This webinar covered selling a business and maximizing its value. It discussed common reasons for selling like retirement or health issues. Valuation methods were explained like price-earnings multiples. Preparing financially by eliminating debt and non-core activities was advised. Legal and tax due diligence is crucial. The sales process was outlined in three parts from identifying buyers to negotiations. Management buyouts were mentioned as an option. Taxation considerations and typical timescales were also reviewed.

1. Corporate Finance
Business Disposal Webinar
Wednesday 11th
March 2015

2. About us
Lorna Watson
Director
Corporate Finance / Tax Support
Peter O’Connell
Head of Corporate Finance

3. Today’s webinar: what will we cover

4. Why Sell
 Retirement – no succession in the business
 Ill health
 Release cash – Other priorities
 Toughening market
 Opportunistic (unexpected offer made)
 Consolidation of the business (e.g. non core activity
being sold)

5. Valuation
Definition
The value of a business is the price at which a business will
be sold by a willing purchaser to a willing buyer
Understanding how people value businesses is key
Price Earnings multiple most common
Can use Discounted Cash Flow or Net Assets

6. Preparing your business for sale
 Commercial
 Maximising Profit / EBITDA
 Maximising Multiple
 Eliminate non core activities
 Legal & Financial due diligence
 Tax
 Corporation tax
 PAYE & National Insurance
 VAT

7. Maximising Value: Vendor Actions
 Remove risk – deal with legal issues
 Customer contracts
 Supplier contracts
 Tidy up employee issues
 Ensure employment contacts in place
 Can the business survive without you?
 Management team
 Intellectual property up to date

8. Maximising Value: Advisor Actions
 Market the business for sale
 Create competitive tension during sale process
 Surplus cash – how to deal with

9. The Process (part 1)
Buyer Research
Prepare Sales Memorandum
Finalise ‘A’ list of potential
acquirers
Prepare a brief summary
of the opportunity
ADDING VALUE
Understanding the target market and value drivers for potential acquirers
Packaging the opportunity
Focussed and targeted approach to potential
acquirers
Ensure potential buyers understand the opportunity
with minimal input
TIME
Approach buyers and sign up
interested parties
Establish a market and test our audience
before compromising confidentiality

10. The Process (part 2)
Despatch Sales memorandum
and control the bid process
Review indicative offers and
shortlist a select number of
bidders to access the date room
Review final offers and
choose preferred bidder.
Enter exclusivity
Assist in the preparation
and delivery of management
presentations
ADDING VALUE
Ensure vendor control to maximise competitive tension
Assist in understanding, evaluating and maximising offers
Select the right buyer
Ensure potential acquirers have sufficient
understanding to present a firm final offer
TIME
Support legal, financial and
commercial negotiations as
necessary to a successful
completion
Drive and control the process to a
successful completion

11. The Process (part 3)
Post Completion
ADDING VALUE
• Assist with post completion matters including:
• Completion accounts
• Earn-out determination
• Taxation issues
• Warranty issues
TIME

12. Identifying Potential Purchasers
• NOT Brokers or Business Transfer Agents
• Direct approaches to decision makers, not scattergun approach
• Own research using professional search tools and software
• Leverage professional network of lawyers, accountants etc.
• Contacts within VC / Private Equity community
• Database of MBI candidate and HNWI’s
• Suggestions from owners

13. Management buy out / in
 Potential option if trade sale is not available
 Enables you to reward management team for working in the
business to date
 Funding is always an area of concern
 Potentially look for equity investment for this option
 Often sale at a discount compared to trade sale making the latter
more attractive

14. Taxation considerations
 Sale of shares or assets?
 Entrepreneur’s relief (ER) – 1st
£10 million at 10% rate of
Capital Gains Tax
 Qualifying rules for ER
 Surplus cash – is it an issue?
 Deferred consideration & earnouts
 Employment related securities

15. Timescales
TIMESCALE
Planning Stage
(Teaser, IM, Research)
4-6 weeks
Marketing Stage
(Approaches, discussions, meetings, offers)
3-6 months
Completion Stage
(HOT’s, DD & legals)
4-6 weeks

16. The Documents
 Confidential 1 page summary
 Information Memorandum
 Non Disclosure Agreement / confidentiality agreement
 Heads of Terms / Heads of Agreement
 Sale Agreement
 Warranties
 Tax Covenant
 Restrictive covenants

17. Why us?
 High quality advice available locally
 Genuine investment in understanding the business, its key attributes
and the market drivers
 Creative solutions
 Joined up tax and corporate finance advice
 Experience
 Commercial input into legal documentation
 Highly proactive project management to drive the transaction
through to completion

18. Recent deals

19. Conclusion
 Prepare the business for sale
 Plan the process properly
 Get the timing right
 Be aware of tax issues
 Ensure the structure is set up correctly

20. Ask us a question

21. Thank you for attending
We will send you a link to the recorded session
Business Disposals Webinar
Wednesday 11th
March 2015