So you are thinking about selling your business?

FREE SEMINAR

Date: Tuesday 21st November 2017

Time: 4.30pm-7.30pm

Location: The Dudley Canal and Tunnel Trust, 501 Birmingham Road, Dudley, West Midlands, DY1 4SB

Attend this evening seminar and leave with an understanding of the actions required to prepare your business for sale, how to maximise the attractiveness and sale price of your business, mitigate risks and avoid common mistakes.

Selling your business is likely to be the largest and most important financial deal you will ever make so it is important you get it right, attracting a price that will support your planned retirement lifestyle.

You will also have the opportunity to participate in a complimentary wine tasting to finish the evening.

Event Organisers


Who should attend

Business owners and spouses should attend if –

  • You are seriously considering selling, or transferring control of your business, in the near future – or any time over the next few years
  • You have not yet given serious thought to what happens to your business once you no longer want to run it every day – or if you should no longer be able to run it every day
  • You would like to understand how a typical business sale process works, who might buy your business and how they might arrive at an offer price
  • You already understand the basics but you wish to understand how to maximise value and minimise avoidable risks
  • You do not really know how to go about developing an “exit strategy” that will deliver on your personal objectives

Businesses with multiple owners are all welcome to attend. In addition, spouses or partners are also welcome as we appreciate that selling your business can be a personal matter as well.

If you do not like high pressure sales tactics that many bigger brokerage companies employ then you will enjoy this seminar.


In this event you will learn

  • How best to prepare for your exit – creating an exit strategy
  • How to value your business
  • Steps to maximise your business value in the sale run up
  • Making your business more attractive to buyers
  • The 6 step selling process
  • Why businesses fail to sale – avoiding those pitfalls
  • Legal guidance
  • Tax issues relating to the sale

About the speakers

Bob Brown – CMC Partners

CMC partner, Bob Brown has been providing practical help and guidance to business owners for over 20 years. He has helped a range of businesses from engineering and manufacturing to hi-tech and professional services.

Read more about Bob

 

Nicholas Lee – Succession Group

Financial planner, Nicholas Lee has over 20 years experience in helping people to recognise their personal financial priorities and enabling them to implement and maintain sensible financial plans. His goal is to help as many people as possible to live the life they deserve.

Read more about Nicholas 

 

Kevin Jones – Silks Solicitors

Kevin Jones, Director at Silks Solicitors has over 30 years hands on experience of looking after business and their owners. He has the technical expertise, long experience and ‘can do’ approach making Kevin   the first port of call for owners who need help with legal aspects.

Read more about Kevin 

 

Richard Lloyd – CMC Partners

CMC partners, Richard Lloyd provides growth and exit strategy development for business owners in Derbyshire and East Straffordshire. With over 30 years business experience, Richard has gained a wealth of knowledge enabling him to create value for his clients.

Read more about Richard

7 Areas that Will Increase Your Business Value via a Planned Exit Strategy

At CMC Partners we are very lucky to work with talented owner managers who have grown their business, and 1 topic that comes up early on in the series of meetings is about how can they develop an exit strategy for the business or plan for a succession with getting the true value.   They do not have to work 7 days a week until they die, and get some of the value they have built up in their business into their own bank account.

It is a fairly complex situation as every business and owner is unique in what it does and what the business owner personal objectives are.  I have written about the different subjects including how to value your business to types of sales such as MBO, MBI, trade sale, etc. (read through the articles here).

The discussions with business owners fall into 7 key areas:

1.Increasing the Business Valuation

  • How do I build value rather than simply grow the business?
  • Methods of valuation and what are the myths – P/E ratios, multiples and book values alone     mean less money for you
  • What should be my exit strategy and how do I time it for the best returns?
  • How do I present the financial data properly?

