social, creative, persuasive and 1. Search engines, ie Google & Get to the core of the campaign technical skills, but its benefits are numerous. CONOR LYNCH 2. Twitter influence tools, ie Klout, Peer Index by describing it in one sentence, and then build associations Conor Lynch is a social media strategist and founder of SocialMe- 3. Social networks themselves, ie & Focus first on concepts before dia.ie, a Dublin-based firm that Facebook, LinkedIn, YouTube considering the best social media advises businesses nationwide. For Benefits of online PR 2. Provides an avenue for 4. Online monitoring services, eg platforms. Platforms should fall more information, visit www.social 1. Enhances brand awareness improved customer relations by Radian 6 naturally from creative concept media.ie