CMC case study – Prosperous Sale Positioning with Proper Planning and Preparation

Industry: Professional Services

Issue/Objectives: Company exit with early due diligence preparation

CMC partner Martin Rowe was intrigued in late 2010 to be introduced via a network contact to a company whose owners had heard of CMC’s bespoke approach to providing tailored exit plans.

After a relatively short meeting it was clear that the owners wished to sell and retire, but were not impressed by the “sausage machine” approach of some of the SME sectors big names. They wanted a more hands on approach from an experienced business professional backed up with superb support team. Needless to say CMC was retained.

Quite often business brokers prepare an Information Memorandum, market the company and then re-engage at a deeper level for the final transaction. This is all well and good but it can easily produce discounts to the company value when it is too late to remedy them; after due diligence. This is where the CMC approach pioneered by Martin Rowe has served to differentiate the practice and add exit value to new clients.

This approach is based on CMC’s skill at project managing an exit and all the key professionals (lawyers, tax advisors, IFA’s etc.) involved in the process. At the same time CMC prides itself on working directly with clients to improve the business before any final price is agreed. If the owners do just two things the CMC process more than pays for itself.

The first thing is to work the business as hard as possible and leave the exit project to the retained and trusted CMC partner. Nobody, no matter what their skills, can both run and sell a business at the same time. That means CMC as the experienced project manager removes this burden from owner managers and allowing the owner to work even harder within the business to maximise the exit vale.

The second and equally important thing is to minimise the discounts beloved of buyers who often agree one price at heads of terms stage and then chisel away to the final minute of the final day by citing disasters in the due diligence they have conducted with their legal team.

Proper planning with CMC avoids this pitfall. CMC has worked with the client cited above and conducted a tender for legal services across the deal, which includes a “buyer due diligence” exercise at the outset.

This gives the legal team time to understand the business, but far more importantly it allows CMC and the owners to take that early stage report and take corrective action during the marketing phase to remove or at the very least mitigate those dreadful discounts. In the current exercise CMC has been able to help the owners redraft all its employee contracts, engage a specialist Intellectual Property lawyer with a style and commitment that appealed to the owner, help with refining client terms and conditions and make certain that all the statutory records will be in pristine condition for the buyer. This well planned and executed exercise didn’t turn up any skeletons hiding in closets but proved an invaluable exercise that will ensure the client receives a fair price and a bigger retirement fund for the owners.

At CMC we encourage businesses to start their due diligence preparation as soon as possible. If the business needs points for improvement, the legal due diligence will soon discover them.

If you want to learn more about how CMC can help businesses maximise exit value through diligent planning, project management and advice during all stages please contact Martin Rowe on 07766 110 582  or martin.rowe@cmc-partners.co.uk

 Click Here for Martin's Profile

Case Study - Tripled Turnover with Organic Growth

CMC starting working with a marketing communication agency three years ago and has helped triple turnover from £1m to £3m by guiding them through organic growth. The company’s ultimate objective for growth was to ensure their businesses sustainability over time is assured, helping to support their family and lifestyle with less dependence on the two owners.

During the initial meetings we took the time to get to know our new client and help understand their goals and ambitions, personally and for the business. After our evaluation it was clear that the company were ready for the growth phase and we guided them through 5 key areas:

Strategy

• Organic growth through increasing sales with existing clients (top 10 and rising stars) with their existing strong service specific in specific industry sectors.
• Structure Change – a second tier management structure was needed to take full responsibility for elements of the business. This took the pressure off the two owners and allowed them to focus on strategic direction and leadership of the company.
• Premises - Essential refurbishment of existing premises and purchase of new IT systems
• Management model developed with the use of profit centres to assign clear accountability.
• Implemented performance measures and budgets, indicators and sales forecasts and targets
• Suitable exisiting financial controller and one of the owners took this role as finance director
• Ensured bank loan  facility should it be needed to support second stage of growth

Sales and Marketing

• A focused client development strategy was needed to develop their 10 top clients, helping to increase profits. This would include employing account directors and managers to develop the client’s relationships and help increase revenue and  profits.
• Sales targets were installed to help measure, monitor, mentor and reward the account directors and mangers
• Marketing strategy and plans were developed with the part time marketing manager including positioning, messaging and communication.
• A new website was developed to support new digital marketing, introduction of quarterly e newsletter, PR, advertising, case studies, sales collaterals and database cleansing.

People

• Identified key people in company, and evaluated staffs strengths and weaknesses
• Increased workforce from 10 staff to 30 staff to support the growth and bring in updated practices and innovative ideas. New positions included account directors , account managers, account executives, designers and digital designers.
• Training - Identified training requirements for key staff. This included the two directors developing their delegation skills
• Development - Appraisal systems put into place to maintain staff satisfaction with key performance indicators
• Recruitment - Presented ideas for job description roles and competencies
• Culture Change – To support growth a change culture from creative delivery to commercial sales was created.
• Share options offered to selected employees
• Introduced to one of CMC Professional Partners - Access2 HR are experts in managing people, employment law and employment tribunals. They worked alongside CMC on recruitment, training, staff handbook, health and safety to help develop and look after the team.

Processes

• New processes were implemented to support the new sales culture such as monthly sales meetings highlighting future business by value.
• Timesheets were introduced to identify efficiency improvements

Over these three years our CMC partner has formed close relationships with the owners and the team. Continuous advice and mentoring through regular monthly meetings and ongoing telephone support has helped the company remain focussed on the ultimate objectives and enabled them to flourish. This company is still a client of CMC’s with a very healthy future in front of them. 

Contact us on 01491829181 or email at info@cmc-partners.co.uk to arrange a free and confidential discussion. 

Case Study - Re-launch of an engineering consultancy

An owner/manager of an engineering consultancy, in his late 50s, called in CMC to help to move his business to the next stage, with a view to succession. Over the following year, they produced a substantial increase in profitability - from breakeven to £300k profit on a turnover of £2.0m!

How did we do it?

We worked with the company to re-launch their:

Strategy:

• To become independent of the presence of the owner/manager and his skills in the business
• To specialise in a market niche driven by energy sustainability.

Finance:

• Set up monthly sales meetings for all Senior Managers and Associate Engineers
• Moved from focus on contracts and projects to monthly billing
• Set up a proper reporting cascade with regular monthly Board Meetings to analyse performance.

Sales & Marketing:

• Delegated individual sales targets to key senior people, who were given increased exposure to clients at industry events
• The company name was changed (from the owner’s name) and a very successful new brand and identity created.

Processes:

• Achieved ISO 9000
• Installed a new network for online IT support
• Opened a new office in a very favourable location.

People:

• Systematic performance management and development processes introduced
• People recognised for commercial success as well as engineering excellence.

The company achieved a major, prestigious industry award in the second year of re-launching!

If you think your business would profit from a re-launch, give us a ring for an exploratory chat on 01491 829 181, or email us at info@cmc-partners.co.uk

Case Study - Exit for a electronics company

CMC had been planning an exit strategy with a Thames Valley electronics company for three years. Though an MBO had been mooted, the Chairman used his network of contacts to raise outside interest.

CMC introduced a team of accountants, lawyers and financial advisers and the company sold for just under £4m.



Case Study - Exit for a publishing company

CMC had been working for a Publishing client for four years, preparing the company for an exit. The client knew of a very specialist publishing sector broker who had excellent contacts with the major players. In this case, the client already had a professional team known to CMC.

The deal was concluded for over £20m.