2. Packaging my Business – Getting it Ready for Sale

  • Starting to see your business through the eyes of the buyer
  • How can I best explain the company’s past; documenting its future potential
  • How can I create documentation that show the best value

3. The Sale (and / or Merger) process

  • What are the steps to take you from the start of the selling process to a successful close
  • What are the common and costly pitfalls to avoid

4. Explaining the jargon in real terms

  • There can be a lot of jargon involved and it is best to have this explained beforehand – CAPM, discount rate, EBITDA, and many more

5. Identifying and Approaching Buyer

  • How to identify and approach the right buyer
  • Which buyers to avoid and why
  • Why big companies buy small companies
  • How do I improve my odds when dealing with sophisticated buyers who purchase several businesses each year
  • Why your most likely buyer may not be the best buyer

6. Negotiating and Structuring the Deal

  • Negotiating mistakes to avoid
  • How professionals may get the best price in the shortest time
  • Managing multiple buyers to obtain the highest possible selling price
  • Deal structures designed to give you more cash with less risk

7. Forms of Payment

  • Making your business “pay you” even after you exit
  • How to increase the total price by using royalties license fees, consulting fees etc
  • Important legal and tax consideration
  • Protecting your lifestyle and estate needs

Making the decisions required to plan for the sale or exit from your business is never a simple set of choices and you will need some guidance.   If you are thinking about your exit strategy or if you would like to explore how we can support you through your business journey, call us on 01844 319286 or complete the form below.

How can an exit strategy benefit your future?

Like many business owners, you have devoted immeasurable amount of work and resources on developing your business. When you are busy with every day operations, it’s difficult to find the time to think about your exit strategy or retirement plan. Developing an achievable exit strategy is an essential task and too few owners give it proper consideration. An exit strategy can benefit your future. It can help you realise your businesses full potential whilst maximizing its sale value.

74% of entrepreneurs in the UK risk long-term business success by not giving proper thought to their exit strategies’ Deloitte Entrepreneurship: UK 2008

With all that you have invested, doesn’t it make sense to plan an exit from your business to protect your future?

What is an exit strategy?

An exit strategy is a plan on how you intent to leave the business. We know this is not as easy as it sounds. Your business has been a significant part of your life and dreams. Contemplating a future apart from it can be difficult to visualise. As hard as it may be, you need to start thinking about your own goals, targets and timescales to ensure your exit is within your control.

What should an exit plan include?

Your exit plan can be a simple one page document but should include:

  • Your preferred exit option
  • Deal Structure
  • Timing
  • Preferred buyers
  • Business valuation considerations
  • Actions

The key is to understand that an exit is a process that may occur over many years and there’s more exit options than simply selling your business. For example you may choose to set up a management team in order to take a back seat while receiving a regular income. To understand more about the various exit options, we recommend you read this blog 

An exit strategy ensures your vision of the desired outcome is achieved and helps to minimise the risk of failure or disappointment.

Carefully planning your exit from your business has huge benefits:

  • exit your business at a time of your choosing, when the business is doing well and the market conditions are advantageous
  • mould your business into the ideal shape for your chosen exit option – maximising the value you get from it
  • prepare successors if they’re coming from within the business, this could be a family member or part of your management team
  • prepare the 2nd tier management team, if you wish not to sell but draw a regular income from the business
  • make your business more appealing to potential buyers, if you wish to sell

If you don’t have an exit plan in place, we would recommend you think about creating one now, even if you expect to work for another 10 -15 years. Preparing a exit strategy is good practice and can help shape your business to achieve your future plans for life beyond your business. To help improve your chances of a successful exit we have complied a short 10 point checklist. Download here 

Take control now to get the maximum value out of your business by contacting us to arrange for a free appointment.

Exit plans – what are the options?

At CMC we are absolutely convinced that all business owners should have an exit plan and in so doing, the owner will need to consider all of the options that are open to him. If you want to know why exit plan is essential, please read this earlier blog.

