This is a Thought Leadership article by PrimeGlobal member firm Buzzacott which looks at how to deal with being approached by a prospective purchaser.
Often our first dealings with a business is when they have been approached by a prospective purchaser. Here, we summarise the top 10 things you should consider to successfully deal with the approach and determine if the offer is right for you.
Is now the right time?
If you're looking to capitalise value and your business is on a strong upwards curve, it is worth considering whether you should delay selling to help maximise your returns.
Understand the prospective purchaser
It's essential that you understand whether the acquirer's motive is genuine and more importantly if can they afford you. Don’t be afraid to ask questions before progressing.
There's no rush
Early actions will set the foundations for the nature of negotiations to follow. There is a reason the prospective purchaser has approached you; put the onus on them to make headway.
Put a confidentiality letter in place; we would expect the acquirer to be able to offer one, but it is your information and it should be on your terms.
Share information at the right time
Don’t be afraid to hold back and not rush into handing over information as early as possible. Whatever information you share will be useful to an acquirer, regardless of whether a transaction completes or not, which is why it is crucial to assess the validity of the approach.
Share information wisely
Any information you share, especially any forecasts, can be held in evidence against you in later negotiations. Take time over the presentation of numbers and make sure you present your business in the best possible light.
Always have value in mind
Even if you have agreed a headline price, there are many more subtleties in transactions where the inexperienced can give away value without realising.
Never disclose price expectations
There is always a positive story, even if you may not initially think so. The acquirer has approached you, it is for them to decide your worth.
Part on good terms
If discussions cease, ask for the return of your confidential information or for an undertaking that it has been destroyed. Most importantly part on good terms, there may well be a next time.
Seek professional advice
Having an adviser on your side will bring a valuable level of knowledge to the table to enhance any sale process, and provide you with the support you need to keep running your business.
If you have any questions about the above, or would like to discuss how we can help you to evaluate an approach, please get in touch. We advise on the right deal and ensure that it’s on the best possible terms, for the greatest return and that the completed deal is the same as the one agreed at the outset.
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