This blog looks at the various exit options an owner should consider. Of course the sale of the business is the main option, but a sale can come in many variants and there also other ways to allow the business owner to step back from the business;

  1. Trade Sale; selling to another business is generally the most immediately lucrative exit option. Trade buyers will be more inclined to pay the highest price as they will understand the marketplace with its risks and opportunities.
  2. Management buy-out (or MBO); this involves existing management buying the business. Often this will involve the price being paid over a number of years and with the seller staying in the business for some of this time. Financing these sort of deals requires specialist input, but lenders see the MBO team’s experience as a positive factor.
  3. Family succession; in some ways this is the most obvious answer, assuming family members work in the business. However it is not without risk as there can be difficult transition issues as the new generation takes over, and the owner exits.
  4. Management buy-ins (or MBI); completely new management can make an offer to buy a business in the same way as a trade buyer. However the issue with MBIs is that often the incoming management dont have sufficient capital resources and have to borrow cash, and pay the owner over a period of years, which may not be ideal.
  5. Non-executive role for owner; in this exit option, the owner retains ownership but allows his existing management team to run the business. In effect the owner becomes a non-executive chairman providing part time help and support, whilst he continues to enjoy an income (salary and/or dividends).

All of these exit plans have their own “pros and cons” depending on the particular requirements of the owner, and the business. Typical factors to consider are – the business size, market dynamics, the dependance on the owner, strength of existing management, tax, and the owner’s personal timescales. Early planning will allow the business owner to both decide on the type of exit that will suit them best and allow time for the business to be optimised prior to exit.

CMC have over twenty years experience of supporting owners through this transition, so please give CMC a call if you want to understand your exit options.

How do I sell my business in the next 6 months?

As well as the problem of over trading and running out of cash, owner manager are looking at their exit options.  So I get asked very often ‘ how do I sell my business in the next 6 months?’.  The vast majority of owner managers have never exited a business before, and many generalist business brokers exploit this with promises of high multiples or valuations and many potential interested parties.

I also wrote an article earlier this year answering the question on why now is a great time to sell most businesses, read this now 

However, the reality for most UK businesses (or read ‘owner managed SMEs’) is that at the time they want to sell, there may not be many buyers or acquirers around at the right stage. As most owner managers are actively involved in ‘their business’ , without a great deal of forward planning, they will have to remain involved in the business long beyond the sold date.  Even when he or she gives up day to day control, they will almost certainly be subject to an earn-out or deferred consideration.

Also, they will also face being an employee with a boss rather than an owner manager themselves.  This means that for many exit strategies, management succession is the top of the priority list, i.e. you must invest early in a strong management team. This is no bad thing, because having strong management will drive growth, and maybe even make them possible buyers as well.

CMC Partner have produced a 10 step checklist for improving your chances of a successful exit, it is available to download here.

Also to get the best price, an owner manager needs to ensure a maximum valuation for the on-going business.  The business valuation is dependent on many things, not least the likelihood of future cash flows.  Recurring income is the star item, as long as there is growth potential within it.   Whilst having recurring contractual income is great, it is the details that matter.  A 5 year history of a client consistently repeat purchasing is arguably more attractive to a buyer than a 5 year contract that includes onerous clauses is a red flag to an acquirer, i.e.  a clause allowing a customer to terminate because of a change of control.

For every sale, we need to think about an acquirer, and getting your business into their target sights.  Most acquirers prefer to be able to target specific businesses whether directly or through a search, preferring not to enter into a competitive process or auction. They want to minimise change in the target business while they take it over.  One point we always try and get a seller to thing about is how to get the messages to possible acquirers before they make an offer.   As part of an exit strategy, have you considered what will make you attractive to a trade or strategic acquirer?  When you have identified what an acquirer might find attractive in your business, you need to get your name out with some PR, e.g. exposure in national trade press, in online articles covering these areas with specific keywords or phrases.  Get your advisers researching possible acquirers and ensuring your business is on their radar.

To answer the question posted in the title of this article, the answer is ‘no & yes’.  If you have planned your exit strategy and done your research, and readied your business for sale, then you can sell your business in the next 6 months.  However if you have just wakened up to the hope that you want to sell your business (maybe you have had 1 too many disputes with your staff or customers), then yes you could sell your business at a heavily discounted valuation.  But why would you do that, get a better price by starting the ground work today.

Making the decisions required to plan for the sale or exit from your business is never a simple set of choices and you will need some guidance.   If you as an owner manger want to sell your business in the next 12 to 18 months or if you would like to explore how CMC can support you through your business journey, contact us via this form.

Business Surgery

FREE Business Surgery with Bob Brown in Worcestershire

Are you a Worcestershire business owner looking to fulfil the potential of your business?

Bob Brown, is offering up to 3 FREE private 90 minute business surgery mentoring sessions, giving  the opportunity to discuss the topics that are important to you.

Here are a few areas where Bob has helped other local businesses:

  • Starting up a business for long term success
  • Taking control with solving business problems
  • Growing a profitable business with practical steps
  • Succession planning to the next generation
  • Exit Strategy planning to help realise full business value

Bobs is running these sessions every second Friday of every month at Malvern Hills Science Park. They are free of charge and without obligation.

‘Working with Bob has allowed us to grow by 35% year on year for the last 3 years. This wouldn’t have happened if we didn’t engage with Bob Brown at CMC Partners’

Derrick Barker, Managing Director

White Paper – Raising Finance for Your Business

Are you thinking about raising money for your business?

Too many business owner’s we talk to have been disappointed in their efforts to raise money for their business. We have therefore put together this guide to help provide an overview of this potentially complex and challenging process of raising finance.

This guide should help you understand about the process of raising money for your business before you start talking to lenders.

It is easy to read and assumes no prior knowledge of the finance market and debunks some of the mystery associated with the topic.


This raising finance guide includes:

  • Aspects of personal preparation
  • Essential business preparation
  • Know what you want the money for
  • Making your business ‘investment ready’
  • Legitimate reasons for borrowing money
  • The risk of your proposed investment
  • Sources of finance depending on your business stage/need
  • Main types of funding
  • Checklist

Download your copy of ‘Thinking about raising money for your business?’

Simply complete the form below and a copy will be emailed directly to you.

Paying the Price for Discounting

When times are tough many UK firms react very quickly and discount prices across the board without fully understanding the impact on demand or profitability.  The results should be dramatic and immediate.  But so is paying the price for discounting.  Many industries and companies using discounting fundamentally erode the total value of the market.  Buyers’ and consumers’ price expectations are lower and buying behaviour changes, perhaps forever.  Just look at what is happening to the big retailers over the past 2 to 3 years.

When survival is the key driver, dropping price is an understandable response by the sales force, especially as sales volumes fall. This might be the right thing to do if the product or service you’re selling is price elastic and so long as a reduction in price will increase sales volumes.  So is that good news?

Discounts are usually driven not by an understanding of market dynamics but by sales force incentives.  Sales teams are frequently measured by sales volume, rather than the quality of the revenue they bring in, i.e. profitability.  If a salesman is rewarded for selling more, then the easiest way to achieve that objective is to discount prices.  This may not be the best in the medium term for the business.

All companies, and in particular SME organisations need to look at their pricing processes and controls to ensure their pricing strategy is effectively implemented, reviewed and managed.  Performance metrics should be linked to profit as well as volumes and appropriate controls should be embedded such as target and limit prices.  For example, a stepped approach to discounts based upon actual spend (not planned spend) incentivises every-one.

So if you have to offer discounts, be aware of when, how much and to whom – and equally important for how long. Have you had a conversation with a current customers about levels of discounting and tried to justify what is being offered to them or other companies and why?  It is a very difficult subject to discuss and explain rationally, so be prepared.

If you wish to discuss how to structure pricing and incentive plans that help sustainable growth, or if you would like to explore how CMC can support you through your business journey, contact us via the form below.